A Recap of 2018 Events: The Digital Lending Revolution

Digital Lending, Commercial Credit, Small Business Credit, Enterprise Risk Management

Digital transformation – a key trend in lending – is top-of-mind for financial institutions evaluating their strategy in 2019. Technology has the power to streamline business operations and bring new revenue opportunities to organizations that prioritize digital growth. The benefits of this digital lending revolution – if implemented correctly – are endless. Digital lending practices can introduce more productivity and profitability into the credit process, speed up decision-making, and, ultimately, provide needed capital to Main Street America.

But how do lenders determine the right investments to make?

This question kept cropping up during many of the 2018 events we attended.  Lenders want to know how to conquer digital disruption head-on to drive business growth and reduce the Main Street credit gap.

Industry Experts and Peer Insights

Event season is a key time of the year. We are able to anticipate market trends and hear customer challenges firsthand. Bringing together businesses to share insights encourages new ideas and creates better solutions for lenders and their customers.

However, with dozens of events hosted in North America, it’s impossible to attend each one. To help you identify new approaches and opportunities for 2019, I have summarized the hot topics being discussed by industry experts as well as your peers.

Addressing Market Challenges

The Art of Possible was the theme for Commercial Equipment Marketplace Council’s 2018 East Coast Executive Roundtable. The event featured speakers from a wide-range of companies that have paved the way for the digital disruption. Presenters addressed the importance of data, social trends and new technologies such as AI, biometrics and blockchain, with the goal of equipping participants with new concepts to apply to their business strategy. Attendees valued the theme and content of this event, with 81% showing the greatest interest in sessions about future tech, 76% interested in big data’s social influence and over 50% interested in women in fintech discussions.

American Banker’s Annual Small Biz: Banking Conference used a social platform to highlight key moments from the event. According to Barlow Research, small business clients expect anywhere, anytime digital access through many different channels, and this brings challenges and opportunities for many banks.

Meeting regulatory compliance was also a consistent topic that was discussed at many different events.

During the American Bankers Association annual conference in New York, FDIC Chairman Jelena McWilliams discussed the regulated banking environment and the challenges banks encounter when attempting to innovate. McWilliams believes, “We need to create a framework that encourages innovation inside the banks and in cooperation with the banks”.

At the annual Risk Management Associates Conference, Emily Nachlas, executive VP and director of enterprise risk management at IberiBank, was quoted saying, “As risk managers, you need a methodical process for your due diligence because regulators will want to come and see your vendors. You need to be very organized and score the risk of your third-party vendors. Regulators are looking to make sure you have a documented policy and ongoing due diligence and monitoring. Check all the boxes, and make sure you have a clear onboarding – and off boarding – process.”

In addition to regulations associated with risk management, EDR put together a summary of major and impactful insights from the RMA conference- highlighting lending transformation, cyber security, new technologies and much-needed efficiencies throughout the banking experience. 

PayNet’s Participation and Insights

To help banks and alternative lenders succeed, PayNet also shared insights and perspective at many of these events.

At the Small Biz Banking Conference, I was fortunate enough to host a breakfast briefing where I addressed the struggle to close the credit gap in a strong economy. Referencing a comprehensive 46-page study, developed in cooperation with Raddon, a Fiserv company, we examined how efficiencies and high costs have hindered small business lending, and how overcoming these challenges may offer the key to unlocking small business opportunities.

Thomas Ware, our senior vice president of analytics and product development, recently co-presented at 57th Annual ELFA Convention - talking about how equipment finance lenders are feeling increased competitive pressures, compressing margins and leading to more aggressive underwriting. He encouraged lenders to achieve their volume goals by increasing market share with new technologies that reduce manual labor and increase operational efficiencies.

Key Takeaways

To help you prioritize and focus on the impactful initiatives to ensure success, we identified three areas of opportunity – compliant technologies, user experiences and data-driven solutions.

Insight #1: Digital business is here to stay, so be compliant. Technologies that streamline operations and create better customer experiences will continue to influence our business-making decisions. As digital banking continues to evolve through new technologies, regulated banking will continue to increase. Commercial lenders need to understand and utilize technologies that enable business transformation, while ensuring compliance.

Insight #2: Embracing digital solutions of UX will determine your success. Learning from companies like Uber, Amazon and Google, it’s crucial to stay-ahead-of the game and look to incorporate digital services and products sooner rather than later. Companies that resisted innovation – such as Sears, Kodak, and Blackberry – quickly learned how competitive differentiation and customer satisfaction impacts the ability to succeed in a crowded marketplace. It’s clear that moving to a more customer-centric model that incorporates innovation has its benefits. Studies have shown customer UX leaders drive three times more revenue compared to UX laggards.

Insight #3: The power of data is transformational. Understanding your customers through data will help make better business decisions. Understanding historical transactions help predict future trends when it comes to risk, and ultimately increases confidence in lending decisions. And utilizing technology to interpret data can improve turn-around times that improve internal processes as well as customer experiences. Also, by analyzing key data inputs such as industry, geography and revenue, organizations can uncover untouched markets that will propel business growth.

Looking Towards the Future

As the digital lending revolutionizes the industry, we want to make sure we help clients anticipate hurdles to be overcome as well as identify opportunities for more profitable growth.

By understanding the impact of digital solutions, embracing customer-centric experiences and utilizing technologies to interpret data and predict trends, you can forge a path to address the many challenges banks and alternative lenders are facing today.

I encourage you to visit our new website and check out some of our upcoming webinars for 2019. We hope to see you join us