This content was published prior to the combination of Dentons Sirote. Learn more about Dentons Sirote. 

Today marks about a year that I have been blogging during the COVID-19 Pandemic. Who would have thought in March of 2020, that we would be in this condition a year later?

In one of my early pandemic blogs, I talked about using E-commerce in the business of making consumer loans. My counsel then was that consumer finance companies needed to be positioned to make loans and take payments electronically. Those companies who were so positioned were able to weather the early days of the pandemic better than those companies who were not.    

While loan originations have fallen rather dramatically for most creditors, collections have been strong, primarily based on the federal government policies of unemployment benefits and PPP loans to employers of our customers. Hopefully, the worst is behind us.

Interestingly, the number of installment loan license applications and grants of license in Alabama, have not materially changed between 2020 and 2021. This fact indicates to me that our licensees have indeed been able to weather the pandemic better than some other sectors of the economy.

Those credit sellers and installment lenders with good originations, may have been successful because of the fact that many consumers relegated to home, have been interested in buying household goods and in pursuing home improvement projects. There may be a pent-up demand for loans that will rise to the surface once consumers feel good about the economy and their personal financial condition.

In analyzing “why” our lenders have weathered the pandemic better, one answer seems to be that consumer finance companies by their nature know their customers. Knowing one’s customer has always been the hallmark of a successful consumer finance company and credit seller. This is a distinguishing characteristic among types of lenders. Credit sellers and installment lenders have traditionally relied upon the personal contact with their customers.  

Yes, we have been nimble and adaptable. But, what about the future? Have we exhausted our ideas and good luck?

The pandemic has created challenges to this traditional characteristic of the personal touch. The challenge for the future seems to be how to maintain the touch in a business environment that seems to be continually moving into the ether.