That’s a trick question. There’s no ‘one size fits all’ approach to the ideal borrower or lender – that would be impossible, thanks to the range of careers, life events and financial circ*mstances of different people.
We can certainly identify some common traits that make both borrowers and lenders appealing across the board, but we also need to think about what makes certain borrowers more suited to a particular type of lender, and vice versa.
Here is why the emergence of non-banks and their tailored approach to lending is providing much-needed choice in the borrowing market, and strengthening our industry.
The borrowers that lenders want
When lenders are making a decision whether or not to carry out a loan, there are three key things required by all:
- A borrower who demonstrates both willingness and ability to repay debt
- A borrower who demonstrates sound employment history
- A borrower who can clearly describe what they're looking for.
However, aside from these base features, the industry has evolved to the point where just about any customer can be suited to a lender - it just depends on the lender’s speciality and the borrower’s needs and circ*mstances - and this choice only serves to make the industry stronger.
Qualities of the best lenders
It’s not all about the borrower. Lenders need to ensure they’re ideal for the customer, too.
To begin with, borrowers want to know what they’re getting. Product features (e.g. interest rates, repayment amounts, account types etc.) are vital, but given these things are common amongst all loans, the differentiator for customers can be how easily this information is conveyed. Clarity is essential right from the start, because customers today aren’t naive. The loan process has to be designed so that the right questions can be addressed upfront.
Good lenders take their customers’ situations seriously and lend responsibly – in fact, this is a minimum standard of behaviour. Beyond this, the best lenders ask borrowers what they want, and what means most to them during their lending experience, without assuming things about their circ*mstances.
Key features of great lenders include:
- Support throughout the application process
- Clarity of the ins and outs of each product, and how they can meet the customer’s needs
- Timeliness of response and action
- No surprises along the way – this is paramount when it comes to the lending industry, since it involves large sums of money.
Non-banks create more choice for borrowers
Traditional lenders have always had a reputation for inflexibility, but the emergence of non-bank lenders provides the borrowing market with flexible options. An alternate lender can be very appealing because it looks at applications through a different lens and is able to adapt its practices to fit varied customers.
Alternate lenders also offer more agility with respect to changes in policies, updates to technology and other material things that impact the experience for a customer.
The focus for alternate lenders is on understanding each borrower’s specific situation, rather than a blanket system with rigid criteria. Our approach at Bluestone is targeted at understanding more about the customer’s unique needs, so we can deliver what they want: we work according to how we can best fit their circ*mstances within our credit policy.
