The emergence of digital lending
More than £1.7 billion is now transferred each week using mobile phones or tablets at the major UK banks, and, according to Accenture’s research, around 80% of the UK banking population is now using some form of mobile banking service every month. The emergence of smartphones and tablets has led us towards an ‘any time, any place, any device’ culture and financial services providers now need to align to these changing consumer demands.
At Nostrum, our particular area of interest is the digitalisation of the lending process. We define a ‘digital loan’ as a being one that can be completed entirely electronically. It’s an area we are well qualified to talk about, because 95% of the loans completed on our systems are already processed in a paperless manner.
Our own business is not representative of the whole industry though, as this is a development we’ve long been ahead of the curve on. Key influencing factors in the broader adoption of digital lending include things like: mobile, big data, retention/loyalty, data security, and authentication. There is also a still unknown impact of new developments such as peer to peer lending, which now accounts for over £4bn of lending in the UK.
Perhaps the biggest influencing factor will be the role of customer experience. If digital is to truly become the channel of choice then this can’t just be about providing digital products and services, it must be built around customer experience. With the increasing number of ‘digital only’ entrants this may become a key factor in retention.
The innovators in banking and lending have their sights set on propositions that offer several advantages over incumbents, including:
• Simplicity and transparency
• Flexibility and personalisation
Moving forward, the established players are going to come under ever increasing pressure from new entrants and other disruptors. To succeed, these existing providers must find the right blend of efficiency saving, revenue generation potential and the opportunity to be closely and continuously engaged in their customers’ lives offered by attractive, relevant, and tailored digital experiences.
Our message to the banks and lenders we talk to is a simple one – focus your efforts on making your processes cheaper, faster and safer, but choose your technology and implementation partners carefully.