Responding to loan requests with a simple “yes” or “no” is an outdated way of doing business in this digital world where relationships are more important than ever.

By FINSYNC

The lending landscape has changed drastically over the past decade, and banks that don’t adjust to the changes sweeping the industry may be in for some real challenges. Traditional bank loans are no longer the only option for small businesses in America, as the growth of online lending has given business owners a new avenue to secure financing.

The Rise of Online Lending

Back in 2015, the SBA reported, “A new generation of online lenders is surfacing with the promise of an efficient, streamlined application process with quick turnaround times and higher approval rates.”

The report went on to note that borrowers spend a mere 30 to 60 minutes on online loan applications, which can be funded in a matter of days, whereas the traditional loan application process takes an average of 26 hours and may not be processed for weeks or even months.

More recently, a 2018 report on small business lending in the U.S. detailed how a handful of the largest small business lending platforms are filling a financing gap for small business owners.

NDP Analytics, an economic research firm based in Washington, D.C., reported that five online lending platforms alone funded $10 billion in online loans from 2015 to 2017, which generated $37.7 billion in gross output, creating 358,911 jobs and $12.6 billion in U.S. wages.

Needless to say, we’re far from business as usual in the banking world when it comes to small business lending.


The Opportunity of Online Data

Access to online financial data streamlines both the loan application and approval processes, benefitting both lenders and borrowers alike. However, there are many more benefits to unlock in this newly charted territory.

What if access to a business’s financial data could open up a dialogue between lender and borrower in a way that elevated the interaction from a mere transaction to an ongoing relationship?

Along with the ease and access that online banking offers, small businesses in America are looking for more out of their lender than a simple “approved” or “rejected” response.

Beyond “Yes” or “No”

As we all know, a solid relationship is based on an ongoing dialogue rather than a communication dead end. What’s true in life is most certainly the case in banking. For far too long, the conversation between lenders and their clients has ended with, “No, I cannot help you with financing.”

What if the conversation — and relationship — could continue, even when a bank opts not to finance the loan? The payoff, of course, is a long-term relationship and all of the future business that comes along with it.

Banks and credit unions in FINSYNC’s Lending Network are given three options every time they receive a loan application to review:

  • First, the member bank can assess the financial data provided by FINSYNC and opt to approve the loan for their own balance sheet.

  • If the bank determines that the business isn’t quite ready for traditional bank financing, the lender can seamlessly share the application with another member lender that’s prepared to approve and fund the loan on behalf of the bank.
  • If the bank determines that the business is not ready for financing at the present time, they can show the business how to get where they need to be. As part of FINSYNC’s cash flow management solution, the bank can communicate milestones and actionable steps that the applicant can take to qualify for financing in the future.

FINSYNC Makes it Easy to Evolve

FINSYNC makes it simple for banks and credit unions to graduate from the old binary way of banking. Participating in FINSYNC’s lending network helps banks connect with their customers online to strengthen these all-important relationships and ultimately fund more loans.

Currently, both traditional and alternative lenders are joining FINSYNC’s lending network at a rate of one new lender per day. This number is rising rapidly as more banks begin to see the growth opportunities that the new lending landscape offers.

We’ve made it as easy as possible to get started. FINSYNC uses established data connections to banks, so there’s no need for IT investment or laborious integration. In fact, we’ve gotten some lenders enrolled and up and running in as little as an hour.

The future of banking is about relationships backed by the power of online data that can benefit both lenders and customers alike.