Lending Is No Longer a Value-Add for Fintechs, It’s a Must-Have – John Downie, CEO of SteadyPay

I believe that the payments sector is an industry that has the most potential to realise from the evolution of technology. As fintechs, we have the unique ability to embed financial services where they are most needed among a customer base that numbers billions rather than millions. As part of that discussion, we need to look at lending; once reserved as a value-add for particular customers, it has become an integral part of what it means to be a fintech, and has the potential to completely redefine the financial journey for customers. According to industry analysis by Allied Research, the global fintech lending industry is projected to soar to $4.9 trillion by 2030.

The digital era demands a holistic approach to financial services. We now need to integrate offerings that respond to changing user needs and seamlessly weave these into the fabric of digital payments. This shift isn’t anything new – it mirrors successful strategies employed by other sectors, such as e-commerce platforms, who integrate payment gateways and insurance services, enhancing user experiences and driving customer loyalty.

Lending as a competitive edge

In the crowded, low-margin, and high-volume digital payments space, the integration of lending services provides a distinct competitive advantage. Industry giants like Stripe, Adyen, and Shopify exemplify this trend by offering revenue-based finance and term-lending facilities. Stripe, the leading digital payments company, offers revenue-based financing and term-lending facilities to its customers, boosting margins and increasing customer stickiness.

Adyen, another major player in the digital payments industry, has also expanded into lending services, embedding lending into its payment platform to create a more fluid and integrated financial ecosystem for its users, enhancing trust, loyalty, and the richness of the financial experience. Shopify, the e-commerce platform, also recently updated Shopify Capital, its revenue-based financing program that provides business loans to its merchants, helping its customers access the capital they need to grow their businesses while also increasing customer loyalty and transaction volumes on the Shopify platform.

Lending and financial inclusion

As fintechs, we also have a duty to tackle the barriers to financial inclusion. Traditional incumbents have little motivation to serve the underserved in financial services. Part of what we champion at Steadypay is opening doors for those left behind by traditional banking systems. Whether it’s digital wallets or micro-lending platforms, lending can create financial bridges to those who need it most.

This inclusion extends beyond individuals too – SMEs are prime candidates for fintech lending solutions. Access to lending can help SMEs drive growth and sustainability. However, challenges such as regulatory complexities, underwriting processes, and the gap between loan demand and supply must be navigated with innovation and agility. Overcoming these obstacles requires a concerted effort to address barriers SMEs face in traditional lending, ensuring that the lending opportunity is open to all and successfully underwritten.

The cost of not extending a helping hand

The cost of not extending a helping hand is not just a missed ethical mark; it’s a significant business oversight. Failing to provide accessible financial services, particularly in lending, to underrepresented or economically marginalised groups not only deepens existing societal inequalities but also means you may miss critical market expansion opportunities. These communities, frequently overlooked by traditional banking institutions, represent untapped markets where fintechs can cultivate trust and loyalty, essential for long-term customer relationships.

Then, of course, there is the question of customer retention. Modern consumers expect innovative, inclusive financial products that cater directly to their needs. If you fail to offer comprehensive lending solutions you may find yourself at a competitive disadvantage, as customers will gravitate towards providers that offer a fuller suite of services tailored to their financial situations.

To stay competitive, it’s essential for you to embrace lending as a core part of your fintech offering, not just an add-on. This shift is crucial for reaching new markets and responding to the evolving expectations of today’s consumers. Now is the time for you to step up and integrate comprehensive lending solutions into your platform, ensuring you remain a key player in the financial landscape of tomorrow.