Digital credit events - outlook 2022
We identified, analyzed and then evaluated over 375 digital credit events from more than 45 countries across five continents in 2021. Based on these events and findings, we have derived the following five theses for the credit year 2022:
- End customers want their needs fulfilled online, regardless of complexity. That means the need for automated and digitalized solutions in mortgage and corporate lending continues to grow.
- Artificial intelligence, big data and machine learning lead to optimized real-time lending, i.e. there is an increased need for accelerated early warning systems and review processes as well as customer-centric communication channels.
- Additional use cases in blockchain-based DeFi lending – greater market penetration among unbanked population expected.
- Credit business remains the anchor product for a positioning at the customer interface. We expect to see a strong expansion in the area of the platform economy and extensions of Buy Now, Pay Later solutions.
- Green lending continues to gain ground, i.e. the increasing ESG value culture combined with regulatory requirements leads banks to adopt clear sustainability strategies for lending.
"Developments from the consumer credit area have carried over to other forms of credit in 2021. We expect this development to continue and accelerate further in 2022."
Marcel Kolbecher, Manager, zeb
Digital credit events can be categorized into six groups: Buy Now, Pay Later; end-to-end online credit process; data-driven lending; lending platforms & ecosystems; green lending and decentralized finance lending.
Buy Now, Pay Later (BNPL): online providers, such as Affirm, AfterPay or Scalapay, tend to offer their customers a zero-interest, zero-cost installment loan on their shopping carts. Not least because of the ongoing Covid pandemic and changing customer behavior, the importance of this topic has increased significantly.
E2E online credit process: the focus is on full digitization of the end-to-end (E2E) processes for application, processing and disbursement along the customer journey with a maximum degree of automation. Omnichannel management and frictionless transitions remain crucial: digital personal advice for some credit products (esp. construction financing and corporate loans) with state-of-the-art technical module support for automation and digitization, e.g. document management system, digital account analysis in retail and corporate lending.
Data-driven lending: here, the focus is on the efficient use of all available data along the customer journey. The use of automated scoring or decision models enables granular credit scoring. In addition, data is used to make predictions regarding expected borrowings (predictive analytics).
Lending platforms & ecosystems: the focus is on establishing platforms & ecosystems in the context of consumer, mortgage and corporate loans. The current focus is on digital lending platforms, differentiated into comparison sites, distribution platforms and credit marketplaces.
"Based on artificial intelligence, we will see various specific use cases at banks & fintech companies in the area of optimized real-time lending in 2022."
Bastian Walkhoff, Senior Manager, zeb
Green lending: new market standards and changing regulatory frameworks in the area of sustainability are important factors that have an impact on the lending process. Based on sustainability principles, green lending steers the financial flows from investors into sustainable projects.
Decentralized finance lending: due to the interaction of market players via a distributed system of decentralized applications or apps, DeFi lending no longer requires a central party as an intermediary, which can simplify the lending process overall.
We look forward to an exciting credit year 2022 and are always happy to share further insights with you.