BY JOHN WATTS
In an era of constant technological innovation, where competition for consumer loyalty is at an all-time high, financial institutions of all sizes are focusing efforts and countless resources on revamping their digital strategies, especially in the lending space. Community banks, in particular, are poised to be unique beneficiaries of this digital
age, as they are often consumers’ first choice for personal loans due to generally lower interest rates and origination fees.
To capitalize on this advantage, nearly one-fourth, or 23 percent of financial institutions have plans to implement a new or replacement consumer loan origination system, according to Cornerstone Advisors’ annual “What’s Going On In Banking” report. Additionally, the same report reveals that improving lending policies and processes is a top priority for 32 percent of bank CEOs
To achieve this, banks need to digitize the lending process from end-to-end, rather than just a portion of the process like the loan application. Many banks still require a visit to the branch to sign forms or ask that customers mail supporting documents to the branch. Yet, nearly all borrowers under the age of 35 would prefer that the entire process be digitized, according to research from Oliver Wyman.
By committing to full digitalization, banks can modernize the lending experience and infuse it with greater speed and convenience for the benefit of customers while empowering banks with more efficient processes to support a growing loan portfolio. Here are three key steps that banks should take to ensure a successful digital lending transformation:
1) Perfect the Application Experience Optimizing the loan application experience should be a priority when taking a digital approach to lending.This involves more than uploading a copy of the loan application online, as replicating the same paper-driven loan application process online will hardly improve the customer experience. First and foremost, make sure customers can complete a loan application online in its entirety, which includes the ability to submit supporting documentation without leaving the application, as well as e-signature capabilities so customers can sign loan documents.