We’ve seen the power of a pandemic in changing how organizations operate, forcing just about every company to rethink their processes and strategies. As businesses look to transform in response to the new normal, they expect a full range of digital offerings to meet specific needs, including easy, digital borrowing solutions; it’s critical to evaluate whether your financial institution (FI) is equipped to meet these evolving needs.
Help business account holders through innovation
For most community FIs looking to transform digitally, the digital banking strategy has traditionally focused on deposits. As such, digital lending functionality lags far behind in terms of user experience, speed, and automation. Suddenly, community FIs must catch up as the world changes. To make headway, banks and credit unions might consider building a strategic plan to transform and scale volume without having to scale resources—and this requires the right technology. Fintech lenders have been winning business customers with innovative technology; to compete, it’s crucial that FIs commit to matching and exceeding fintech efforts.
Fintechs may be taking your borrowers away
There is a misperception that competition in the lending area is limited to other local banks and credit unions. Fintechs are gaining ground, creating targeted apps for a range of solutions—from traditional checking and savings accounts to a variety of lending options. Fintech lenders are also taking market share because of the convenience, speed, and superior user experience they can provide borrowers.
Customers and prospects are looking at companies like Sofi, Quicken Loans, Kabbage, and PayPal to meet their growing banking needs. Why? All too often, it can be traced to a lack of focus on the part of FIs in creating a fintech-like experience that meets the expectations of today’s users and performs seamlessly on the devices they use for banking. In 2019, The Financial Brand found that 52% of FIs surveyed had solutions that could complete an entire loan application process on their website. But only 31% have the technology to complete the entire consumer loan origination process on mobile devices.
What’s impeding your digital transformation?
In 2018, Boston Consulting Group showed that 86% of banks said that their banking technology infrastructure is complicated and a hindrance to quickly enabling digital interactions with their customers. If your current line of siloed digital solutions and legacy systems don’t work in harmony to provide exceptional experiences, it’s no wonder account holders may be investigating fintech alternatives.
Ready to Start?
If your FI is ready to start a digital transformation—including gaining the ability to offer digital lending—consider employing the following tactics:
- A top-down approach: Your C-suite needs to be committed and involved from the get-go.
- Enterprise-wide involvement: Include every department in planning and execution; it’s possible with an inclusive, all-hands commitment to transformation.
- Comprehensive change: Consider eliminating legacy systems and integrating any existing digital systems in your planning. Remember, technology should make life better for all involved, including staff who may be constrained by your existing solution.
When everyone is on board, focus on three essential areas:
- Digital engagement: How do you plan to bridge the gap between the in-person branch experience and digital experience? You will need a strategy to make digital engagements as personal as possible. Your goal is to create positive digital banking experiences, including the borrower experience.
- End-to-end integrations: A significant part of delivering positive experiences is ensuring systems talk to each other. End-to-end integrations that produce smooth and quick borrowing experiences benefit business account holders and FI staff alike.
- Data: It’s well known that FIs have mountains of data available to them. In most cases, this data is siloed. When data is freed from these silos, it can be applied to improve relationships and create benefits such as increased business borrowing and cross sales. Position your FI to take advantage of customer, demographic, and spending-pattern data to help businesses.
Start the conversation at your bank or credit union. Be there for businesses that need your help to provide seamless service during this uncertain time—and when life begins to feel a little more familiar. These recommendations can help your FI’s management and staff take a closer, more critical look at bringing your digital transformation to life.
Keep your eye on the Q2 blog for more entries on digital lending and digital transformation to help your FI with relevant information tailored to these unusual times.
Recommended Resources
Webinar Recording
Access a recording of this valuable webinar: Digital Lending: A Critical Step in your Digital Transformation
How Banks Will Survive the Lending Revolution
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