Future Proofing Growth: Redefining Lending and Account Opening for Banks and Credit Unions
A significant shift in customer preferences is underway, as they increasingly seek streamlined, speedy, and digital solutions. Financial services industry is at the forefront of this change, experiencing a remarkable 67% surge in online banking since 2020. This evolution is notably apparent in the domains of lending and account opening. Today, approximately 80% of clients prioritize digital methods to access financial services and 70% do so through mobile devices, showing a clear preference over traditional in-person channels.
Banks and Credit Unions must keep up with these changing trends while ensuring the efficiency, security, and adaptability of their services. This white paper offers an in-depth exploration into the latest trends in digital lending and account opening. Later, it introduces CreditSnap, an innovative platform that is aiding financial institutions in enhancing their digital interfaces without breaking their bank, while simultaneously contributing to a 40% improvement in operational efficiency and a significant boost in customer satisfaction. A win-win!!
Overview
Explore the current digital banking trends, focusing on lending and account opening. Understand challenges, leadership approaches, and future plans of banks and credit unions. Covered sections are:
- Understanding Digital Trends in Lending and Account Opening
- Challenges and Opportunities for Financial Institutions
- Empowering CU and Bank Leadership: Harnessing Possibilities
- Future Proofing Your Business through Smart Decision-Making
1. Understanding Digital Trends in Lending and Account Opening
Digital banking users in the United States are projected to grow year-over-year to nearly 217 million by 2025. Therefore, more financial institutions are leaning into digital platforms for their banking needs than ever before. In this section, we'll dive deep into this rising trend, breaking down the big move toward digital and what it means for financial institutions like banks and credit unions.
- Digital Sales Divide - There is a clear gap in the digital sales between top-tier and average financial institutions, highlighting the need for advanced digital platforms. The statistics indicate that institutions with the best digital sales systems have higher sales, lower service costs, and increased revenue.
- Impact on Efficiency and Revenue - This given data highlights the impact of an institution's digital infrastructure on the operational efficacy and revenue generation. Institutions that employ advanced fintech platforms, such as CreditSnap, experience an expansive customer reach and superior service delivery, ensuring higher customer satisfaction rates.
- Rising Tide of Digital Natives - A consistent rise in digital natives, especially post-COVID, signifies a fundamental shift in consumer demeanor. The number of Gen Z mobile banking users is expected to reach 47.8 million in the US by the end of 2026. It has led to a demand surge for sophisticated digital solutions that promise convenience, rapidity, and efficiency.
- Attracting a Diverse Consumer Base - By presenting comprehensive, transparent, and accessible online platforms, institutions can appeal to and keep a diverse range of consumers. This approach meets the various needs of different groups, promoting steady growth and reach.
Digital Sales Performance
Let’s take a closer look at the critical areas of digital sales, cost to serve, and revenue from organizations. We outline the current scenarios, underline the disparity among various institutions, and highlight the necessity of strategic moves to enhance performance and profitability.
Diving into the world of digital sales, the gap is clear. Traditional Credit Unions or Banks show a digital sales rate of 30-45%, while top performers and digital-only platforms are soaring with 60-80% and over 90%, respectively. The message? Streamlining digital sales is not just beneficial, it’s essential. Elevate the game by focusing on soft inquiries, swift offers, and an unmatched customer experience.
Now, let’s talk about costs. Average institutions are dealing with a cost to serve at a baseline of 100. The top dogs and digital-only platforms have slashed this, bringing it down to a manageable 40 to 60. How? By embracing robotic automation and enhancing self-service options, proving that innovative solutions are not just buzzwords, but pathways to significant cost reduction.
And don’t forget about revenue from organizations. While average institutions are pulling in around 5%, top performers and digital-only platforms are raking in 55-65% and over 70%. To boost this, focus on rolling out next-gen campaigns and amplifying efficient cross-sell strategies, ensuring your revenue figures are nothing short of impressive.
Digital Natives vs Others
Consumer behaviors and preferences are rapidly shifting towards digital platforms, altering how they interact with the financial institutions. Understanding and adapting to these changes is crucial for banks and credit unions aiming to stay relevant and competitive. Let's delve into the emerging trends among digital and 'phygital' consumers, highlighting the importance of a robust digital presence and strategy for financial institutions.
A growing segment of consumers, now at 32%, are Digital Natives, relying exclusively on digital channels for banking, marking a 6% increase since the COVID-19 outbreak. This group seeks exceptional digital experiences and easily switches preferences, given the plethora of alternatives available online. On the other hand, 25% of consumers, categorized as 'Phygital', prefer starting their banking journey online, further highlighting the indispensable role of digital platforms in shaping consumer choices and preferences.
Furthermore, extensive online research before making banking decisions is a common trend across all age groups. This includes 90% of millennials, 85% of Gen X, 80% of Baby Boomers, and even 50% of the Silent Generation. Altogether, Digital and Phygital consumers now make up a whopping 57% of total banking customers, reinforcing the urgent need for financial institutions to prioritize and continually enhance their digital offerings to meet the evolving consumer expectations and ensure lasting customer loyalty and satisfaction.
2. Challenges and Opportunities for Financial Institutions
Digital transition presents banks and credit unions with both hurdles and prospects. Challenges like integrating diverse tech solutions and ensuring channel consistency are interconnected with opportunities to harness local engagement and instant digital solutions. This section delves into these aspects, offering insights to seamlessly maneuver through the complexities, ensuring improved customer satisfaction and solid growth in the evolving digital financial environment.
Challenges:
1. Silo Technology Solutions: There are many technology solutions out there, each handling different parts of digital operations. The challenge is making these technologies work together seamlessly. Right now, the isolated approach can cause operational delays, higher costs, and a disjointed customer experience, which can harm customer satisfaction and loyalty.
2. In-House Development Costs: Investing heavily in in-house development can stretch the financial resources of institutions thin. This financial strain can limit their ability to invest in other vital areas, potentially stifling growth and the ability to stay competitive in the fast-paced digital world.
3. Channel Consistency: As institutions expand their presence, it's crucial to maintain consistent service across all platforms. Currently, the use of various tools for different platforms may baffle and irritate customers. This confusion can harm the institution's reputation and may result in a loss of customer loyalty and engagement.
4. Balancing Self-Service with White Glove Service: Today's digital world is leaning more towards self-service options, yet the desire for personalized, white-glove service hasn’t faded. It’s crucial to strike a balance between these varied expectations. Failure to do so can lead to customer dissatisfaction, negatively affecting their loyalty and retention.
Opportunities:
1. Local Engagement: Despite the global reach of digital platforms, customers’ desire to engage with local institutions remains significantly high. This preference presents a golden opportunity for financial institutions to strengthen their local presence and connectivity, thereby enhancing customer satisfaction, loyalty, and community relations.
2. Highlighting Competitive Rates: Financial institutions with competitive rates have a clear advantage. By effectively promoting these attractive rates, institutions can more easily attract and keep customers, positively impacting the institution's growth and place in the market.
3. Integrated Cross-Selling: Smoothly blending cross-selling into digital channels can notably increase revenue. This ensures customers consistently see relevant and additional offerings, enhancing revenue chances and customer relationships.
4. Instant & Digital Solutions: Adopting quick and digital solutions helps institutions meet modern customer expectations, improving the customer experience and cutting down service costs, leading to better operational efficiency and customer contentment.
3. Empowering CU and Bank Leadership: Harnessing Possibilities
Bank and Credit Union leadership must confront a range of challenges while making the most of emerging opportunities. Understanding and implementing the following practical solutions is crucial for sustainable growth and community impact.
1. Choosing the Right Platforms: Opt for platforms that bundle various functions together. Modern fintech platforms, like CreditSnap, are available and often more affordable than you think. They help avoid the confusion of using different systems for different problems, making work smoother and more unified.
2. Community-Driven Lending: Embrace community-driven lending. Allow local stores to distribute your personal loan products. This strategy not only makes your loan products more accessible but also strengthens your community connections, showing your commitment to local growth and stability.
3. Focus on Instant Offers and Self-Service: Customers today love quick and easy service. Provide instant offers and robust self-service options to meet these expectations. But remember, traditional branch and phone services still matter. Strive to find a balance that keeps all customers happy.
4. Straight Through Booking for Customers: For certain customers, ensure a seamless journey, especially for products like credit cards and personal loans. Remove unnecessary steps and make the process straightforward and efficient. This approach will enhance the customer experience and boost your reputation.
4. Future Proofing Your Business through Smart Decision-Making
In the fast-evolving digital world, making decisions that withstand technological advances is critical, especially in digital lending and account opening. This section highlights strategies to make robust decisions ensuring continuous relevance and efficiency.
- Choose Adaptable Solutions: Prioritize solutions that have the flexibility to grow and adapt to future needs and advancements. Opting for platforms like CreditSnap, which continually evolve with technology and ensure that banks and credit unions stay at the forefront of innovation and efficiency.
- Utilize AI for Enhanced Decision Making: Embrace Artificial Intelligence (AI) to make faster and more accurate decisions. AI quickly processes large amounts of data, helping improve how your business operates. CreditSnap’s AI-powered lending and account opening platform also enhances customer happiness by making sure lending decisions are quick and correct.
- Integration with Advanced Fraud Detection: Prioritize integration with innovative Synthetic ID and First Party fraud detection tools. CreditSnap utilizes this integration to amplify security, shielding both the organization and its clients from potential fraud, and ensuring peace of mind along with financial safety.
- Stay Ready for Technological Shifts: Ensure the capacity for a smooth transition between the existing technology and emerging advancements. Using customizable and innovative lending solutions, like CreditSnap, enables financial institutions to maintain their innovation, competitive edge, and operational efficiency without unnecessary hurdles.
The whitepaper clearly highlights the importance for banks and credit unions to focus on strategic integration, community involvement, and improved customer service. CreditSnap comes packed with innovative features like Soft Inquiry Tech, Instant Document Signatures, Core System Integration, Strategic Cross-Sells, Instant eDeposit Capability and more to help financial institutions realize world-class customer experience and operational efficiency. Now, you can witness the impact of CreditSnap on your institution firsthand, make a hassle free demo request or simply reach out to us at community@creditsnap.com.
