# Flexibility: the key to success in the current lending market Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-09-19 Category: FINANCE Category URL: https://financedigest.com/category/finance Meta Title: Adapting to the Volatile Lending Market: Key Differentiator Meta Description: Discover how advanced flexibility through cloud technology can help lenders navigate the ever-changing lending landscape in 2022. URL: https://financedigest.com/flexibility-the-key-to-success-in-the-current-lending-markethtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/istock-1371922303-1736815196001-compressed.jpg) _![](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/134-1736815196020-compressed.jpg)_ _By **Jerry Mulle**, Ohpen’s UK MD,_ 2022 has been a rough and unpredictable year in the lending space. Interest rates have shot up countless times and are projected to keep rising. Meanwhile, key rules, such as the affordability test, have been scrapped. However, such pressured [markets do inevitably lead to transformation and adaptation for the players](https://www.financedigest.com/foot-suction-unit-market-focusing-on-current-trends-leading-with-top-key-players.html "Foot Suction Unit Market Focusing on Current Trends, Leading with Top Key Players ") within them – crucial times where it simply becomes sink or swim. In light of this, the [key differentiating factor that we are observing between successful](https://www.financedigest.com/battling-uncertainty-is-the-key-to-property-investment-success.html "Battling uncertainty is the key to property investment success") and unsuccessful lenders is advanced flexibility. The ability to [upgrade technology fast through the gradual implementation of cloud operating systems](https://www.financedigest.com/sweden-to-upgrade-berzelius-supercomputer-with-nvidia-ai-systems.html "Sweden to upgrade Berzelius supercomputer with Nvidia AI systems") has been absolutely crucial in being able to achieve this. In particular, there are three key areas in which increased flexibility can assist lenders in addressing the [volatility of the current market](https://www.financedigest.com/italys-a2a-trims-green-investment-plan-citing-economy-volatile-markets.html "Italy’s A2A trims green investment plan citing economy, volatile markets"). **Responding to repricing** As we’ve just set out, a multitude of factors are materialising in the form of jumping [interest rates](https://www.financedigest.com/ecb-raises-interest-rates-again-cuts-bank-subsidies.html "ECB raises interest rates again, cuts bank subsidies"). In the [lending world](https://www.financedigest.com/post-crash-banking-regulation-is-transforming-the-world-of-corporate-lending-for-the-better.html "Post-crash banking regulation is transforming the world of corporate lending – for the better"), when it comes to the subsequent repricing, it scarcely gets more turbulent than this. But a lack of flexibility makes it worse, and ultimately, a lagging and clunky approach to coping with the quick repricing required can [cause further headaches](https://www.financedigest.com/five-common-it-headaches-caused-by-long-term-working-from-home.html "Five common IT headaches caused by long-term working from home "). These operational issues and slow [processes are caused by sticking to legacy systems](https://www.financedigest.com/solvency-ii-pushing-existing-systems-and-processes-harder-is-not-enough-for-compliance.html "Solvency II: pushing existing systems and processes harder is not enough for compliance") and fundamentally makes it more challenging for lenders to offer rates to brokers, and their customers, that are reflective of a fast-changing market. However, institutions that employ cloud-native technologies have the power to [react to market](https://www.financedigest.com/market-stress-indicators-react-sharply-after-u-s-bank-failures.html "Market stress indicators react sharply after U.S. bank failures") changes as they occur, rather than days or weeks later. And days and weeks matter in this climate. When utilising agile, cloud-based systems, it means that lenders aren’t slowed down by the withdrawing and repricing process, but can change promptly with the times, offering products and [rates that more accurately correlate to the market](https://www.financedigest.com/no-santa-rally-for-markets-as-central-banks-dampen-peak-rate-hopes.html "No Santa rally for markets as central banks dampen peak rate hopes"). **Taking on affordability** And [interest rates](https://www.financedigest.com/interest-rate-and-recession-fears-knock-stocks-and-oil.html "Interest rate and recession fears knock stocks and oil") aren’t the only thing that is changing. So are more entrenched processes, such as the affordability test, as mentioned. With more onus now placed on the [lender to assess the affordability of potential borrowers](https://www.financedigest.com/almost-a-third-of-consumers-see-default-as-the-responsibility-of-lenders-not-the-borrower.html "Almost a third of consumers see default as the responsibility of lenders – not the borrower"), it becomes what could seem like yet another task to add to a long list. This means implementing and sustaining a model that works best for them in order to assess affordability, something that is potentially harder than ever when we consider the changing world of work and incomes, and the current [cost-of-living crisis](https://www.financedigest.com/british-shoppers-defy-cost-of-living-crisis-at-christmas.html "British shoppers defy cost-of-living crisis at Christmas"). Operating in an incumbent legacy-laden institution with systems that were designed [decades ago makes assessing affordability in a contemporary way nearly](https://www.financedigest.com/analysis-consumer-boom-nearly-over-as-central-europe-heads-into-decade-of-peril.html "Analysis-Consumer boom nearly over as Central Europe heads into “decade of peril”") impossible. It’s now vital for lenders to ensure that their [data collection and analysis capabilities are robust](https://www.financedigest.com/dollar-buoyant-as-robust-u-s-data-keep-fed-hawks-in-control.html "Dollar buoyant as robust U.S. data keep Fed hawks in control") enough to assess potential future customers, but also so that these processes can form the basis of a reliable assessment model that can be used time and time again. Again, this is another area whereby only cloud-based [technology can provide](https://www.financedigest.com/is-your-technology-provider-holding-you-back.html "Is your technology provider holding you back?") the technical ability to data capture and analyse, and then ultimately develop a reusable model. **Upping the** [pace of innovation](https://www.financedigest.com/the-leadless-pacing-system-market-to-fathom-the-depth-of-innovation.html "The Leadless Pacing System Market To Fathom The Depth Of Innovation") Going beyond the specific issues of repricing and affordability testing, the [market is forcing](https://www.financedigest.com/rapid-action-force-regarding-innovations-to-drive-the-medical-devices-market.html "Rapid Action Force regarding Innovations to drive the Medical Devices Market") lenders to adapt more broadly. For example, a prolonged heatwave has shone a harsher light on the [climate crisis](https://www.financedigest.com/global-energy-crisis-russia-invasion-eclipse-biden-climate-goals.html "Global energy crisis, Russia invasion eclipse Biden climate goals"), and businesses and consumers alike are looking at how they can more seriously address the damage already made to the planet. The mortgage space is no different, with lenders developing ‘green mortgages’, for example. In fact, research from Leeds Building Society shows that [93% of brokers](https://www.financialreporter.co.uk/93-of-brokers-expect-demand-for-green-mortgages-to-grow.html) expect demand for green mortgages to grow. However, implementing new products like these can be difficult to achieve when operating on [legacy technology and building new offerings on age-old systems](https://www.financedigest.com/retailers-weighed-down-by-their-own-legacy-systems-survey-reveals.html "Retailers Weighed Down by their own Legacy Systems, survey reveals") is messy, disruptive and hinders fast-paced innovation. As such, lenders need to take advantage of the [benefits offered by transitioning to cloud](https://www.financedigest.com/can-finance-reap-the-benefits-of-the-cloud-without-compromise.html "Can finance reap the benefits of the cloud without compromise?") operating systems. Migrating back-end operations to the [cloud grants these entities the ability to scale and evolve their offerings  throughout every step](https://www.financedigest.com/3-steps-to-combat-cloud-outages.html "3 Steps to Combat Cloud Outages") of the cycle, from servicing to origination, and everything in between. All in all, lenders find themselves at different stages with their current tech stacks, but this is no reason to [hold back](https://www.financedigest.com/fear-of-failure-holding-back-british-entrepreneurs-new-research-finds.html "Fear Of Failure Holding Back British Entrepreneurs, New Research Finds"). A complete technology overhaul isn’t required, not least is it disruptive, but it’s [costly to business](https://www.financedigest.com/esg-prepared-why-ignoring-esg-is-a-costly-business.html "ESG Prepared: Why Ignoring ESG is a Costly Business"). Instead, cloud platforms allow for incremental transformation, ensuring that daily operations are not disrupted, but that they can innovate and afford themselves the [flexibility in many different areas to meet current challenges](https://www.financedigest.com/insights-on-the-flexible-packaging-global-market-to-2027-key-driving-factors-and-challenges.html "Insights on the Flexible Packaging Global Market to 2027 – Key Driving Factors and Challenges"), and those incoming. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---