Changing times result in changing industries. With stiff competition among businesses, the new standards for success are being set by customer expectations. Industries from education to lending are learning fast that to stay in business, they must remain highly competitive and in-tune with their customers.
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J.D. Power’s 2020 U.S. Primary Mortgage Servicer Satisfaction Study announced this week that while inquiries from borrowers are rising given the current financial turmoil, the general sentiment regarding borrowing is sour. Customers are frustrated with long wait times on the phone, poor communication, and confusing website layouts. Ultimately, who they choose will be whoever provides them not only the best rates, but the best experience.
The report does, however, note that customers rated their general experiences with the industry higher than they did last year. This includes their overall experience as well as the financial aspects. Quicken Loans came in first among mortgage lenders for the seventh year straight, showing that alternative lenders have a competitive edge even in our current financial landscape.
How else is consumer behavior driving the recovery? As it turns out, though what they’re spending money on may be different, the reasons why have remained the same.
The economic crisis is causing more and more businesses to seek additional funding. Many individuals who are beginning their search still have long-held misconceptions about what makes them a good candidate for a loan. So, what do some of those misconceptions look like?
While traditional bank loans may have strict requirements for applicants, many business owners still believe that their credit score must be perfect to get funding. They may be unaware of other factors affecting their eligibility and terms, like having a solid business plan or showing their ability to pay. Alternative lenders also have their own requirements which may allow more flexibility for applicants. Considering the effects that COVID had on businesses, this is good news to many business owners struggling to keep afloat.
Some business owners who are now looking for funding may be under the misconception that online lenders are not trustworthy. While the former lack of regulation let some lenders set questionable terms, fintech has since matured. Applying for loans online lets borrowers compare terms and apply for multiple types of funding at once.That said, borrowers should still do their homework before agreeing to any lender’s terms.
Is your business doing enough to educate borrowers on alternative funding? And how can you predict how the market for your services will look? There are a few indicators that you can still rely on.
With the economic downturn taking a toll on lenders and borrowers alike, more borrowers have turned to non-bank options for their funding. However, on the opposite side of this dilemma sits the federal agencies overseeing the activities of these lenders. The urgency to better regulate the industry has led to legislation that leaves lenders with unanswered questions.
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New York State’s new law affecting lenders, the Small Business Finance Disclosure Law, passed last week in a matter of several days. The law mandates that lenders disclose APR, among other uniform disclosures, on their contracts for commercial financing. It also puts New York’s Department of Financial Services in charge of overseeing these changes and implementing punishments for those found violating the law.
The issue comes down to this: Some of these requirements are simply not possible to fulfill. For instance, the section requiring disclosure of the APR applies even to contracts that are not for loans and have no set time-frame. How do you disclose an APR if there is none involved? Also, in the case of California (who passed a similar law), regulators could not come to an agreement on how to disclose, or even come up with an APR for contracts that do not inherently involve one.
While the law still hasn’t been formally signed by the governor, alternative lenders and MCA providers should consult with a lawyer to make sure they are as compliant as possible with the upcoming regulations. For now, businesses are hoping that the New York Department of Financial Services issues their own formula to calculate APR when the law is enacted.
With the economic landscape being foggy at best, how can you prepare your business for the coming events? Take a look at which factors you can still depend on to plan for the future.
Trade shows, weddings, vacations, family visits. Humans are social animals and it’s in our nature to stay connected. For hundreds of years, we were bound to paper mail at best. Then, air travel changed that all. But now with travel being risky (if even available), how are people adapting?
The first thing you could do is to look at the stock performance of the seven biggest airlines. Companies like Southwest, United, Delta, and Lufthansa saw between a -48% to nearly -79% change in total returns. The evidence is everywhere. Plane capacity is being cut to help keep a safe distance. Staff are getting laid off and even the executives have taken pay cuts.
Interestingly enough, our need to stay connected at a distance hasn’t changed. While air and other long-distance travel aren’t currently in the cards, people are arguably more connected than ever. School and work have come online, and so have our friendships.
While the seven biggest airlines saw their stocks take a nosedive, Zoom, the video conference giant, had its stock shoot higher than those seven companies combined. In May of this year, their market capitalization jumped to $48.8 billion. Especially with its new use in distance education, Zoom’s popularity suits the current social need.
That said, Zoom has seen its fair share of problems. Security issues and uninvited guests joining meetings raised some concerns early on. However Zoom manages these and its future road bumps will decide its future from 2021 on.
Airlines and software companies aren’t the only ones facing an unclear future. See how the lending market is managing the COVID-19 pandemic.
Both businesses and individuals have taken the COVID health emergency as an opportunity to bring their operations online. As the number of remote financial transactions grows, more and more companies are trying to capitalize on this trend.
However, with billions of dollars circulating online, financial software needs to be safer than ever before.
First, how do we tell how secure a company’s software is? There are two metrics that measure this. The first is the average time it takes to detect a security breach and the second is the average time it takes to respond to the threat. The first is abbreviated as MTTD (mean time to detect) and the second as MTTR (mean time to respond).
While a trained staff must monitor for potential threats, the majority of these processes are monitored digitally. Programs scan for unusual activity and reduce the MTTD for the software. After, the time saved by automating the detection process can be used so the security team can quickly respond to and eliminate the threat.
Another measure a company can take to protect its app and is to focus on the security of its data. Encrypted communications protect financial information from third-parties and two-step verification can keep users’ account data private. That said, financial companies will need to go above and beyond in order to succeed as a record amount of transactions take place online.
Tech companies will be the ones responsible for their apps’ security, but who is making the paper-to-digital transition happen for their users? Take a look at one example here that is helping lenders get their processes done online.
We’re finally beginning to understand how to care for our physical health in the pandemic. Wear your mask, keep a safe distance from other people, avoid crowded and poorly ventilated spaces. Simple enough, right? But what about the health of your finances? Just like your own well-being, there are simple measures you can take to protect your wallet’s as well.
First, a financial checkup: Do you know how much you spend every week? Making accurate judgements about your financial health is impossible without knowing where your money is going. If you don’t already, start to take note of how much goes to food, housing, and other expenses as part of your weekly budget. If you are new to budgeting, there are apps that can link to your bank account and help you track your expenses.
No matter where you are financially, be sure to save something for your future. Even $100 can put a buffer between you and financial uncertainty. Though the future is always unpredictable, remember that your retirement savings account allows you to save more money over time than a standard savings account.
These are fairly basic steps, but fully investing in your bank account’s preventative care can ensure you have the resources for your own physical health. The list continues here with this article from Finance Monthly.