Consumer Loans in an Era of Disruption

Digital Transformation Trends in Lending

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In the midst of the global pandemic, banks and lenders braced themselves for a slew of issues, including spikes in the quantity of inbound calls, needing a consistent outreach strategy and balancing the new reality of a primary remote work force.

The AITE Group conducted a consumer lender survey to learn more about what issues they experienced — as well as what worked in solving those issues, and how they plan to move forward. Several common themes emerged, including:

  • Anticipated challenges
  • COVID-19 pivots
  • Digital transformation
  • Artificial intelligence

Webinar navigation:

00:15 – Overview of Hyland
00:46 – Introduction of Leslie Parrish
01:37 – A challenging year of uncertainty and volatility
02:39 – Varied consumer credit demand and performance
03:41 – 2021 Consumer lender survey: methodology
04:19 – 2021 Consumer lender survey: areas of inquiry
05:05 – Anticipated challenges: risk-related
05:50 – Anticipated challenges: internal functions
06:42 – Anticipated challenges: consumer experience
07:33 – COVID pivots
08:35 – COVID pivot examples
11:37 – Digital transformation: viewed as table stakes
12:27 – Digital transformation: loan origination
13:37 – Current spending, relative to year before
15:22 – Future spending, relative to this year
16:20 – Specific areas of investment: lending
17:08 - Specific areas of investment: communications
17:37 – Use of AI increasingly common across loan stages
18:21 - Examples of AI for select loan stages
20:24 – Key takeaways
21:32 – More detailed findings in three AITE Group projects
22:39 – Contact us

Anticipated challenges

Businesses faced many challenges during this time, but these areas stood out as the most difficult to the lenders being surveyed:

  • Compliance
  • Managing credit risks
  • Accessing and harnessing external data
  • Rising of delinquencies
  • Need to focus on the borrower experience and ways to attract borrows
  • Customer Retention

Covid-19 pivots

Upgrading communication: Lenders are investing in solutions that allow for more targeted messaging, enhanced text messaging and the ability to have two-way text message conversations. Many seek out chat bots that allow virtual conversations, automated emails and the ability to communicate broadly.

Loan origination: Many lenders made fundamental changes like replacing existing platforms with solutions that integrate with their loan origination system. Some lenders are investigating partnering with fintech’s or other non-bank lenders to refine their underwriting and offerings. Bankers are interested in transforming the loan, closing and document signing processes completely through remote services for mortgage lenders.

Collection strategies: Some delinquent borrowers do not want to talk to an actual human about their troubles, but instead prefer a digital interaction through a chat bot. Lenders wanted to add touchpoints for consumers to make the decision-making process and payment reminders easier and more accessible. Now lenders are investing in analytics for different collection treatment strategies.

Digital transformation

Ninety percent of lenders believe strongly in digital transformation and want to improve it consistently.” -AITE Group

Investors are spending more money on identity verification. This is due to surging fraud attempts that happened during the COVID-19 situation. Research has shown that nearly 47 percent of consumers experienced some type of financial identity theft in the past two years (AITE).

Many lenders are investigating the implementation of new systems within the next two to three years. This includes digital account opening solutions and loan originations systems management software. These increases had not been seen prior to COVID-19.

Artificial Intelligence

Over half of the lenders surveyed have reported that they are already using artificial intelligence for marketing and fraud detection purposes and 45 percent are using it in originations.” -AITE Group

Artificial intelligence is currently in use for marketing, fraud detection and loan origination. It helps make messaging and content dynamic and adaptive. These systems improve customer experience.

Using AI leads to cross selling improvements, more reliable fraud detection and better customer experience.

Key Takeaways

Overall, these were the main findings that the AITE Group found when conducting this survey:
  • Lenders are gearing up for increased demand
  • A host of fundamental technology investments are already underway or planned for the coming year
  • Consumer expectations require a focus on improving the omni-channel experience
  • The survey represented a mix of 22 banks, credit unions and fintech who completed an online survey between November 2020 and January 2021. 10 of those respondents participated in a follow-up phone interview.

    About Aite Group

    Aite Group is a global research and advisory firm delivering comprehensive, actionable advice on business, technology, and regulatory issues and their impact on the financial services industry. With expertise in banking, payments, insurance, wealth management, and the capital markets, we guide financial institutions, technology providers, and consulting firms worldwide. We partner with our clients, revealing their blind spots and delivering insights to make their businesses smarter and stronger.


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