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The World’s Leading Lenders Have Embraced Digital Payments: Have You?

May 13, 2022

In the world of digitization, things are moving at a breakneck speed. As a result, the lending industry has dumped the hard costs of paper check payment processes and shifted towards digitization and digital payments instead.

As Loan Management Software provider TurnKey Lender points out, everything from loan origination and servicing to collections, reporting, and payments can now be automated. With the rise in global B2B non-cash transactions expected to hit 200 billion transactions by 2025, there is no time like the present to make the move toward digital payments.

Lenders need not worry; today’s technology lets you do it all; in fact, the entire loan process just got safer, faster, and much more efficient. Here we break out the main reasons lenders have moved digital and why the industry has turned to embedded payments to save on costs and deliver the customer experience.

Global digitization and digital payments

“ So far, no organization we know of has put it all together. Not in Finance. Not yet. But you can see it coming.”

Deloitte

Across the various aspects of business, digitalization is the reason for sweeping and large-scale transformations.

Global digitization by the numbers:
The lending market will reach USD 83,460 billion by 2025. Growing to a compound annual growth rate of over 53%.

Digital Payments Lending Market


Further to this, an additional equally important statistic to take into consideration is the growing market of nonbank lenders. According to a recent
study by McKinsey & Company, the sharp increase in “new kinds of lenders” in the market continues to rise year over year. For example, in 2017, nonbank lenders accounted for roughly about half of the total originations. This figure expanded to 60% in 2019 and sits over 70% today. Much of this growth results from enterprises with a strong digital focus and a differentiated value proposition.

Three big reasons to go digital

Digitalization has the potential to save up to 90% on operational expenses.

The opportunities for value capture and creation in the lending industry are unparalleled by moving over to digitalization. As McKinsey Partner Gerald Chappell states, digitization of the lending process brings several powerful benefits, including the following three main ones.

  1. Considerable gains in customer experience – Technological advances allow companies to meet the consumer where they are at.
  2. The ability to make better quality decisions – Easier access to information and data analytics provides businesses with the ability to make real-time strategic plans.
  3. The huge cost savings – Going digital delivers significant cost reductions for operational expenses.

Across all sectors, business leaders look to adopt and implement digitalization for their organizations and industry ecosystems. Automation provides a new lever for managing costs. For instance, enterprises can reevaluate how workforce time is organized, introducing processes that no longer require human intervention, allowing workforce hours to be shifted to more strategic tasks.

A digitized lending industry

While the term end-to-end digital lending has been more buzzword than action over the last few years, there is no doubt it has arrived. With the increased time saved in-house and customer satisfaction ticking upwards, the industry trend is moving towards digital lending. TurnKey Lender’s CEO of Americas, Marc Pickren, recently walked us through his thoughts on how best to maximize a return of investment on digital lending technology.

If you have the time to watch the 30 min clip, it will prove worthwhile.

https://www.youtube.com/watch?v=C-sEUHxKU1Q
Otherwise, we sum it up below:

Application – The application of the digital product is the first step of the process. It’s either made in-house or contracted out. It will look and feel like the company’s brand and be the interface that the customer deals with.

AI (Artificial Intelligence) – Another buzzword. AI assists digital lenders with image recognition, machine learning and natural language processing (NLP). It can elevate companies to another level.

Collection and Payouts –   Payment methods and payment choice. New payment technology means collection and payout are frictionless.  Provide users with a positive experience every step of the way, from onboarding to final payment transfers. Meanwhile, lenders maximize the savings by eliminating credit card processing fees. Save the 3%, our  EFT payment processing is a low-cost alternative for cheques and typically 80-90% less expensive than credit card fees, not to mention,  half the administrative work.

“Lenders are looking for ways to stay ahead of the curve. Everything is moving at a faster pace, including customer expectations. It has become vital for lenders to disburse funds almost instantaneously. That has become the most important thing for lenders, real-time funding. Whoever can fund faster will win.”

Hamed Arbabi, CEO and Founder of VoPay.

Digital payments

There are no two ways about it; customers expect a fast, easy, and efficient payment experience. In today’s lending industry, embedded payments can mean the difference between a satisfied customer and one who abandons the process in favour of one that is easier to navigate. Recent research confirms what many of us already know; young people are more likely to abandon ship and move on as soon as a challenge presents.

Payment checkout abandonment rate

Consumers demand choice, simplicity and security. For this reason, we are seeing significant growth in the embedded payments space.

Embedded payments deliver a positive user experience and help convert a visitor into a repeat customer.

While the traditional form of lending still prevails in many parts of the world, the recognized benefits of moving towards digital payments have paved the way. More and more lenders seek cutting-edge technology, prioritizing speed, convenience, and customer experience.

Embedded payments deliver:

  • Faster onboarding and disbursements
  • Increased visibility and simplified reconciliation
  • Fewer payment delays
  • Enhanced borrower experience
  • Automation of complex processes and reduced manual interferences

VoPay’s industry-leading payment solutions are built for lenders

Reduce the complexity of providing local payment options

VoPay is a leading payment technology software specifically designed for the lending industry. Lenders and Loan Management Software companies prefer our developer-friendly API payment technology. Powered by Open Banking payment technology, VoPay delivers the payment tools lenders need, including bank account payment technology,  data intelligence and bank account verification helping to eliminate failed payments for lenders and borrowers. Lenders can send and collect mass EFT and real-time payments without building their own infrastructure. 

Request a demo of our platform today!

We are recognized for our contribution to digitizing lenders across Canada, winning the Canadian Lenders Association award Fintech Innovator of the year in 2021 

VoPay is a proud member of Smarter.Loans and CFLA.

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