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How to use automated payments to delight and retain customers as an alternative finance provider

The last few years has seen a significant rise in the number of institutions offering alternative finance options to businesses and consumers. From merchant cash advance, to crowdfunding and invoice discounting, there are many loan options available today that were not around five years ago. In order to grow, alternative lenders need to think about how they can differentiate, and one of the best ways to do this is by optimizing their payment processes.

Market maturation

The alternative finance space is booming. Latest findings from the Cambridge Centre for Alternative Finance (CCAF) shows an increase in market share by over a third in one year alone (2017) – 68% of which was attributed to business funding. Year prior, 2016, saw an increase of 43% with total share of the lending market rising from £3.2bn to £4.6bn.  Leading the charge by market volume are Peer-To-Peer (P2P) business & consumer loans and property lending – followed by invoice financing, debt-based securities and equity-based crowdfunding. The bulk of alternative finance market volume – 72% – is being raised specifically for start-ups and SMEs.

With so much activity going on in the alternative finance space, players are pushing to increase their share by expanding their product portfolio and improving their services. One of the most effective ways to achieve this is through payment automation. Payment flows are the building blocks of any loan-issuing company. Get it right and not only will you have a business model that can scale, but a differentiated customer experience that will drive customer retention.

How does payment automation work?

In order to achieve the seamless automation of payment processes you need to work with a payment provider that uses APIs. APIs – or Application Programming Interfaces – are sets of software used by developers that allow one system to talk to another. This enables deep integration between business and payment systems resulting in significant benefits.  

Delight and differentiate with automatic payments

Using APIs, payment services providers can enable lenders to delight their customers with a service that is as efficient as it is easy to use. An enhanced service is achieved in the following ways:

  1. Automation of large volumes of pay-outs and pay-ins – reducing manual error and time spent on reconciliation

    Without the need for CSV files and manual reconciliation, lenders can minimize human error whilst maximizing efficiencies. customer GRID Finance has reduced reconciliation processing times to minutes, by using the API to automatically update their systems when a payment is received. “Every minute we save allows us to focus on delivering the best possible experience for our customers” says Senior Operations Manager of GRID Finance, Gary Grimes.

  2. Increased settlement times – same-day payments

    Integrating and automating bank transfers reduces settlement times, meaning customers can have money in their accounts sooner. And where multiple accounts are created with the same provider, transfers will take place instantly, further delighting customers and differentiating from slower services on the market.

  3. Enhanced data richness and access to up-to-the-minute data

    By using API functionality, lenders can pull unique fields and troubleshoot issues in real-time, providing a first-rate customer service. With more data points to work with, customer service reps can easily query client accounts and address issues quickly.’s digital account and API service is enabling alternative lenders to optimize their sterling and euro payment processes. These businesses are seeing improvements in customer satisfaction and operational efficiency ratings in return. Find out more here.