Despite the significant disruption caused by Covid-19, traditional lenders have outperformed fintechs in consumer lending, a JD Power study has revealed.
The consumer insights and analytics firm surveyed 2,467 personal loan customers to measure their satisfaction based on three factors — offerings and terms, loan management, and application and approval.
Although many fintechs gained traction during the pandemic — particularly those that supported small businesses accessing Paycheck Protection Program loans — JD Power found that traditional lenders received higher satisfaction ratings.
American Express and Discover ranked highest in a tie among personal loan lenders in overall customer satisfaction, with Citi ranking third.
A combination of stimulus funding, record high mortgage refinance volume, and an uncertain economic outlook had an adverse effect on the consumer loan market, the analytics firm said.
“The consumer lending landscape shifted dramatically over the past year and consumers need to understand that this shift will be permanent,” said Jim Houston, managing director of consumer lending and automotive finance intelligence at JD Power.
“To attract and retain customers, personal lenders need to deliver easy-to-use technology and adapt communication channels to market demands.”
Key findings from the study highlighted overall industry trust improved, despite the pandemic forcing lenders to change their service delivery models.
Fintech lenders saw their overall satisfaction scores fall by five points on a 1,000-point scale.
In contrast, traditional bank and credit card-branded lenders saw their overall customer satisfaction scores rise four points this year.
This increase in satisfaction was attributed to traditional lenders outperforming their emerging rivals in areas such as putting the customer first, providing guidance, aligning with consumers’ social views, and providing more reliable technology.
Lenders were forced to rely on digital means during the pandemic, causing rapid and, on occasion, radical change.