What are the biggest ways the digital economy has transformed lending over the past 12 months?
Lending has shifted from a largely static brick and mortar experience with a customer and an institution to one where a dynamic interaction exists between the two in a seamless way that finally values the borrowers’ time and needs.
The amount of data available on borrowers has enabled technology companies like OnDeck to transform how lending works, turning it into a more effortless and real-time experience, putting the borrower more in control than ever. They have a myriad of options when it comes to products, payment methods, funding sources and overall experience and access. Mobile interactions have increased more rapidly than online growth and this trend will continue.
We see an increasing trend towards supporting customers across all devices and contactless transactions. Security is a real concern in this space and leveraging native mobile features such as cameras to send docs, using biometrics to sign in, and sending messages to instantly and securely communicate changes bridge the online and offline space.
You may have seen, for example, that we launched a mobile app earlier this year to give our customers – who are rarely running their businesses from their desks or computers – on-the-go access to their accounts. We are also using real-time insights of customer transactions and behavior to help interact with them in a more tailored by
What are the biggest mantras, or techniques, that you have brought to OnDeck from your time working at so many leading FinTech institutions?
When I came to OnDeck, my primary areas of focus were mobile, security and services. I feel strongly that interactions with a customer need to be mobile-based, use native features and integrate with products they are already familiar with for a seamless and simple experience.
Focusing on mobile allows you to ensure your services are centralized, scalable and well understood, and that is exactly the stance we have taken. Our systems are designed to be simple to help accelerate the innovation our small business owners deserve.
Security is an obvious concern for anyone in this space and creating a primary focus on securing end points, data, systems, and making security a shared goal with training was crucial.
How much does Lending.com’s entry into the market potentially disrupt the industry? How does an alternative financing giant such as OnDeck continue to command a leading market share, as the competition increases at such an incredible rate?
As our industry continues to evolve and new players enter the market, we remain focused on one thing: becoming a business’ first choice for financing. OnDeck has delivered more than $3 billion across 700 different industries since 2007.
As the scale player in small business lending, with eight years of lending and learning and a platform that cannot be easily replicated, we offer the widest range of term loans and lines of credit in the online lending industry, and will continue innovating our products and platform to meet the financing needs a business faces throughout its lifecycle.
How do alternative finance companies continue to entice SME owners? Is it simply a case of reducing rates?
Not at all, because business owners consider multiple elements in addition to rates, including total loan cost, payment structure and ease of process. Another important component for them is search cost – according to a study by the Federal Reserve Bank of New York, business owners spend on average 33 hours searching and applying for credit.
That’s an enormous amount of time for a business owner to spend away from running their businesses. While traditional bank loans may offer low rates, their process is very time-consuming and businesses often don’t get approved – and if they do they’re often required to collateralize major assets like their home.
It’s important to also understand the actual rates being offered to fully understand the total cost of the loan. For example, we believe that shorter-term loans are better quoted on a cost-per-dollar basis because annualized rates on a short-term loan are very duration sensitive and may confuse a borrower as to the actual total interest cost, especially if they are being compared to an annualized rate on a longer-term loan which often has a higher total cost.
At the end of the day, business owners need a lender they can trust who can help them make the right credit decisions, deliver the right product for their financing needs, at the right time for their business and with a process that respects their time and their individual needs.
With OnDeck introducing longer-term loans, will the company begin quoting APRs?
At OnDeck, we are committed to transparency in pricing, and our pricing structure allows customers to more easily understand the total cost of their loans and calculate their ROI: shorter term loans are quoted in fixed simple interest, and longer term loans are quoted in annual interest.
For our long term loans, we separate the one-time origination fee from the interest rate to create a clearer picture for our customers of how their costs break down between interest and fees.
How can OnDeck better win the trust of clients, given its association with some dubious loan dealers in the recent past?
Earlier this year, OnDeck implemented a rigorous recertification process for all existing and new partners within our broker channel. This, combined with our commitment to providing the most dedicated service in the industry, ensures every business owner who comes to OnDeck has a positive and worthwhile experience.
How can a loans company like yourself best scale up? Is local still a vital part of the business?
We are a technology company and as such have gained scale in the market by using our credit platform and OnDeck Score technology to deliver the best financing solutions to small business. In an industry like this, scale matters and that means having the capability to add new features and services on a simple platform is important. Think about it – open source only works when it is simple. And that is exactly the type of platform aspirations we are holding sacred.
As we continue evolving our platform, we have a strong focus on building an experience that delights our customers and creates brand affinity. We’re doing this in a variety of ways, including through strategic partnerships and technology integrations with companies like Intuit and Angie’s List as well as sponsorships of national brands that have local footprints like SCORE and Minor League Baseball.
Which technologies do you think will best serve OnDeck, and loan firms, in the coming future?
The best technologies that will serve OnDeck and other companies in this space are those that enable great engineers to use their talent to create great products quickly and ensure security and scale for the long term. You don’t want to rebuild your systems every year because you didn’t consider how you would add a new product, country or language.
At the same time, if your focus is on building great lending products that resonate with the customer, you want to spend your time focusing on great interactions and products – not building a message queue for transactions when an off-the-shelf solution is available. Systems that leverage open-source technology and API integrations create opportunity for innovation both internally and with partners and are clear advantages for lending companies.
It’s also not just about the technology, but how companies use it that will be the difference between short-term presence in a market and longer-term ability to continue to delight new and existing customers. Strive for simple platforms with building block capabilities that can scale easily with security, testing and deployment automation.
Secondarily, but no less important, is creating a common data and intelligence from your interaction with the customer. You want quick insights and the ability to pivot to stay connected with your customer.