A global pandemic and an economic recession have left many consumers looking for ways to better secure their fiscal futures to weather the storm. For many of these consumers, debt consolidation and emergency relief funds are a clear priority.
With millions of Americans losing employment in 2020 due to COVID-19 reductions, banks are taking notice. Many of these financial institutions are aiming to assist their consumers during these uncertain times in unprecedented ways.
A recent study by Bankrate examined responses from more than 160,000 Americans seeking prequalification on a personal loan in the first quarter of 2020. What they found that was driving these loan applications was compelling.
38% of those surveyed stated that debt consolidation was the intended use-of-funds for their personal loan application, 15 percentage points more than the next most popular reason, emergency expenses, at 23%. With many consumers taking advantage of low interest rates to consolidate their debt, banks are starting to take notice while attempting to fend off FinTech challengers like LendingClub, Upgrade, SoFi, and Marcus. These FinTech leaders provide digital-first consumer experiences and command a large portion of the market.
So, how will these banks fill this consumer demand in a time of such great need? More importantly, what is the impact on the consumer? Banks must respond to the demand from consumers to pay off their existing debts directly through one unsecured installment loan — all in an omnichannel digital environment.