Consumers, particularly groups that tend to be dissatisfied with the current banking system, are calling for more control over their finances. Based on our discussions with industry leaders, successful lending will stem from finding ways to empower customers in 2020.
Explore industry experts’ perspectives on the evolution of customer experience in 2020
Empowerment is an element of the consumer experience that is often overlooked, primarily because there are currently very few mechanisms to enable it. Blend CEO Nima Ghamsari believes “using analytic capability to proactively improve financial wellness, or ‘self-driving finance’, will be the next fintech innovation that organically deepens customer relationships.” He acknowledges that the analytical capability and depth of technology needed to solve this is only starting to mature, but is confident big strides will be made in 2020.
Harnessing technology to create automated, intelligent tools that guide financial decisions allows lenders to exceed consumers’ expectations and build trust. Trust is particularly important with groups typically unsure of how banks can satisfy their financial needs. Lending staff can supplement these tools with personalized service to strengthen customer relationships.
Trust starts with empowerment
Millennials, having come of age during the 2008 financial crisis, tend to be skeptical of the current financial system. According to American Banker, 57% of millennials said it’s “extremely” or “very” important that their primary financial institution helps them improve their financial health, while only 14% believe their primary institution is succeeding in doing so.
When assessing how lenders can win over millennials, Sasha Grutman, partner at Middlemarch Partners, notices that technology-enabled lenders have been more nimble and successful. He remarks, “Institutions will reestablish their brands with millennials by providing convenience, anonymity, and control of their finances.” Tech-first lenders are able to provide millennials with the tools they need to feel empowered to improve their financial lives. Lenders who are able to work hand-in-hand with consumers to help them build strong financial futures will win the trust and business of millennials.
Technology can aid accessibility
When lenders provide people with financial tools that empower them, they’re providing a stepping stone to people who historically have not participated in the system — or in fact, who may have been actively kept out of the system. Kendra Barnes, founder of The Key Resource, noted, “Technology has the power to take the overwhelm and mystery out of the loan process, and it has created an opportunity for banks to bridge that gap and offer an easier, more transparent loan process.” Many people who have not participated in the current financial system, whether it’s by choice or not, are concerned about bias in lending practices. These consumers are searching for more insight into existing financial processes. They also want financial services that suit their individual needs and goals.
Technology has the potential to increase transparency and alleviate these concerns. When people see this increased transparency and opportunity for control over their finances, they are more comfortable partaking in the system. Lenders who take this into account will be employing more inclusive lending practices, ultimately expanding their reach and growing their businesses.