A growing number of borrowers are skipping traditional bank loans and opting instead for merchant lending at the point of sale.
Although merchant lending is another indicator that branch business is declining, it doesn’t have to mean lost opportunity for financial institutions. Banks and credit unions can stay competitive by meeting borrowers where they are, providing instant consumer loans and promotional offers across a variety of markets and verticals.
The Current State of Consumer Lending
In a recent MeridianLink® webinar, Andrew Turner, CEO of LoanStar Technologies, made these observations about the current state of consumer lending and increased demand for easy access to credit at merchant locations:
- In-branch originations are down year over year.
- Consumer habits are shifting toward borrowing when and where they make large purchases.
- Traditional loan products have contracted and are commoditized.
- Competition for borrowers is at an all-time high because borrower loyalty is at an all-time low.
- Big banks and fintech firms are outspending credit unions in any field of membership.
LoanStar, a MeridianLink Marketplace Partner, is addressing these challenges through a co-op of lenders. They provide everything financial institutions need to successfully deploy or streamline merchant lending programs, including an integration with the MeridianLink Consumer platform, recommended pricing, and templates for compliance and legal requirements.
By eliminating the need for face-to-face interactions at a branch location, LoanStar empowers lenders to drive opportunities they might otherwise miss when high credit borrowers take advantage of offers at the point of sale.
Creating Value for Lenders, Merchants, & Borrowers
For lenders, the LoanStar co-op extends opportunities on a regional or national basis, allowing banks and credit unions to be embedded at the point of sale and to present different loan products through one platform based on the vertical and asset class of individual merchants.
This enables lenders to build a diverse portfolio by offering specialty loans in market verticals such as home improvement, renewable energy, elective medical, recreational vehicle, pool and spa, home lawn and garden, powersports, and more. It also provides a source of higher yielding consumer loans and new borrowers—especially younger borrowers.
The benefits for merchants and borrowers are the same: the ability to secure instant credit decisions at the point of sale for loan products from a reputable financial institution. They also want well-priced offers that can be closed quickly.
Getting Started With Merchant Lending
Many consumers who are unbanked or underbanked simply don’t want to visit a branch location. One way financial institutions can win their business is by providing consumer loan offers when, where, and on the device they want.
Watch this on-demand webinar—New Opportunities for Diversified Consumer Lending—to learn about LoanStar’s five-step process for diversifying your portfolio by using a loan origination system (LOS) such as MeridianLink Consumer or MeridianLink DecisionLender to offer merchant lending at the point of sale.