As we rebound from a tough year in originations, the outlook is optimistic as lending and the rest of the economy are gaining traction. Projections suggest that not only will lending activity return to normal, but, in some areas, far exceed pre-COVID levels.
Trending in Lending: The Outlook beyond 2021
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Spending and Lending on the Rise
Oxford Economics projects that U.S. consumer spending growth will rise by 9.6% in 2021 and 5.1% in 2022, reflecting the pent-up demand. The 2021 projection would be the highest since 1946.
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Highest projection since 1946
in 2020
47%
Number of executives said they believe demand for new loans will improve over the next 12 months
in 2021
68%
IntraFi Network Bank Executive Business Outlook Survey Report, 2020
TransUnion projects that 10 million Americans will originate home equity lines of credit (HELOCs) between 2018 and 2022. A projection that is twice what originated in the previous five-year period – a rich opportunity waiting to be tapped.
HELOC: A rich opportunity
2012-2016
2018-2022
$5.5M
$10M
Less than 1 in 4 consumers
currently have a HELOC loan
Obtained HELOC from original lender
7 in 10 consumers
Less than 1 in 4 homeowners currently have home equity credit of some kind. Research shows 7 out of 10 who currently have HELOCs obtained them from the lender where they obtained their first mortgage, suggesting that many prospects may be consumers that your institution knows already.
Cocheo, Steve. "Tips to Help Financial Marketers Grab More Home Equity Lending Business." The Financial Brand.
Industry research projects that fintech lending originations will thrive through 2024, far surpassing 2019’s pre-COVID levels.
Banks competing with fintech lenders
Student lenders
Personal loan fintech lenders
SMB fintech lenders
152%
$32.8b
Student lenders are forecast to rise 152% to $32.8 billion.
51%
$47.9b
Loan amounts originated by personal loan fintech lenders are projected to rise by 51%, to $47.9 billion in originations annually.
16.1%
$15.8b
Small- and medium-sized business fintech lenders are expected to rise by 16.1% to $15.8 billion.
Cocheo, Steve. "Fintech Lenders Will Come Roaring Back As Economy Re-Opens." The Financial Brand, April 1, 2021.
Cocheo, Steve. "Fintech Lenders Will Come Roaring Back As Economy Re-Opens." The Financial Brand, April 1, 2021.
Cocheo, Steve. "Fintech Lenders Will Come Roaring Back As Economy Re-Opens." The Financial Brand, April 1, 2021.
The J.D. Power study 2021 U.S. Consumer Lending Satisfaction revealed that from 2020 to 2021 overall satisfaction in personal loans and HELOCs rose for traditional lenders and fell for fintech lenders.
Based on the survey, consumers favor Traditional Lenders in “Offerings and Terms” and “Loan Management” categories, but Fintechs enjoy an advantage in the “Application and Approval” stage, where their tech platforms performed well.
Where traditional lenders prevail
Application and Approval:
Offerings and Terms:
Loan Management:
Fintech lenders
Traditional lenders
This come as no surprise when you consider some of the outdated processes for pulling and analyzing IRS tax data to assess creditworthiness of an applicant:
20% of income verifications come back failed
IRS Form 4506 is a one-time use request
form that is manual, meaning proper ID Verification can take days to a week or more.
Each request is limited to a specific filing timeframe, making it expensive and time consuming to make multiple requests.
No summary analytics to provide a clear and accurate picture of the applicant's future risk of default.
Click the icons to learn more.
Automation grows increasingly important as consumers demand speed and accuracy. Automate your institution’s access to IRS tax records and data for smarter, faster lending decisions. Add Ethos™ Tax Intelligence to your lending strategy.
Automate application and approval with direct access to IRS data
Faster data access
Real-time SSN/EIN verification, electric consent, and automated report
Receive all IRS Transcripts, including tax returns, wages and income, 1099, W2, K-1, etc. from a single request
Complete tax records
Automated technologies allow more data to be assessed by expert algorithms for deeper insights
Expert algorithms
Easy to assess risk levels with the exclusive Tax ID® Score and dashboard summaries with details on IRS Liens, levies and seizures
Risk mitigation
Reveal additional revenue opportunities with a view into official wage and income
Identify revenue opportunities
Hover over the icons to learn more.
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Banks competing with fintech lenders
HELOC: A rich opportunity
Spending is on the rise
Where traditional lenders prevail
Automate application and approval with direct access to IRS data
Customer preference:
Traditional lenders
Loan Management:
Traditional lenders
Offerings and Terms:
Fintech lenders
Application and Approval: