As 2014 gets underway, consumers are feeling optimistic. Their confidence is on the rebound, a sentiment that is manifesting itself in numerous ways. One of the most noticeable is a rise in automobile sales, which saw an 8% increase, year-over-year, in 2013.
As consumers “re-start their engines” and rev up purchasing in 2014, are banks and other loan originators ready to meet their needs?
Consumer expectations: Right here, right now
Let’s think about the environment in which consumers operate now. They can instantly shop for the lowest price for anything with their mobile phones – and when they find the right deal, they can make a purchase in the moment, too. Everyone is now a comparison shopper, and these shoppers are looking for instant gratification.
The same applies to credit products, such as credit cards, car loans, personal loans and mortgages. According to a recent customer survey by Bain & Company, only 50% of US consumers’ new product business was won by their primary bank, which compares to 63% on average for developed markets.
Since consumers often apply with multiple lenders when buying cars, homes and durable goods, during the “golden time period” between credit application and approval, they typically jump on the first loan they are approved for.
Is your bank – and your origination software – ready to respond quickly?
Why lenders’ origination software needs to rebound
During the financial crisis and the lean years that followed, many institutions treated their origination systems like consumers treated their aging cars: they patched them up and prayed that the engine of their business wouldn’t seize up completely.
Now that the outlook for the US economy is rebounding, it’s time for banks and other lenders to invest in the origination systems that will give them the nimbleness today’s market requires.
Retooling for today’s market goes beyond improving the velocity and quality of processing applications for secured loans, of course. The outlook for credit cards is also on the rebound, with the average number of cards per US consumer up to 2.19 in 2013 (from 1.96 in 2012, and 1.83 in 2011).
Fast time to benefit, balance the risk
Since the last major wave of origination software upgrades about six to eight years ago, a lot has changed. Flexibility, automation, speed and accuracy are key benefits that new origination software can bestow – which can help lenders in these areas:
- Simpler Regulatory Compliance – The heightened global regulatory environment may force rapid changes to the workflow of credit applications or how models are scrutinized. Lenders need a modern origination system that is very flexible, to help them address compliance requirements.
- Better Risk Management – The control to change strategies rapidly, ingest new internal and external data sources, and adjust to changing market conditions helps protect against losses. Automation and champion-challenger testing can be implemented today by business analysts, with less involvement required from IT.
- Outstanding Customer Experience – Integration between marketing and origination systems allows lenders to engage in multichannel conversations, when and how customers prefer – including via mobile alerts and email – in order to expedite the approval and underwriting process.
Ready, set, lend
As consumers gear up to re-stock their garages, homes and wallets, it’s clear that new origination software can help lenders meet consumers’ rising needs, control the risks – and generate new revenue