A new year is bound to bring new challenges and opportunities to the banking industry. Technology has played a heavy role in 2018, with banks and credit unions combining superior customer service efforts with technological advancements to set itself apart from competition. Will your financial institution be prepared to compete with tech-heavy banks in the new year?
According to The State of Digital Lending report from the American Bankers Association (ABA), 75 percent of bank customers reported low overall satisfaction with traditional banks. That dissatisfaction emanated from a lack of online processes according to a 2016 Federal Reserve survey, which states 42 percent of respondents complained about difficult loan application processes. Despite the need for change, only 38 percent of small banks are using a digital loan origination system.
Streamlined banking technology isn’t just a draw for customers – it’s also an important component for bank employees’ satisfaction. Big banks are investing in technology from within internal processes to talent acquisition, as large banks such as JPMorgan employ 50,000 tech roles – nearly double the number of employees at Facebook. Young bank customers, who are most likely to choose a bank for its digital services, mirror their millennial and Generation Z counterparts graduating from college and entering the financial workforce.
The digital future of lending is here, and the key to competing in a digital-first banking environment is simply to start. Invest in technology that offers benefits to banking customers and banking employees alike. If you’re searching for a starting point, read below to find tools that might help you optimize and deliver a customer-centric banking experience at your institution next year.
Build an online loan onboarding process
For lending prospects who are crunched for time, a digital branch and online loan application is the ultimate convenience. According to the ABA, 4 in 10 banking customers access their deposit account information online, and that number will only increase as more financial institutions begin to offer similar capabilities such as online loan applications. Of the banks that offer digital channels, 96 percent of those banks offer a digitized loan application according to the same ABA report. For community banks that want to gain a leg up on the competition next year, adopting an online lending solution that streamlines documentation collection before credit analysis will put your financial institution on the fast track to success.
Secure borrowers with a CRM
The immediate ROI of a fully-integrated customer relationship manager (CRM) is an efficient task management system and central record of daily customer engagements. A CRM does the legwork when it comes to documenting touchpoints – and pointing out if prospects have been touched one too many times. But for financial professionals who choose to think outside of the box, a CRM can provide numerous benefits beyond its bank-facing features. Community banks can utilize a CRM to enhance and personalize its customer service efforts, gain a 360-degree view of the borrower or potential cross-sale opportunities and capitalize on relationship lending and referrals.
The proverb, “You don’t know where you’re going until you know where you’ve gone” is a phrase we’ve all heard before, but its message rings especially true when it comes to bank analytics and reporting. Gaining access, aggregating and organizing bank-wide data can be a daunting task. However, leveraging internal data can often shed light on missed opportunities and drive bank strategy in the new year. An analytics tool puts banks in the driver’s seat, taking the guesswork out of strategy building and allowing banks to recognize key patterns within the portfolio.
For community institutions, some of the best insight often comes from peer data. Understanding your institution’s competition is and how it stacks up against peer institutions is critical for determining the institution’s goals and opportunities. Utilizing a peer analysis tool allows financial institutions to compare themselves against local, regional and national competition – whether its measuring loan concentrations or key performance metrics, such as return on assets or interest rates – and identify weaknesses that may have otherwise gone undiscovered. While several community banks have completed planning for the new year, it’s important to reevaluate plans as the banking environment shifts throughout the year. Community bank mergers and closures have risen significantly over the past 30 years, with just 4,880 commercial banks open today of the 12,343 commercial banks open in 1990. A peer benchmarking tool can be a valuable resource for improving initial strategies as competitors arise and fall.
For some community banks, it’s easy to continue onboarding and underwriting processes as they’ve been done for years because it’s what staff, executives and customers are comfortable with. However, it’s critical for banks to realize that in order to offer superior customer service and a one-of-kind customer experience, tapping technology will put them in the best position to succeed in the new year.
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