The future of loan servicing technology
In this Q&A with Crowdfund Insider, Peach CEO Eddie Oistacher takes a look into the future of loan servicing. Here's an excerpt from the article.
Q: We often hear of “financial institutions vs. fintechs,” as if this is a battle with a binary outcome. Is this an accurate assessment within the lending space?
A: Not at all — in fact, nothing could be further from the truth. Once upon a time, fintechs may have been perceived as a threat to the existence of traditional financial institutions (FIs), but that perception has radically changed. This is for two reasons.
First, the fintech that had hoped to replace FIs wholesale have been largely unsuccessful. That’s not to say they haven’t built great businesses. But instead of replacing FIs, these fintechs have found a niche — doing certain things like point-of-sale financing, underwriting, and onboarding better than their FI counterparts. These more focused solutions don’t pose an existential threat to FIs.
Secondly, a very large portion of today’s fintechs in the lending space aim not to replace FIs, but to serve them. For every fintech building machine learning-based underwriting for their own benefit, there’s another fintech offering a similar technology to bolster the existing offerings of FIs. And in large part, FIs have embraced this symbiosis, acknowledging that they need help in certain areas in order to stay competitive.
So, in this way, we’re settling into a very healthy balance between fintechs — with their specialized product offerings and nimble approach to financial services innovation — and FIs — with their comprehensive product offerings, offline presence and established customer bases. It’s certainly true to say that the emergence of fintechs has made FIs better, that FIs’ resilience has compelled fintechs to be better, and that customers have benefited a great deal from...