Optimism hit a five-year high in 2017 among c-level executives at financial institutions, but this year, optimism took a sharp dip amidst concerns over decelerated loan growth, an uncertain economy, and higher interest rates, according to survey results by Cornerstone Advisors. Competition for deposits is high, but financial institutions are becoming savvier in finding ways to break through these banking slumps.
It wasn’t long ago that financial institutions were wary about the impact fintech would have on their traditional branches; however, fintech partnerships have become an integral part of many institutions’ success and growth. As financial institutions begin drawing up plans and goals for 2020, it’s important to consider the ways that fintech partnerships can help renew optimism and break through banking plateaus.
Top growth priorities for financial institutions, according to the same Cornerstone Advisors survey, include growing commercial loans, expanding their digital presence among online and mobile channels, and growing consumer deposits. And banks are privy to the fact that fintech can help in these areas. When it comes to determining the areas that banks and credit unions plan to focus their fintech efforts, an overwhelming 93 percent of bankers reported that a lending and credit product focus was important for their collaboration, and 96 percent reported digital account opening was at the top of their list.
So how, exactly are financial institutions leveraging fintech to solve these priorities and restore optimism? Let’s take a look.
Overcoming decelerated loan growth
If a financial institution is feeling anxious over decelerated loan growth, it may be time to consider partnering with a fintech that can enable it to streamline its lending process and automate repetitive, manual tasks. Traditional loan origination processes can be long and frustrating, as it often entails large spreadsheets, data to be re-entered numerous times, and constant document collection. To get an edge on loan growth, financial institutions should consider turning to automation to create a scalable origination and loan management process. Additionally, lending automation enables lending and credit professionals to free up time to focus on revenue-generating and customer-facing activities, rather than spending it on duplicative data entry and tracking down documentation.
For smaller community financial institutions, it can be especially difficult to compete on fast turnaround times when relying on traditional processes. Automating the life of the loan expedites each part of the lending process, from pipeline development and assigning risk ratings, to loan pricing and credit memos. Loans that could take five or six days with legacy systems can now turnaround loans within 24 hours by leveraging technology, freeing up lenders' time to nurture existing customer relationships and seek out new ones.
Staying the course under uncertain economic conditions
Another key concern leaving bankers feeling more pessimistic is a possible recession or potential economic slowdown in the near future. While financial institutions are not immune to economic headwinds that may occur, there are many more resources and technologies available to mitigate lending risks and protect their institution.