5 reasons lenders need adaptive infrastructure

August 2, 2022

Fintechs, who have been this decade’s primary instigators of lending innovation, might seem poised to be the primary and perennial beneficiaries of continued technological progress. But things aren’t so straightforward. Many of today’s fintechs are falling into the same trap established lenders did long ago: They’re launching modern lending programs on rigid infrastructure designed for the present, not the future. We’ve seen the repercussions of this choice over the past decade, as established lenders hobbled by rigid infrastructure 
ceded market share to fintechs, who have gobbled up 
about half of all personal loan originations.

It’s become expected for lending cores to bake in assumptions about loan configurations, ancillary software systems and regulatory requirements—these assumptions make cores cheaper and faster to build. But when markets shift and novel lending constructs emerge, established lenders find themselves handcuffed to outdated infrastructure, sometimes requiring years of retrofitting just to launch new lending programs.

To compound the problem, the rate of change in lending—as in all of technology—is accelerating. And so it will take even less time for today’s modern-yet-rigid lenders to be eclipsed by the next crop of nimble upstarts with newer and better ideas. Rigid lenders will once again lose market share in the struggle to keep pace with a rapidly changing landscape.

But lenders have control over their fate, and can prioritize investments in adaptive infrastructure that enables them to continually test and iterate, even at scale, and continually launch new lending programs with speed and flexibility.

For those lenders who fail to make these investments, there will be five major headwinds as lending innovation and market evolution continue their forward march.


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