LendIt Shows Growing Innovation in Auto, Community Banks and Beyond

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Industry Insiders’ Conversations at LendIt USA 2018 Highlight Technology, Innovation Strides

At LendIt Fintech USA 2018 this year in San Francisco, one of my favorite conferences, in one of my favorite cities, the fintech community came together to regroup and revisit why innovation on one side and technology on the other, will provide the bookends to continued fintech success.

Innovation Nation

As I mentioned at the start of the year, digital lending continues to grow and mature rapidly as it garners greater acceptance from consumers, traditional financial services companies and banks. Last year, with less than half of banks offering any digital loan origination and many in limited channels, those of us watching the banking industry understand the long-term total available market for these players is probably far beyond the original estimate.

At LendIt, I sat through many interesting discussions on white labelling platforms, bank partnerships, and how to better leverage data. These topics will be around for some time. One topic that I found particularly interesting was on the current state of tech in auto finance, led by Magdalena Yesil of DriveInformed; Georgine Muntz of defi SOLUTIONS; Lukas Wickart of AutoGravity; and Tim Russi of Ally Financial. The panel was moderated by Mac Dorris of Dechert LLP. To see the level of involvement from so many leaders across different sectors of the auto finance space, at a fintech-centric event, really shows you where the industry is heading.

Additionally, the buzz continues around some of the biggest names in traditional, brick-and-mortar banking have realized that fintech operations might very well make their traditional operations extinct. At minimum, they are nailing down a consumer mobile strategy and updating infrastructures by yesterday. As result, smaller community banks and credit unions have a steep climb ahead. Those who have already implemented a digital strategy are well ahead of the pack in this sector. They’re going to be the ones to beat.

Tighter Technology

To accelerate innovation, most community banks, and even the bigger ones, must pay close attention to technology. Cybersecurity, legal compliance for the secondary market and transactional user-friendliness are paramount in ensuring speed-to-market at all stages of the deal, and, finally, market dominance. As memories of the first, most newsworthy security lapses start to fade, it’s as if many of us are waiting for the other shoe to drop when it comes to fintech data breaches and the co-occurring loss of consumer confidence they cause.

At LendIt, I observed industry insiders devote serious attention and scholarship to this issue. I also observed how on-point those of us in the technology business are while discussing our safeguards against the storm-clouds that seemed to have gathered and then dissipated a bit. If I were to summarize what I didn’t so much learn as confirm for myself: We’ve done due diligence and we’re ahead of the curve in providing cybersecurity and confidence in fintech.

Another positive outcome on the technology front continues to be uptake by consumers for new kinds of loans and loan structures online. From point-of-sale home equity to student loans to classic personal loans, mobile platforms are getting faster and easier to use; back-office credit checks and underwriting processes are more streamlined; and investors for the secondary market are taking notice of it all. As technologies become more robust, bank and fintech partnerships burgeon, creating synergistic opportunities beyond just lending.

As they begin to collaborate in new ways, for example, as a virtual storefront for payments; or in wealth management services; it will further enable innovation to create more opportunities for fintech as it comes into its own.

As a digital lender, do you have the kind of “future certainty” we’ve just discussed? If not, you might want to check out our white paper, Building Future Certainty in Asset Management for Marketplace Lenders. For an example of fintech chops in this area, download our case study about how our partnership with Funding Circle delivered competitive advantage in the form of a fully digital transformation solution. And, as always, I’d love to hear from you at jjacobs@eoriginal.com.

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