Q: Why is it urgent for community banks and credit unions to adopt digital lending?
A: In the world of Amazon same-day deliveries and instant payments, convenient options for applying for credit are table stakes. Non-bank lenders already offer them, and digital financial tools are everywhere. Consider this: More than three-fourths of consumers use fintech applications, according to a recent survey of 2,000 U.S. adults by Plaid and the Harris Poll. One in every five expect to use an app for lending services in the next six months—up from 10% in 2020. Finally, the same consumer survey found nearly half of consumers consider the typical loan application process too confusing; 39% said it was challenging to even successfully complete a loan application. Traditional lending processes also cost more. “Banks can realize huge gains in operational efficiency by automating more manual processes, using workflow management tools and underwriting algorithms that spit out decision and approval. They can also use digital tools to raise employee productivity,” write Bain & Co. advisors. The firm has long recommended banks modernize lending processes to avoid a material decline in profits and loss in market share.
