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How the alternative credit market is beginning to use technology

Apr 13, 2015 Sean Albert

Alternative lending has remained competitive with big banks and financial institutions. Instead of having to comply with complex and often unyielding regulations, consumers can instead use these services.

"Lenders have the ability to do their diligence, see the risk and the interest rates, and make the loans they want to on an a la carte basis," Stuart Ellman, managing partner at RRE Ventures, told TechCrunch.

Alternative lending has boomed - according to a report by Foundation Capital, lending became a trillion-dollar industry in 2014. As TechCrunch reported, the alternative market grew more popular with customers due to its transparency and ease. Lenders are beginning to adapt to the evolving market and technological world by using new programs and software.

Building up since the recession


The source reported that many alternative lenders are finding new ways to improve their methods. For instance, DriverUp broke into the automotive lending market with new technology, allowing investors to contribute online. Dealers can now use a streamlined digital credit process.

The financial sector has struggled since the Great Recession, and the effects haven't really lessened significantly. Investors are worried about what is being done with their money and whether or not they'll face consequences if there's another shift in the economy. Having technology such as DriverUp can help them review their assets and predict what will occur in the future.

Both customers and lenders want transparency and loads of data, according to TechCrunch. New platforms can use data analysis for better insight and streamline corporate processes.

Using technology to keep track
Alternative lenders have begun to use technology to track loans and clients. Technology has helped these companies automate and streamline many processes.

"As soon as you start talking to operations or accounting teams, you realize that the thought of trying to track $100 million worth of $8,000 loans is just terrifying - none of their systems are set up to deal with loans that small," Matt Burton, founder of Orchard, told TechCrunch.

There are particular programs that can help professionals communicate with customers and employees, such as CRM software. CRM software enables staff members to communicate with each other and with clients. Most programs store complex information matched to each customer and employee. Lenders have the capability to look up any information with a few clicks, whether to discover the last time the client paid or how much their loan amount is.