Most of the banking industry’s early efforts to digitize the consumer experience has focused on transactional services such as deposit accounts and credit cards. Much less effort has been spent on more complex services, such as lending, insurance, investments and small business.
A study by Bain & Company and SAP entitled, Retail Banks Wake Up to Digital Lending, found that the majority of banking organizations have only digitized a small portion of the overall lending process. For instance, banks can handle only 7% of products digitally from end to end. By not responding to fintech challenges in lending, more than one-third of retail bank revenues are at risk.
Even though many of today’s financial institutions are moving toward an omnichannel banking environment, with synchronized systems with real-time or near-real-time access to core and channels systems, many lack fast access to authentication, decisioning, and approval systems. It is in these latter categories where fintech providers and other, non-traditional financial services firms can grab market share from banks and credit unions that still use legacy loan and credit approval systems and processes. These are areas where significant improvements can be made.
Overview by Ed O’Brien, Director, Banking Channels Advisory Service at Mercator Advisory Group
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