Even Staff

2020-10-21

How COVID-19 Has Impacted The Lending Ecosystem Moving Into Q4

The lending ecosystem for personal loans experienced unprecedented disruption in Q2 of 2020, due to the COVID-19 pandemic and ensuing economic impact. In a swift reaction, peer-to-peer loan providers were forced to freeze acquisition efforts, both digitally and directly, as investor demand in the personal loans market came to a halt. 

 

With quarantine measures easing up and lending performance data coming in for Q3, loan providers are taking back to the market with cautious optimism. Outstanding loan performance data, as reported by dv01, signals a 70% recovery (to pre-Covid levels) of loan impairments (i.e., a delinquency or modification of a loan’s original repayment terms). This suggests that a majority of borrowers have been able to pay/manage their outstanding loans and that investors can expect normal returns, which allows lending platforms to unpause and/or expand underwriting criteria. 

 

Loan providers are adopting the following strategies to increase acquisitions during Q4:

 

  • Expanding credit boxes - Providers restricted originations to only the most creditworthy consumers during Q2. Now, providers are using updated underwriting criteria to extend offers to wider audiences outside of the super prime credit box. We expect more density and better offers for near-prime and subprime consumers.
  • Adopting alternative credit models - Despite economic hardship, traditional credit scores have risen as credit cards have been paid down and consumer spending has dropped. The rise in scores, however, does not reflect the crunch on consumer cash flow and ability to repay loans. Providers are leveraging alternative credit models to distinguish cash-strapped consumers from those with liquidity. We expect providers using diverse credit models to perform more aggressively and profitably.
  • Implementing additional verification - Providers are being more thorough in qualifying consumers during the application process, adding steps like employment verification to wider audiences. We expect an increase in a consumer’s time to fund as proving income or employment verification can add additional time from the original application to the disbursement of funds.
  • Restaffing operations - Providers with applications and flows that are 100% digital will scale faster. Those who rely on call centers to walk consumers through applications will experience a slower return to market as they rush to hire personnel that were lost to Q2 cutbacks. We expect digital-first providers to gain considerable market share.
  • Consolidating partnership channels by cost effectiveness - Acquisition teams at providers are also smaller, meaning the ability to manage multiple direct partnerships is curtailed. Providers are working to migrate direct relationships to API platforms, which reduces relationship management responsibilities while increasing conversion rates and cutting data costs. 

 

We predict that the prevailing loan providers of Q4 will be digitally-focused, using alternative underwriting to identify previously disenfranchised consumers, while leveraging end-to-end digital experiences like Even over direct partnerships to scale and gain market share. Affiliate partners looking to monetize will see greater success in tailoring their audiences to align with the desired consumer populations of these foremost and optimized loan providers. 

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"... generating some of the highest approval rates and conversion rates among our online acquisition partners. The transparency and focus on data have allowed us to drive consistent growth and success each month. "

"... a streamlined consumer experience, helping millennials with no collateral, budget, or saved money. Even’s impressive matching algorithms simplify the process of finding the best personal loans to meet your needs."

"... a truly modern and easy to use platform for the financial services marketing world. They make it easy to develop consumer friendly, innovative products in a space dominated by legacy platforms."

"... Their wide-reaching network and tech integrations bring in qualified, high-converting leads, and their team has been a pleasure to work with."

"... generating some of the highest approval rates and conversion rates among our online acquisition partners. The transparency and focus on data have allowed us to drive consistent growth and success each month. "

"... a streamlined consumer experience, helping millennials with no collateral, budget, or saved money. Even’s impressive matching algorithms simplify the process of finding the best personal loans to meet your needs."

"... a truly modern and easy to use platform for the financial services marketing world. They make it easy to develop consumer friendly, innovative products in a space dominated by legacy platforms."

"... Their wide-reaching network and tech integrations bring in qualified, high-converting leads, and their team has been a pleasure to work with."

Kyle Taylor
CEO

Awards

Press

Even Ranked Top 50 in the Deloitte Technology Fast 500
DELOITTE
Even Ranked Top 50 in the Deloitte Technology Fast 500
Even is ranked within the Top 50 on the Deloitte Technology Fast 500, a prestigious list that ranks the fastest-growing technology and life sciences companies in North America. To see the full list of winners click the button below. 
A Fintech Conversation With Even Financial and TransUnion
BENZINGA
A Fintech Conversation With Even Financial and TransUnion
Even CEO/Founder Phill Rosen recently sat down for a conversation with our enterprise partner TransUnion’s SVP, Chief Product Officer Hilary Chidi and Benzinga Staff Writer Spencer Israel to discuss the current state of fintech, the impact of COVID, and more...  You can watch the video here: Click Here Click below to read an article about the learnings from the conversation. 
Even has won the Data Innovation Award from the 2020 TearSheet Data Awards
TEARSHEET
Even has won the Data Innovation Award from the 2020 TearSheet Data Awards
On June 8th, 2020, TearSheet announced the winners of the 2020 TearSheet Data Awards, and Even won the Data Innovation Award. They said: “Even is moving the financial services industry from an era of customer acquisition based on mismatched static ads, to one where more personalized offers are matched to consumers in real time.”