PYMNTS | 01.28.15

Will Lending’s Future Be Untethered From Banks?


The problem with a financial crisis is that the climb out has been particularly arduous for consumers and retailers. Even though spending and wages have recovered (albeit slowly and at a lesser rate than many would like) spending continues to frustrate. Consumers may be returning to work, earning more money and are even paying less at the pump, but big increases in consumption seem to be a thing of the past. The result is customers who pay bills on time more often but not avid consumers ready to light retail on fire.

Among the many factors contributing, is the simple fact that for many the credit crunch that followed the credit crisis is still alive, well and cutting off access to financing for scores of low- and middle-income consumers, which in turn lowers their economic activity.

“Banks are dealing with so much new regulation. To be specific, BASEL II and BASEL III, determines how much risk weighted capital or how much equity they have to put up against loan portfolios – which makes it hard to lend to consumers generally, but also to lend to consumers that fall outside of the traditional underwriting box,” Insikt founder and CEO James Gutierrez told PYMNTS in a recent interview.

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