Will Open Banking Shake Up The Industry?
5 Dec, 2019
Will Open Banking revolutionise personal finance?
In recent years several research papers have come out citing the difference in millennial culture, their spending habits, their need for speedy delivery of everything and of course a preference of digital over face to face interactions. The world is spinning from one digital revolution to another and this has given rise to a global consumer base that is increasingly tech-savvy and capable of getting the info they need for themselves.
It is crucial for businesses to recognise that the only way to keep ahead in this neck-and-neck race to gain greater market share is to go online. The growing influence of digital transformations in the financing sector is apparent. For example, according to J.D. Power’s 2018 Malaysia Auto Consumer Finance Study, the ability to apply online and receive quick decisions has been identified as the main driving factor for high customer satisfaction.
Not only do the customers of today have a plethora of resources and aggregator websites to refer to – making competition between lending companies and banks fiercer – consumers have also become more discerning in their expectations of how they want to engage with financial institutions. Based on the above report conducted in Malaysia, roughly 60% of customers who apply for auto-financing online can expect their applications to be approved in no more than 2 days. These customers have reported higher levels of customer satisfaction, proving that turnaround time and convenience is a major factor in achieving those targets.
Studies conducted by international consulting firms such as PwC and Deloitte from as far back as 2011 had already highlighted the need for multi-channel platforms for Loan Origination and identified online loan applications as key to raising customer satisfaction in the consumer financing space, hence making it the obvious next leap in online banking and financing.
By shifting from paper-based applications to a digital platform and automating the decisioning process, financing institutions would benefit greatly by providing the levels of customer service and response times that their customers are looking for, but also increase internal process efficiencies and reduce operational overheads.
From an implementation perspective, Loan Origination solutions can be considered one of the easiest entry points to automating and digitising the loan management process. By eliminating paper-based forms in loan application and automating the origination process, financing institutions will benefit from quick wins in terms of faster loan processing times, greater productivity, increased volume capacity, and better data quality and integrity at the very start of the loan lifecycle. And of course, immediate gains to an increasingly mobile-driven consumer-base seeking loan providers that can offer them the best digital financing experience.