Lending & Brokerage Insight to Understand Evolving Needs

Sergio Oliveri |
 05/08/23 |
4 min read

lending and brokerage

The financial services industry is rapidly evolving due to technological advancements and changing consumer preferences. These shifts impact lending and brokerage processes like never before. What’s a brokerage firm to do? Well, our Impact of Technology on Financial Services 2023: Lending and Brokerage report examines the evolving needs shaping the sector.

We share a few key takeaways below, but the report highlights so much more, including:

  • Key companies in the sector
  • The strategies each company employs to drive change and carve out a niche
  • And the corresponding sentiment each generates in the market

It also shares predictions for where the space is headed to inform strategic planning in the coming months. Check out the preview below!

The rise of innovative lending solutions and trading apps has dramatically altered the way people access and manage credit, at the same time increasing concerns over data privacy and security. To stay competitive, financial companies must monitor market trends, analyze consumer sentiment, and understand user preferences and attitudes.

There are definitely a bevy of opportunities and challenges for companies in the financial services industry, and we have three to highlight below.

Key Takeaway #1: Online lending, what’s not to like?

Online lending has become increasingly popular in recent years as a quick and easy alternative to traditional lending. Lenders use advanced technology and data analytics to evaluate creditworthiness and decide on various loans for individuals and businesses. And it’s turning to alternative data sources, including social media and online transaction histories, to accurately assess creditworthiness.

But this practice has raised concerns about data privacy and fairness. Despite its popularity, online lending has faced criticism because of these issues, as well as high-interest rates and hidden fees.

While it’s a convenient way to access loans, some borrowers feel exploited by the high costs associated with online lending. This has thrown up red flags in the world of consumer sentiment.

The top priorities for consumers when considering online lenders are customer service (30), convenience (21), and fair fees/costs (19), while respecting borrowers’ privacy is also critical (-14). Fraud is a significant concern for consumers, with a negative sentiment score of -59.

ranking the top priorities for consumers around online lending

Key Takeaway #2: Peer-to-peer lending disruptions

P2P lending allows people to lend money to borrowers at lower interest rates through online platforms and without going through a bank. It has emerged as a significant disruptive force in the lending industry. Correspondingly, the media conversation around this has fluctuated considerably over recent years:

graph showing p2p lending conversation on social vs news

P2P platforms offer both centralized and decentralized models to borrowers and lenders. In a centralized model, borrowers and lenders interact through a single platform that acts as an intermediary. This is typically more regulated.

Decentralized P2P lending models, on the other hand, allow borrowers and lenders to interact directly without needing an intermediary.

While a decentralized model is more flexible with lower fees and less stringent underwriting criteria, there is a higher level of consumer net sentiment toward centralized systems, most likely due to security and privacy concerns.

green yellow red showing centralized vs decentralized sentiment

Some steps have been taken to alleviate ongoing concerns about the lack of regulatory oversight, but not all countries are fully regulated yet. Despite potential risks, consumers express optimism about the opportunities presented by P2P lending and generally hold a positive sentiment toward it. It’s definitely something to watch!

Key Takeaway #3: Tracking apps for easy-peasy investing

Trading apps have made it easy for people to access financial markets and manage their investments. They typically offer a variety of investment tools and features, like real-time market data, charting and analysis tools, and news and research resources, to help users make informed decisions.

One of the most significant changes in the trading app industry is the shift to commission-free trading, which has driven positive consumer sentiment.

According to net sentiment analysis, consumers generally hold favorable views towards trading apps, and millennials especially are talking about these and what you can do with them. This an unsurprising trend, given that younger generations are more likely to be early adopters of new technology and are generally more comfortable with digital platforms for investing and trading.

red green circle and age demographics

And then there are cryptocurrency trading apps that have grown in popularity as well. They give users convenient platforms on which to buy, sell and store currencies using their mobile phones with real-time market data, news updates, price alerts, and more.

Transparency, security, privacy, and accessibility are all crucial factors for trading apps to gain customer trust and loyalty in a rapidly evolving digital scenario. And by offering educational support, advanced analytics, and social trading capabilities, these platforms show they are here to stay. They’re trying to fully understand customer preferences and needs, build credibility and enhance customer experience.

Undoubtedly, as more investors look to the crypto market, the demand for these apps will increase, as will gamification—but we need to leave some mystery for you to explore in the report, so we’ll encourage you to download our Impact of Technology on Financial Services 2023: Lending and Brokerage report to learn more!

It reveals the intricacies of the dynamic and ever-changing landscape, particularly regarding online and peer-to-peer lending and online investment trading platforms and consumers’ response to each.

And reach out for a demo if you’d like to see this insight as it’s captured in real-time!

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