Both 2020 and 2021 were wild rides for borrowers and lenders alike. 

And 2022 is likely to be another year of transformation, innovation, and upheaval across the consumer and business lending landscape. Here are five potential changes to keep an eye out for — and what they mean for the lending landscape.

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1. Governments will regulate BNPL

As more companies become micro-lenders, they will offer products such as point-of-sale financing and buy now, pay later for SMEs. Regulators will monitor how credit products are created and scored by these new providers as access to credit widens. 

Lenders that act in bad faith will be outed. And unethical and predatory players will face fines and sanctions. BNPL may bear the brunt of these regulations, but they’ll also be a warning for the wider industry. 

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2. SME funding will (still) be a pain point

Lenders and non-bank lenders alike continue to broaden their services for under-served borrowers. But SMEs — the engine of national economies across the world — will still struggle to access the credit they need when they need it. 

Countless fintechs have emerged to offer different credit products, such as invoice factoring and financing, equipment financing, and term loans. But SMEs still report frustrations with the application process and rejections based on outdated scoring approaches. 

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3. Borrowers will value more self-service

Digital natives are taking up a greater share of the global population. These borrowers will expect an (almost) fully self-serve experience when seeking credit from a fintech, bank, or non-bank lender. Chatbots and apps have served this need with mixed success so far — but certainly not as well as many consumers would like. 

The lenders that can provide a fast and fair time-to-decision will likely win out over more sluggish competitors. And better self-serve will be a large puzzle piece in that jigsaw.

Discover how to embed credit scoring into your app, site, or product suite. 

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4. We’ll see more embedded lending

Fintech ‘unbundled’ bank products from banks. And now, those same products that have been improved and refined by fintechs will be offered within a wide array of companies from beyond the financial services sector. 

Consumers will be able to access a great range of credit products right at their point of need. That could be car finance as they buy a family car—working capital as they open up an online shop through a website builder. Or invoice financing through a spend management software platform to understand their account receivables in real-time. 

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5. Credit scoring will improve again

And woven through each of the four changes above will be greater use of alternative credit data. As a result, banks, fintechs, and embedded finance users will rely on fast and fair credit scoring to power quick credit decisions, smooth onboarding, and great customer experiences. 

Companies like credolab will be there to support businesses that want to embed credit scoring into their decision-making processes. And through partnership and innovation, credit scoring will improve again for the benefit of both borrowers and lenders. 

Discover how to embed credit scoring into your app, site, or product suite.