2020 radically changed the life of the planet, significantly influenced the economy and politics of many countries.

The consequences of the pandemic and quarantine, on the one hand, worsened people’s lives, and on the other, significantly accelerated the development of protective medical programs.

The consequences caused a boom in modern IT technologies for business development including the lending industry itself. 

Despite the worsening epidemic situation in November, the situation in the global commodity and financial markets remained favorable given the continued development of the lending industry.

Positive news about the start of vaccination against COVID-19 affected the rise in prices in world markets and the interest of foreign investors in profitable but at the same time risky assets including the lending industry. 

The balanced monetary policy of the Central Bank and the latest actions on the placement of bonds for $ 600 million has also helped to return the attention of foreign investors who are supporters of the continuation and influence of the lending industry.

The exchange rate of the national currency which strengthened for the first time in the last three months also reacted positively to these events.

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Regulatory Requirements and Legislative Innovations Expected in the Future Lending Industry

The financiers paid a lot of attention to the forecasts and prospects of the lending industry in the new year. Questions are topical and important for banks.

The discussion showed that all bankers understand what will change in regulation in the near future. Thus, they are already preparing for innovations today.

The main regulatory changes will affect capital requirements, the introduction of liquidity and conservation buffers, new requirements for non-core assets, and the establishment of increased risk weights for consumer unsecured loans that companies like MoneyZap offer to its customers.

The requirements of the decree regarding the automation of financial monitoring operations in banks will be fully implemented. This will affect the further development of the lending industry.

A bill introduced by banks requires the attention of banks which provides for a change in legislation in terms of corporate governance in banks and significantly affects the regulation of other functioning of the banking system issues in the lending industry.

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According to banks and financial institutions, the newborn project requires revision and coordination with the banking community.

Now there is a discussion between banking associations on the introduction of possible changes and additions.

Key Lending Industry Development Trends

Financial experts believe that the previous “shocks” in the financial sector were not so significant. The main changes took place at the level of interaction with clients.

This refers to the emergence of financial applications and the evolution of user interfaces.

The specialists noted that by the time of interaction with the client, there is a whole value chain of activities that has changed little over the past few years.

Changes in this chain have been taking place for some time. However, in 2021 companies will come to grips with this issue.

Struggle for Small and Medium Business Influencing the Lending Industry

In 2020, the industry has seen three important events in terms of the value chain:

  • Against the backdrop of the COVID-19 pandemic, small banks and credit unions were able to provide loans to representatives of the SME segment that larger lenders did not want to work with. We are talking about the US Federal Reserve’s Payroll Protection Program under which companies receive soft loans with low-interest rates.
  • A partnership between Goldman Sachs and Amazon enabled the latter to provide up to $ 1 million in credit lines to select sellers.
  • Stripe Treasury Product Announcement (a Banking as a Service API). With its help, Stripe customers can integrate financial services into their business which has become a continuation of the development of the lending industry.

All these events took place “in the middle” of the value chain while its beginning is still ignored.

Small businesses spend more than $ 500 billion each year on accounting, billing, and accepting payments from third-party providers according to recruiting agency Cornerstone.

Many of these businesses would not mind receiving accounting services for the continued development of the lending industry directly from banks or finance companies that already serve their business.

Therefore, next year we should expect development in the field of cloud accounting and systems of interaction with POS providers.

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Modernization of Banking Systems Using Financial Technologies

Many leaders of banks and credit unions believe that the highest barrier to digital transformation is their underlying system for influencing the lending industry.

At the same time, few of them will risk transferring the organization to a new system. It is too painful, slow, and expensive.

Therefore, banks are looking for workarounds to support the development of the lending industry.

Over the past few years, several players have appeared on the market who provide financial institutions with assistance in implementing this strategy.

The coming year is expected to see strong demand for three types of fintech service providers:

  • Basic integration service providers. These companies provide banks with integration platforms that allow them to better interact with fintech companies, and potentially change the main system that influences the lending industry.
  • Payment centers. These are companies that allow banks to efficiently route payments as well as use optimal payment mechanisms which has a positive effect on the lending industry.
  • Digital cores. These are companies that allow financial institutions to build their own digital banks.

New Fintech Service Platforms

Currently, there is an imbalance in supply and demand affecting the lending industry as a whole. Many fintech companies want to cooperate with banks.

But only a few banks can cooperate with fintech companies since the infrastructure of most lenders is very outdated.

More and more companies will appear on the financial market offering banks solutions for interacting with fintech players and clients.

There are already several examples of the successful implementation of this concept.

The development of IT technologies will get a second wind to innovate in the further development of the lending industry next year.

New opportunities that banks and customers have successfully used in 2020 (when expanding digital channels) have revealed a significant number of technical issues that contribute to the normalized work of financial companies and online institutions.

For the further growth of remote services and ensuring reliable protection of customers from fraudsters, banks provide significant financial investments in the development of the lending industry and the introduction of modern software systems.