If you don’t know where you are going, you’ll end up someplace else. Yogi Berra.
Over the past decade, financial institutions everywhere have succumbed to adopting some form of digital experience, especially as it relates to opening new deposit accounts or accepting loan requests.
However, the degree to which each bank and credit union employs automated originations in their overall business strategy varies greatly. Some financial institutions employ every conceivable technology to automate the entire process, giving them a considerable edge over the competition. Others merely adhere to the bare essentials with no real commitment, just to be able to proclaim, we are online.
Based on survey results that came out of the September 2020 Digital Lending and Account Opening Review (DLAOR) from the Digital Banking Report, a staggering 85% of financial institutions allow consumers to apply for a loan online. However, only 44% provide the convenience of performing this task on a mobile device.
Of the more than 400 banks and credit unions that participated in the survey, 66% could complete the entire process online, but only 46% allowed end-to-end completion on a mobile device. The report points out that if a potential borrower can’t request credit and receive funds quickly, on the platform they desire, a provider is simply faking digital.
For digital account opening, the DLAOR results were slightly better. Seventy-two percent of financial institutions allow consumers to open a checking account end-to-end on a website, while only 46% provide this capability on a mobile device. The review points out that while the numbers are significantly higher than 2019 results, they are still insufficient for a person who has now become accustomed to ordering groceries, selecting movies, paying bills, communicating with dozens of people at once, or buying anything imaginableincluding an automobilewith the click of a button.
We cannot solve problems with the same thinking we used when we created them. Albert Einstein
According to the Boston Consulting Group, there are four marketplace changes driving the move to digital lending:
- Consumer behavior changes due to online experiences sped up by COVID-19
- Rapid technology changes, including the reliance on mobile phones
- Changes in regulations and compliance that have allowed digital lending and account opening to be modernized for the benefit of the customer
- Innovations and simplification of operating models that have driven the entire financial industry to improve
According to the DLAOR, the ultimate goal is to have the entire end-to-end consumer journeythat is, account opening and lendingfully digitized and at a speed comparable to involved digital engagement offered by the likes of Amazon and Apple.
But how do you determine if your digital lending and account opening strategy is on track? What are the key components? The must haves? The best practices?
I never said it would be easy, I only said it would be worth it. Mae West
Knowing your travel plans before you depart on your journey ensures you are headed in the right direction. It also helps you chart your various successes, as you reach your final destination. The infographic below outlines all the key components and configuration milestones for an effective and successful digital account opening and lending program.
It starts with the customer experience. From the moment they click on your digital applicationon a device convenient to themuntil the account is booked and the loan is funded, the customer experience needs to be simple, easy, and fast. And all of this without ever stepping foot in the branch.
The account opening and lending platforms need to be fully integrated to maximize on cross-sell opportunities. From the back-office perspective, automation is key in almost every step of application processing. Additional best practices include access to a wide variety of third-party vendors to support your processes, advanced decisioning, and reporting to use data and analytics to lower risk, and, if need be, a smart collections tool.
Want to find out where you are currently on your digital account opening and digital lending journey? Looking to uncover any potential gaps in your strategy? Our quick and free assessment will help you visualize your current situation, with a scorecard. Take Our Digital Assessment.
We also highly suggest you score your free copy of the 2020 Digital Lending and Account Opening Review. Download a FREE copy while supplies last, compliments of MeridianLink.
I love it when a plan comes together. Hannibal Smith
Having a successful digital journey is worthwhile for your customers/members, staff, community and your financial institution. Should you find you need some roadside assistance in a few areas, or a complete overhaul to accelerate your program, MeridianLink has the tools and services you need. Safe travels!