As time passes and we are further removed from the debt crisis, the extent of its damage becomes clearer.
One sector that was hit hard was student debt. Since 2009, the amount Americans owe on education loans has surged. The more graduates are consumed with paying those back, the more muted their contributions to the economy will be.
And graduates are supposed to be the ones who grow the economy, as they put their higher incomes to work buying cars, homes and consumer goods.
The crisis did not just bring problems, it also created opportunities. Dissatisfaction with established financial players who played such a big role in the crisis coupled with advances in technology allowed entrepreneurs to take fresh looks at the entire financial delivery system, driven as they were to create a more responsive one.
CreditIQ is one such company. Using technology to aggregate and screen loan offers from across the web, CreditIQ provides instant quotes on mortgages, auto, student and personal loans from dozens of lenders including CommonBond, SoFi and Avant.
Yes, the new technology brings opportunity, but finding and comparing those opportunities can be difficult, CreditIQ CEO Bill Liatsis said. Individual lender underwriting systems can be radically different, as platform founders take their own experiences and combine them with unique data sets to produce products catering to very specific subsets of people.
If you fit this criteria, great. If you do not, you may be rejected, or quoted an uninspiring rate. Not knowing there are other options, perhaps you take the first one.
Your first few interactions with your bank may go famously well, Mr. Liatsis said. You get good service, and, after looking around, the rate you negotiated makes you feel like a Rockefeller.
Sorry to be the one to tell you, but the most likely reason you got that rate was because the bank wanted to get you in the system so they are perfectly positioned when you need mortgages, retirement savings products and other products. That is where you make them real money. It is not unlike a supermarket using cheap milk and Lucky Charms as a hook to get you in the door so you will buy steak.
“Banks survive on their ability to remarket,” Mr. Liatsis said. “They get you in the funnel.”
Since the credibility blow they have taken since the crisis, banks can no longer expect an easy time in steering people to said funnel.
“In 2008 banks trust factor was dealt a heavy blow,” Mr. Liatsis said. “There is no bank loyalty.”
“In fact, several of the 10 lowest ranked companies on the Fortune 500 are big banks.”
Great timing for lean companies who leverage technology to capture market share, but CreditIQ is not relying on those events to differentiate itself, Mr. Liatsis said. They also provide educational tools so customers can do more with the money they have and so they can maximize the effect of their future earning power. These include blog posts and chats with companies like Experian.
Many finance companies struggle to maintain links to customers after the initial transaction but CreditIQ has created a novel solution to that problem, Mr. Liatsis said. They regularly analyze borrower credit reports and send IQ Alerts with offers which lower monthly payments, interest charges and APR.
“It is important for us as a business that as you do better your costs go down,” Mr. Liatsis said.
Expect more innovation and savings as the marketplace lending industry matures, Mr. Liatsis predicts. That is because data generation and analysis in the sector, while making impressive strides over the last decade, is still quite new. There are plenty more relevant sets to identify and correlations to make.
“Instead of narrow data sets, you can pull in so much more data now,” Mr. Liatsis explained. “The data table is turning where in the past a limited amount of data led to higher rates. Now, more and more data integration is becoming a reality.”
“It will produce a more intelligent market over time.”