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Expert opinion

Four keys to be a successful lender

Wednesday 10 August 2016 | 10:21 AM CET

Konstantin Rabin, KontomatikFirst of all, as a lender you have to serve the correct group of people and to reach the target you need to understand your consumer segment

A successful lender – what makes you one in a world full of such businesses? Is it a high interest rate, which makes your company extremely profitable? A huge customer base or a precisely targeted one? Or perhaps a trust you get from your clients returning?

There is no one exact answer — or it is a combination of all of the above. The success comes from a mixture of four basic ingredients that make up a perfect lending business.

Reach the target

First of all, as a lender you have to serve the correct group of people. In order to reach the target you need to understand your consumer segment. Whether it’s a client, who needs a small loan for a short period of time, or a person, who seeks for a long-term big loan to buy a house, it’s essential to know what this consumer expects from you. Sure, interest rates and fees are a very important factor, but there are also other criteria that determine the final decision.

For example, if potential clients can’t get all necessary information on terms and conditions with just a few clicks on your website, you will probably lose them. The same applies to all small print disclaimers and fees — people simply don’t like to be surprised with additional costs or limitations just at the end of the whole process. So, the user experience on your website should be smooth and simple.

Innovate and be helpful

This converges with the second principle of successful lending business: offering innovative solutions, which help your customers decide and apply with almost no effort and within minutes. These solutions involve tools for fast client verification (KYC), instant credit scoring, easy communication through chat/audio/video, and so on. As an online lender, you have to follow the current trends and embrace all innovations quickly to keep pace with the competition. When you use tools from the past, not only do you limit your business, but you also give your customers a reason to switch to rival services, which can be easier to use thanks to innovative solutions.

Your website should be user friendly, but it should also offer some tools, which help your clients manage their budget. A nice and sleek Personal Finance Manager (PFM) can be one of them. It will allow customers to better control their expenses and reduce the risk of going red every month. One could think lending businesses would thrive if most of the people would be short of money as often as possible, but it’s totally the opposite: when you are broke all the time, you don’t get any loans. And you would rather not want them. You simply wouldn’t be able to repay them.

Mind your business

The same thing about proper cash management also applies to you as a lender. You must be able to control your assets in real time, knowing exactly how much money you currently have, so you don’t get into troubles your customers deal with. And, of course, you have to choose your clients carefully or otherwise you will end up with many loans that will bring you losses, not profits. It’s also vital to continuously track loans and repayments. The sooner you realise a loan is threatened, the better odds are that you will be able to help your client repay it.

Go mobile

Last but not least, as the world is more and more mobile, you should adopt mobile technologies. Nowadays, a website, which is not mobile friendly, is a fatal mistake. A financial service without an app for portable devices means a less secure experience for users — an app can be paired with a particular device and will use only encrypted connections, offering higher level of security. And a well-designed app can benefit from OS or hardware based features like fingerprint/face authentication, bar/QR code scanning, ID capturing and recognition, and so on, giving users tools that enhance their comfort of use and security.

About Konstantin Rabin

Konstantin has taken part in various projects in the European financial industry for the last 4 years. Currently Konstantin is heading marketing at Kontomatik - a European developer of bank API. In addition to this, Konstantin often publishes articles on finance and technology on key websites.

About Kontomatik

Kontomatik is a provider of Banking APIs. The service supplied by Kontomatik is mostly aimed for banks with competitive products, online lenders that are looking to optimise loan-issuing processes and start-ups that want to build their app around supreme technology. Online credit scoring, instant KYC and contextual financial offers are the key benefits supplied by Kontomatik, yet the main service is the provision of a tool that lets an organisation become a true innovator in the financial industry.

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