Is Your Institution Meeting Client Technology Expectations?

By Joseph Lowe02.11.2019

Ultimately, all financial service institutions – large, small, community, national, or alternative lenders – share one common goal: Meet customer expectations.

It’s 2019, banking customers’ expectations have shifted toward digital platforms, and community bank leadership is on notice. According to the American Banker Association’s (ABA) 2018 Community Bank CEO Priorities report, which surveyed 440 community banks, 71 percent of survey respondents planned to offer digital processes for small business lending last year, and 57 percent planned to offer digital processes for consumer lending.

Whether or not those respondents made good on their goals, it’s apparent that technology disruption is top of mind for CEOs across the United States. From quicker loan decisioning to streamlined credit analysis to customized workflows, financial technology offers a competitive advantage when it comes to internal banking processes. But, perhaps more important than that, customer-facing technology is increasingly becoming an expectation among banking customers, pressuring banks and credit unions to quickly adopt technology solutions. In our infographic, “Prepare for the Digital Future of Lending,” we outline how mobile and online banking have changed the landscape for securing a loan. We’ve highlighted a few key points from the infographic below.

Point 1. 57% of consumers say it’s critical for companies to provide an easy to use mobile experience (Salesforce).

Offering mobile banking in an effort to attract millennials is a popular strategy, as 62 percent of millennials use their phone for mobile banking. But it’s important to remember that Baby Boomers, Generation Xers, and Generation Z – the cohort following Millennials – are important to keep in mind as well; mobile phone ownership across all generations has increased dramatically over the past seven years. Since conducting its first survey on smartphone ownership in 2011, the Pew Research Center found that the share of Americans with a smartphone has jumped from just 35 percent to 77 percent in 2018. Furthermore, the Pew Research Center also says more adults are reaching for their handheld devices for their banking needs as well. According to their findings, 51 percent of U.S. adults bank online, and 35 percent of those individuals do so from their mobile device.

Large banks caught on to this trend early, with banks such as Citi, Wells Fargo, and USAA offering account management, money transfer, and conversational banking services from the convenience of customers’ pockets. What does this mean for community banks and credit unions? It’s time to catch up. Community financial institutions that want to level the playing field with big banks must offer an optimizable and seamless mobile experience for banking customers, whether it’s something as simple as online account summaries or offering online loan applications.

Point 2. 45% of loan applicants complained of long waits for a credit decision – Credit Analysis, Loan Automation (American Bankers Association).

Have you ever wondered how much business meetings or inefficient processes – such as lenders traveling to client meetings – cost your financial institution? Over $25 million is wasted per day on meetings, and $37 billion is spent on unproductive meetings each year. It’s become so much of a problem that Harvard Business Review built a calculator that allows management to review how much money is wasted via unproductive meetings. Automating timely front-end bank processes – such as meetings, gaining signatures, and data entry – through digital loan origination systems can be a time-saving and cost-saving endeavor for community banks. In fact, Abrigo has found that lending automation can reduce loan processing time by over 50 percent, while also decreasing costs by 54 percent.

But, according to the ABA State of Digital Lending report, financial institutions aiming to please consumers have a lot of ground to make up. Community banks and credit unions can start by simply offering a digital loan origination process in the first place. While several banks have a functioning digital branch, only 50 percent of banks over $1 billion in assets and 38 percent of banks under $1 billion in assets offer digital loan origination in some capacity.

Offering an easy-to-use online platform for clients is a vital component of a community bank’s success because despite the amount of customers who continue to visit physical branch locations, over 90 percent of mobile bank users prefer using their app over walking into nearby branches.

Reprinted with permission from Sageworks, a financial information company that provides analytical services and solutions to financial institutions.