Over the past year, the financial services industry has observed in real time the COVID-19 pandemic and its economic fallout that has radically transformed the credit landscape. Market conditions have strained the ability of banks and credit unions to manage loans effectively, while at the same time managing expenses and effectively delivering top-notch experience has become more complicated. .
This comes after decades of siled operations and digital fragmentation, resulting in manual processes and operations that fuel inefficiencies and errors. Even today, limited visibility into the state of loans and disconnected systems hamper critical collaboration between bank employees in the front, middle and back office, as well as with the customer.
But the opportunity exists if banks prioritize IT investments. By using technology that simplifies and improves the customer experience, banks can better understand consumer needs, respond effectively with a trusted experience, and leverage a platform that responds quickly to changing needs.
Since 2020, massive changes in consumer behavior and macroeconomic conditions have made servicing loans even more difficult. Consider this:
- Volume: The number of mortgages and refinancing loans skyrocketed last year due to ultra-low interest rates. This continued into 2021 with an increase in home loans to small businesses and businesses.
- Economic headwinds: This happened as the total number of loans in forbearance fell from 0.25% to 2.66% in 2020.
- Customer engagement: Meanwhile, service center wait times soared to more than 17 minutes from less than two, while abandonment rates hit 25 percent, well above the previous 5 percent .
- Cost of service: The cost of servicing a loan has increased 173% and 400% for non-performing loans.
To overcome these problems, global financial institutions must invest IT dollars in automation, cloud-based solutions that connect to existing systems, and seamless collaboration for remote workers. One potential solution is a system that allows users to integrate external data into a single action system, open external systems with one click through URL integration, and avoid data duplication. and work items.
When it comes to loans, effective products lead to a lifecycle journey that begins with informed customers who can see their status in real time.
Using a variety of communication channels, customers can communicate with the service agent and check their loan status online. Employees, on the other hand, can become more efficient and increase customer satisfaction by acting as advisors with value-added knowledge and expertise. Finally, future inquiries and account changes are linked, making updates easy for both the consumer and the employee.
A major New Zealand bank saw how such a system can benefit lenders. To address a disconnection between its branches, contact centers and operations, the institution has established a platform of joint engagement and action to work on complex customer processes and digital workflows for the process. loan maintenance request. This unique workflow overhaul has resulted in a 30% improvement in customer retention, 1 million employee minutes saved per year, and a 25% reduction in productivity time for new hires.
In another case, a US-based bank found itself inundated with investigations after the passage of the CARES Act. In less than a day, she deployed a solution that provided a single view of loan applications throughout the process lifecycle and worked with existing core lending capacity. As a result, each case experienced a 75% reduction in workload.
Some of the benefits that banks and credit unions should reap as they transition from silos to a more integrated structure include:
- Instead of manual processes and inefficient tools, financial service providers benefit from automated processes that span disconnected teams
- Disconnected systems give way to streamlined operations
- Lack of visibility into the status of requests results in real-time updates across the organization and for customers
- Complex compliance requiring manual intervention and monitoring is replaced with transparent processing that removes bottlenecks
- Bad experiences give way to greater employee satisfaction and CSAT scores
By investing in end-to-end digital transformation and making it the backbone of the business, banks can do more with less, create an empowered work environment, and implement more resilient and compliant operations.
Gregory Kanevski is the global head of retail and commercial banking with Service now.
Learn more about lending opportunities in BAI’s executive report “Where Banks Fit Into the New World of Lending”