If traditional financial institutions want to compete with trendy, app-based challenger banks to offer small and medium business customers a seamless loan experience, they need to make their processes frictionless, friendly, and fast; according to McKinsey, over one-fifth of SMEs that switched banks were looking for better rates, better online service, and products and services that their previous provider did not offer.
The trends are clear and consistent: a growing number of people are no longer interested in visiting a brick-and-mortar bank. In fact, 71% of millennials would rather go to the dentist than physically talk to their traditional banks. In just over a decade, the number of mobile banking users rose from 30% to 76% in the UK alone.
And when it comes to one of the main reasons businesses used to visit a bank – taking out a loan – the volume is rising: when small and medium businesses need a loan, it’s often a “must-have” rather than a nice-to-have; according to this study, of the companies that did secure finance in 2022, four in ten (42%) plan to use credit to manage cash flow, considerably more than the numbers planning to use funds for equipment updates (21%), expansion (19%), or recruitment (4%). This means this financing is becoming more common, with competition looking to grab as much business as they can: In short, the customers are there, and need your services – or someone’s – in order to run their business.
The problem is that many banks haven’t figured out the formula do serving these customers effectively. The European Bank for Reconstruction and Development identified three large myths about SME finance; central among them: “Commercial banks know how to finance SMEs.”
The Imperative of Automation: Introducing Loan Origination Systems (LOS)
In response to the shifting landscape, financial institutions are increasingly turning to automation as a cornerstone of their operational strategy. At the heart of this transformation lies the adoption of loan origination systems (LOS), which serve as a linchpin in streamlining the lending process from inception to fruition. By harnessing the power of automation, LOS empowers lenders to mitigate risks, enhance operational efficiency, and deliver a superior customer experience.
Adopting a Loan Origination System
The journey towards implementing an LOS necessitates a meticulous approach, beginning with strategic planning and meticulous stakeholder engagement. Cloud-based LOS solutions emerge as a beacon of innovation, offering unparalleled scalability, security, and real-time updates. Moreover, the transition to an LOS-driven framework entails a paradigm shift in organizational culture, necessitating robust change management protocols and comprehensive training initiatives to facilitate seamless integration.
Reducing Risk and Enhancing Customer Experience
The integration of LOS heralds a new era of risk mitigation and enhanced customer experience, underpinned by expeditious decision-making and streamlined documentation processes. By leveraging automation, financial institutions can transcend the constraints of traditional workflows, delivering prompt, frictionless experiences that resonate with today’s digitally savvy clientele.
Transitioning to Automation: Challenges and Solutions
Yet, the journey from manual processes to full-scale automation is not devoid of challenges. From navigating technological complexities to fostering organizational buy-in, financial institutions must confront a myriad of hurdles along the path to digital transformation. However, by aligning with a reputable LOS provider and prioritizing collaboration, institutions can navigate these obstacles and emerge as trailblazers in the digital landscape.
Ezbob: Empowering Financial Institutions
Enterprises such as Ezbob stand at the vanguard of this transformative journey, offering a comprehensive suite of cloud-based LOS solutions designed to revolutionize lending processes. Through automation, Ezbob empowers financial institutions to optimize efficiency, minimize errors, and deliver unparalleled customer experiences that rival those offered by FinTech disruptors.
Conclusion: Embracing Digital Transformation
The imperative for financial institutions to embrace digital transformation has never been more pressing. By leveraging the transformative power of LOS technology, institutions can redefine the contours of customer engagement, foster operational resilience, and chart a course towards sustained growth in an era defined by unprecedented change. As the digital revolution gathers momentum, the path forward lies in embracing innovation and reimagining the future of banking in the digital age.
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