2020 has witnessed a fundamental shift in how consumers want to engage with financial institutions. At the beginning of the pandemic, it is estimated that approximately 40% of banks in advanced markets had digital lending and account opening in place. Just six months later, it is estimated that the number has increased to 50%. What is clear is that this shift to digital was already underway and the trend has now accelerated.

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Lenders are rapidly realising that digital is not something they can do at their own pace; it is a transformation that organisations have to undertake as a matter of survival.

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In a three-part series we journey through the challenges that plague the onboarding process or originations in the financial services industry today. We also explore how CredoDecide, the CredoLab and ADEPT Decisions partnered solution, not only equips these businesses with the right technology to bring their legacy systems up to speed, but also elevates customer experiences.

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The Challenge

A study conducted by J D Power in early 2020 gave us a hint of what was to come in the year - Nearly one-third (31%) of new account openings were executed through a bank website or mobile app, up from 22% in 2019. Meanwhile, the number of new account openings at branches declined year on year by 10 percentage points, and now comprises just 55% of all new account openings. As a result, customer satisfaction with new account openings increased by 13 points this year.

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Even though the concept of digital onboarding is not new, not many actually adopted it at every stage of the originations process. Originations is a complex area of lending, with many moving parts, including:

• Application form
• Applications process
• Credit bureau
• Alternative data sources
• Scoring
• Credit decisioning
• KYC
• Fraud
• Document capture

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The challenge is to get each, and every step of the originations process performed digitally. But if the solution is so simple, why has that not been done yet?

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A 100% Digital Originations: What to look out for

While banks and other financial industries play catch up with digital technology and change up their legacy systems, there are many other areas that need looking into before hopping onto the digital originations wagon.

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This infographic on Contentstack summarises perfectly the possible additional roadblocks to digital originations.

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While stats like “54% of millennials willing to share personal data  in exchange for relevant guidance and options” may paint a rosy picture of a market ready to adopt digital originations, some factors still need to be considered to ensure you are on top of your game.

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Security

The infographic on Contentstack also highlights that the main reason consumers are hesitant to switch to an online only banking platform is the increased risk that they associate with digital banking. 54% of consumers  said this is the main reason for opting for physical branches, followed by 43% stating customer service as being the main discouraging factor.

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Regulatory Compliance

Regulators are constantly revising the rules to safeguard the interest of consumers. Staying compliant with the changing rules to safeguard the interests of customers and businesses is crucial.

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Customer Experience

Through it all, ensuring customers feel good at the end of the application process is of paramount importance. Having an intuitive experience as a result of a smooth, easy to follow application process is important not only to stay ahead of the competition, but to just be in the game.

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This long ‘to do’ list stands in the way of lenders fast tracking the migration from bricks and mortar to digital channels. The task is even more daunting and time consuming if multiple vendors are required for each of the multiple components.

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The need exists for a pre-configured and pre-integrated solution that provides a rapid and effective digital channel for organisations.

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The Solution

To solve this challenge, CredoLab and ADEPT Decisions have developed a fully integrated solution which will accelerate lenders digital transformation using a low risk, but high-performance approach.

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Watch out for Part 2 of the series which dives right into CredoDecide’s different elements that check every item in the digital onboarding ‘to do’ list.

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