The impact of innovative technologies on the financial services industry has been nothing short of transformative.
As we delve into the realm of lending innovation, Eddie Oistacher, the CEO of Peach Finance provides valuable insights on the topic.
With a wealth of experience, Eddie has made appreciable impact in the lending sector. He led the product team that built Affirm’s loan management, servicing and compliance software from the ground up.
At that time, there was no lending technology platform with the power to adapt to evolving technology, markets, regulations and consumer preferences. Eddie founded Peach to solve this problem, creating the first platform designed to power the lenders shaping our financial future—regardless of industry, scale or asset class.
The innovator will shed light on how traditional banking operations have been impacted by innovative lending technology and the pivotal role that Peach Finance has played in this remarkable transformation.
As we embark on this insightful conversation with Eddie Oistacher, we gain a glimpse into the transformative power of lending technology and the exciting potential it holds for the future of financial services.
TE: The impact of innovative technologies on the financial services industry has been huge. In your experience, how are traditional banking operations impacted by innovative lending technology, and what role has Peach Finance played in this transformation?
EO: Historically, lending innovation has taken place only very gradually because of outdated technology. Even today, most financial institutions’ core systems are decades old. These systems were built to support a finite number of asset classes, which explains why it takes years for most banks to be able to launch new products like BNPL.
Fintechs are often nimbler, but their ability to innovate can be limited, too.
Until recently, there were no API-first servicing platforms available, and so fintechs that wanted to innovate had to build their own platform in-house. These purpose-built systems are usually inflexible—because they’re built to support one specific use case. This approach can work well for a while, but it eventually limits fintechs’ ability to scale and to roll out new products.
Peach was founded to solve these problems, and to revolutionize lenders’ ability to innovate and to quickly launch new lending products. Peach is an API-first lending technology platform that gives lenders an extremely high degree of flexibility and configurability.
We enable lenders to offer virtually any type of loan—from BNPL to credit cards to merchant cash advances—and to configure their lending programs in unique and innovative ways. Our Adaptive Core has over 200 configuration variables to define loan product behavior, and features industry-first capabilities like Loan Replay and Self-Service Portfolio Migration.
For financial institutions, modern lending technology platforms like Peach lower the technological barrier to modernization, so banks can begin to catch up to their fintech counterparts. For fintechs, Peach lowers the technological barrier to entry into lending, enabling innovative ideas to come to market with less friction and a smaller upfront investment of resources.
TE: Thinking beyond the configurability of lending programs, what are some of the latest innovations on the servicing side specifically? How can lenders ensure optimal repayment rates?
EO: It’s a really good question, because credit losses—and the human effort it takes to prevent them—are huge pain points for the lenders we speak with. Every lender is seeking to maximize repayment rates while minimizing the amount of human interaction needed to do so.
Thankfully, modern servicing platforms, including Peach, are reaping the low-hanging fruit that’s been left by legacy servicing tech. This can take a couple different forms.
First, robust and frictionless borrower self-service is key. The only thing better than automating a lender’s collection efforts is for borrowers to self-cure. Lenders should offer borrowers not only a friendly repayment experience, but also the ability to access flexible repayment options without needing to contact customer service.
Every lender can customize this in the way that makes most sense for them. For example, some lenders may want to give borrowers the ability to move their due dates to better align with when they get paid, while others may want to give delinquent borrowers the freedom to implement a modified repayment plan.
Second, a tight integration between loan management and collections systems gives lenders access to automated collections campaigns, robust loan modification tools, temporary payment plans, automatically created collections cases, pre-integrated communications tools and templates, cases and workflows, compliance monitoring, and more.
Collections campaigns are one area where AI is particularly relevant, because lenders can train machine-learning models on real-world data to get better and better at collecting with minimal human effort. It’s also crucial to empower agents with powerful loan modification tools that can truly help customers experiencing hardship. Very often, inflexible technology is the only thing preventing agents from being able to solve borrower pain points and retain valuable customers who are just going through a rough patch.
TE: Are there any specific strategies or technologies put in place by Peach to ensure compliance with regulatory requirements in the lending process?
EO: Our Compliance Guard offering helps lenders stay compliant with the complex patchwork of federal and state regulations in the U.S. Compliance Guard is broken into two parts. First, we scan for borrower status changes that have compliance ramifications, like military status, reassigned phone numbers and bankruptcy.
Second, our Compliance Guard Rules module scans outbound communications based on a predefined—yet fully customizable—set of rules to ensure compliance with regulations. Lending compliance is obviously quite complex, but many regulatory enforcements actually have more to do with the inflexibility of legacy technology than with lenders’ willingness or desire to comply.
For instance, regulations that empower borrowers to retroactively request an interest rate reduction are difficult or impossible for most lenders to implement properly.
TE: What steps does Peach take to stay up to date with changing regulatory landscapes and adapt its lending platform accordingly?
EO: For us, it’s simply a matter of staying on top of regulations as they evolve, and then coding these updates into our platform. The most challenging part of this process for most servicing platforms isn’t keeping up with new regulations, but rather enabling the functionality in their platform that’s required for compliance with those regulations.
There are all kinds of compliance rules that stretch and even break the functionality of both legacy and modern servicing platforms.
A simple example that I previously alluded to is the U.S. SCRA requirement that lenders cap interest rates at 6% for active-duty military members upon request.
The challenge is that this request can be made retroactively, and very few servicing platforms are able to handle retroactive changes to the accounting ledger, especially when they affect historical daily interest accrual and interest-principal splits for payments. Lenders end up resorting to manual workarounds that are both resource-intensive and, in many cases, noncompliant.
Due to the inherent complexity of servicing technology, the only way to ensure lenders have the functionality they need to stay compliant is to build a servicing platform from day one with a tremendous amount of configurability built in. It’s almost impossible to bolt on configurability after the fact. That’s why we’ve placed so much emphasis on our platform’s microservices architecture, and, more specifically, our Adaptive Core.
TE: Looking ahead, what do you see as the future of lending technology, and how does Peach plan to stay at the forefront of innovation in the industry?
EO: The future of lending technology is a world in which lenders can quickly launch and easily modify lending programs of any asset class—including novel constructs. For decades there has always been a laundry list of reasons “why not” for lenders trying to implement outside-the-box ideas.
But because modern technology now enables us to build a lending platform that’s completely configurable, and that can power lending constructs we’ve never seen before, I expect we will see a wave of innovative lending products that are beneficial to both borrowers and lenders. We’re moving toward a world in which lenders’ ambitions are limited only by their imagination, capital and regulations—not by the rigidity of their technology stack.
At Peach, we believe we’ve built the most flexible and future-proof servicing platform in the market, and we’re very excited about our role in powering tomorrow’s innovative lending products.
Conclusion
It has become clear that modern lending technology holds immense potential for driving lending innovation. Traditional banking operations are being revolutionized, and Peach Finance has played a vital role in this transformation.
By providing an API-first lending technology platform with unparalleled flexibility and configurability, Peach Finance empowers lenders to quickly launch new lending products and compete with fintech counterparts.
Looking ahead, the future of lending technology promises an environment where lenders can easily launch and modify lending programs, leading to a wave of innovative and beneficial lending products. With its focus on flexibility and future-proofing, Peach Finance is well-positioned to be at the forefront of powering tomorrow’s lending innovation.
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