#1 Banks are Ceding the Mortgage Battleground 

Since the private lenders are well-developed for mortgage nowadays, they are already making more mortgage loans than the traditional bank now. With the help of the technology, the speed of approving the conforming loan has been shortened. Experts assert that the trend will continue to accelerate in the 2020s. Banks are already ceding the battleground, and their share of the mortgage market will continue to dwindle in the 2020s. It is also believed that similar changes are coming to other forms of consumer debt.

 

#2 Innovative Loan Products Based on the Stress of Consumers  

Some lenders develop some new loan products to address the demand of the market, referring to medical loans and student loans. Student loans have become the second-biggest source of household debt after mortgages. And the medical bills are still the first reason of bankruptcy for American. It is believed that we'll see some new options develop in the 2020s. We're already seeing new players offering income-share agreements as an alternative to traditional student loans. These two areas are ripe for disruption, and the technological tools are there to make new solutions possible.

 

#3 No More Payday Loans

The traditional payday loan is incredibly expensive for borrowers and they are increasingly aware of how dangerous these products can be. But payday loans won't be regulated out of existence. They'll be outcompeted by innovative products that meet the same needs at a much lower cost to the borrower.

Historically, it's been tough to make money off a low-dollar loan because it costs so much to originate and underwrite any type of loan. It only made sense to underwrite a bigger-dollar-value loan since costs were relatively fixed. But today, there's so much data available from payroll services, employers and other sources that these loans can easily be automated, making low-cost low-dollar loans a real possibility. Keep an eye on paycheck startups, which are proving that payroll advances don't have to be predatory.

 

#4 Lending by Robot 

With the advancement of technological development, it is certain that more and more technology such as AI would be involved in lending. The AI technology is being commonly used in different aspects such as self-driving vehicle. It shows that the technology is mature to apply in different perspective to make our life more convenient. There would be an analogous kind of development in AI for lending. Technological tools will assist lenders incrementally in doing their jobs better, such as assisting in the loan monitoring and no-show loan application. For example, An AI tool could watch macroeconomic trends and monitor individual borrowers' finances, alerting a lender when a loan might be headed for trouble. That crucial advance warning can enable lenders to reach out and work out a proactive plan with the business. 

 

#5 The Nonbank Competitors 

Regard as a new type of competitor, but who would think that they would involve in the lending market? We've already seen Apple launching its own credit card, but it is just one of them. All of these financial products are outgrowths of the companies' core businesses, designed to help the companies' customers accomplish their goals. They would be the competitors who we don’t even aware of before. 

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By Lenderse Research and Editorial Team