How to compete with alternative online lenders
Abstract: Technology and willingness to use innovative techniques in the underwriting process have allowed online lenders to grab a small but growing percentage of the market for loans to small and medium-size entities (SMEs). Yet traditional banks have several advantages over online lenders. This article offers some guidance to help traditional lenders compete in a virtual marketplace, suggesting that lenders should, among other things, use data to develop predictive models and consider digitizing their application process. A sidebar lists some reasons borrowers are attracted to online lenders.