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Why lenders believe monitoring tech, loyalty are key to future of industry
EVENT COVERAGE: ABF SUMMIT 2022 Why lenders believe monitoring tech, loyalty are key to future of industry
Experts discuss what FSIs are up to in their quest to future-proof their businesses.
Technology is very much one of, if not the most influential factor rapidly transforming the banking and financial services industry, with decentralised finance and buy now pay later (BNPL) being key focus areas, according to the analysts and market leaders taking part in the first panel of the Asian Banking & Finance Summit 2022.
Monitoring controls are amongst the biggest focuses of banks today, with lenders using technology to check lending procedures and policies, observed Elisha Harrington, Senior Director, Innovation Office, APJ for software company ServiceNow. This helps not just to speed up the process, but more so to reduce the overhead and administrative burden on individual teams of the lenders.
“We can check against policies and procedures to ensure that a lot of that lending procedures is done correctly, and prevent a lot of pitfalls that may or may not result in regulatory fines down the track for missed settlement periods,” Harrington told attendees as an example of what type of technologies lenders are currently implementing.
“We’re also seeing more of a focus on a complete, simplified and seamless experience for both the banker, the agents, brokers, and also the customers involved.”
Upgrading internal processes
Similar to Harrington, Tushar Agarwal, managing director and Partner of the Boston Consulting Group, noted that lenders are upgrading their internal banking processes in order to implement different channels in which loans could come into the bank.
“People are thinking not just of the backend process and reengineering, but also now thinking about new channels that they are now tapping into and how they make the lending journey a lot more seamless,” Agarwal said.
In order to achieve seamless lending journey, one of the key elements banks are asked to focus on is the user interface of their platforms, according to Daniel Cantorna, Vice President, Data, Insights and Technology, Asia Pacific, at Collinson.
Beyond that, Cantorna said that it’s important for banks to focus on keeping customers rather than just onboarding new once. Frictionless services and personalisation will be key to doing so. For the former, Cantorna said that Collinson has observed over 1,400 banks globally are working to lessen friction in their lending processes. But for the latter, customers notedly remain unsatisfied, with only 1 in 3 (34%) indicating that they are getting the personalised services they expect from their banks—versus the 2 in 3 (66%) that already expect it.
“Often this does come down to varying things, depending on the type of bank that it is in. The services in the larger multinational banks are usually [bogged] by legacy technology, creating silos where experience varies depending on where you are, where you’re interacting with the bank, which products you’re buying from them,” Cantorna said.
This leads to varied customer experiences, sometimes good, sometimes bad. And that can affect loyalty, Cantorna warned, adding, “Getting that consistency across the bigger organisations is really critical.”
New services
Apart from internal process and UX, FSIs are also exploring new revenue streams in the form of new types of lending services—with BNPL being amongst the hottest. Over 20 million new people yearly are estimated to access financing and credit through the internet, according to Frederic Tardy, Chief Strategy and Customer Officer for Home Credit, one of the region’s leading BNPL providers.
And with banks in Asia likely to focus on the prime segment, fintechs like Home Credit have a great opportunity to make waves with the middle segment, especially for their rising interest in BNPL services.
As for the rising interest rates, Tardy said that this likely will not affect BNPL, but he does expect the rise of online shopping to benefit the BNPL market. These are prominent in segments including telcos, mobile devices, and even car manufacturing, he said.
Interest free products will continue, [and even] retailers and manufacturers are also contributing to pay the cost of the interest [in order to] continue offering BNPL products, Tardy added.
Another space that FSIs could explore is the growing decentralised finance space.
