Covid-19 has significantly impacted most commercial sectors, including the lending industry. The stringent measures employed by the government, such as social distancing and border closure, affected the livelihood of most employees and employers. One of the most affected businesses in the financial sector was the lending industry.
Lending companies have had to digitize most of their processes to adjust to the current needs of their customers and the government. While traditional face-to-face lending may seem trustworthy, the reality is that most of the operations have taken a different turn, with more and more companies employing the use of eVault to digitize their lending services.
What is the impact of Covid-19 on the lending industry?
The disastrous effects of Covid-19 across the globe necessitated extreme government measures that unfortunately negatively impacted the financial sector. Due to the absence of treatment or vaccine, positive cases rose rapidly. As a result, some countries experienced total lockdown whereby everyone was expected to stay in the house with only people of specific occupations required to work but also under strict measures.
The regulations which citizens needed to adhere to included: Maintaining social distance, avoiding crowded places, and wearing their masks. The government and the World Health Organization perceived these measures as an effective way to prevent the spread of the virus. While this may have helped save many lives, it had a systemic impact on the financial sector, including the lending industry.
The commercial resilience of most businesses has been tested during the COVID era, with most companies looking for loans to keep their ventures running. Most businesses in need of funding prefer not to wait for too long for loan processing. People tend to lean on a side that meets their needs and for this reason, how fast a company adapts to the evolving needs of its customers determines its success or detriment.
Customers no longer appreciate waiting for too long before the company can process their loans. The period between loan application and processing determines whether the business will thrive or not. Poor service is one of the leading causes why companies tend to change their bank providers. For example, traditional SMEs may take up to 5 weeks to establish viability for a loan.
How fast a business can offer loans and loan extensions to its clients is essential to the survival of any lending company. By reducing their time decision, the average margins of a company could rise to 50 percent. The good news is that companies can achieve this through digital lending, which is faster, effective, and more convenient to both the customers and the company.
During the Covid-19 outbreak in part of 2020, companies realized that they didn’t have to work in a traditional office environment. The need to avoid large numbers in one space forced organizations to think out of the box. Most companies had to create a pace where workers would offer their services without reporting to work.
For this reason, digitization became necessary in most commercial sectors. Digital transformations in companies facilitated remote working and allowed consumers to receive services from the comfort of their homes. The digital revolution has not been a walk in the park because companies needed to invest much money into devices and to pay tech gurus.
What is the future for the lending industry?
The year 2020 was challenging for the financial sector as the lending industry was navigating the uncertainty due to the impact of Covid-19. Fast forward to 2021, most companies got the hang of the new norm and approached the whole situation differently. Surprisingly, what seemed like a challenge is now an opportunity for the lending industry.
Businesses have taken a different trajectory, digitizing most of their processes to remain relevant during these times and in the future. Companies should expect more remote workers in the coming years, and for this reason, the housing market is one for lenders to bear in mind.
Lenders need to keep up with the changing times by being more tech-savvy in their operations, and sticking to traditional systems may be a road downfall. Although establishing the critical systems may be costly, it all works together for the business’s success in the long run. Digitalization is the future, and such is evident, especially now that there is growth in lending requests.