FinTech Lenders are Adapting, Protecting Customers During COVID-19 Crisis

There has been a lot of coverage detailing the various ways that many industries are responding to the COVID-19 pandemic sweeping its way across the globe. The millions working in the financial services industry are not free from disruptions, and now more than ever we understand that our customers are facing greater economic insecurity. Consumers already deemed high-credit risk deserve access to credit in the good times as well as the bad.

Today, Americans with non-prime credit scores are most at risk of losing access to credit. Companies that primarily offer loan products are reducing originations, in part, because of tighter credit standards and stricter income verification requirements put in place by lenders

Read more by OLA CEO Mary Jackson on Morning Consult.

COVID-19 Impact on Consumer Lending

Lenders are experiencing decreased loan volume. Loan demand has declined by 67% since February 23, 2020 as consumers avoid taking on new debt. In addition, lenders have tightened their credit underwriting models in light of the current economic environment. Approval rates for new customers have declined from 26% in Feb. to 15% in May.

OLA Statement on COVID-19 Crisis

As countries, companies, and consumers continue reacting to the ongoing COVID-19 pandemic, Online Lenders Alliance CEO Mary Jackson issued the following statement:

"The Online Lenders Alliance (OLA) continues to monitor the spread of COVID-19 and urge its members to work with consumers by providing them with flexibility, allowing them to defer or skip payments, and delaying sending delinquency notices or negative credit reports to credit bureaus. We've also recommended extending payment terms, restructuring existing loans, or easing terms for new loans when possible.

With many Americans facing stress or strained income due to work reductions or illness, it is important that they have options when seeking legal, regulated, and safe forms of credit. Many of these consumers are already excluded from many financial services offerings due to non-prime credit scores. Efforts to cap interest rates on short-term, small-dollar credit options would only eliminate financial products at a time when these options are more important than ever."

Read more here.

2020 Alternative Financial Services Lending Trends Report

Experian's Clarity Services, which specializes in alternative financial services (AFS) data solutions, has released its 2020 Alternative Financial Services Lending Trends Report. Among the report's key findings are that the online small-dollar installment market has continued to grow, with larger loan amounts driving an increase in funded dollar volume. In 2019, the industry continued to trend toward longer repayment terms and larger online installment loan amounts.

In addition, a higher percentage of online installment credit applications from the AFS market came from consumers with higher traditional credit scores. Though online installment loan performance declined in 2018, it returned to normal last year.

Next year's report will contain important information and unique insights given the COVID-19 pandemic. Using this year's report as a baseline, we'll get to look back and see how this disruption has impacted the AFS industry and the consumers who access its services.

Download the full report here.

Consumer Stories

The following are real and recent consumer reviews from TrustPilot. These reviews highlight just how important fintech products are for so many Americans.

Juan, April 2

Yesterday, I applied for a loan, and I am most pleasantly surprised with how easy and hassle free the process was! I was promptly approved with a very reasonable APR. The funds were deposited into my account this morning and I have already paid off some bills and consolidated some debt. Most definitely a great service!

Trey, April 10

During a time of uncertainty caused by the coronavirus, it's very comforting to know that they were there. With all the scams and spam loan options online I gave up until I found them. I'm glad I applied because I found a loan that fits my need. I would recommend them to anyone looking for a loan.

Trudy, April 17

I am truly very happy with my experience! They gave me a loan when most banks refused to help. Then after some time after the original loan, I needed to refinance and once again they gave me the help I needed! Thank you for being here for me and I would recommend your services to everyone!

Source:  https://www.trustpilot.com/

OLA Consumer Hotline

The OLA Consumer Hotline is a resource for consumers of online small dollar loan products. We encourage all OLA members to add the Hotline number to their websites, along with the OLA Seal. The Hotline provides a place for consumers to report fraudulent calls and to speak to live operators who can assist in navigating the online lending landscape.

Here is a look at the year to date calls made to the Hotline. OLA shares this information with the FTC to deter fraudulent online activity.

OLA members harness technology to deliver safe, convenient, private and reliable credit options, offering financial inclusion and empowerment.

703.567.0327

contact@oladc.org