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ABA: The American Bankers Association
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New ABA Report Examines State of Digital Lending

WASHINGTON —
Forty-one percent of banks currently use a digital loan origination channel and only 19 percent offer instant credit decisions, according to a new report released today by the American Bankers Association. “The State of Digital Lending,” an initiative by ABA’s Endorsed Solutions group, highlights the results of an ABA survey of nearly 200 banks of all sizes. Survey topics
include banks’ challenges and opportunities, their use of digital lending technology and their views on partnering with non-bank digital lenders.
According to the survey, nearly 3 out of 4 bankers say their bank is interested in using a third-party digital platform for consumer loan origination. But when asked about the biggest obstacles to implementing a digital lending platform, respondents were most concerned about integration with core systems (60 percent), compliance (57 percent), cost of acquisition (53 percent) and ensuring a superior customer experience (53 percent).
 
“The survey results show that banks are keenly interested and ready to leverage today’s technologies to maximize efficiencies and increase profitability,” said Helen Sullivan, senior vice president, ABA endorsed solutions. “Banks are interested not only in existing lines of business but also in areas that have not been recently served by community banks — for example, personal and small business loans because the traditional lending process was either too time intensive or costly.” 
  
According to respondents, efficiency is the greatest challenge when it comes to consumer lending (72 percent), followed by cost (61 percent), and process, operations and staffing (57 percent). Of those who do not currently offer consumer and small business loans, there was interest in expanding into those loan categories if they had technology that would enable them to do it competitively.
 
The report also provides case studies to demonstrate how three banks have used technology to enhance their lending capabilities:
  • WSFS Bank in Delaware adopted the LendKey lending platform for originating student loans. This partnership approach enabled WSFS bank to quickly deliver a program to market that uses the bank’s underwriting criteria and standards. The bank keeps the asset on its balance sheet and LendKey services the loan.
  • Darien Rowayton Bank in Connecticut uses proprietary technology to streamline and fully digitize loan processes.
  • Burling Bank in Illinois uses Akouba’s digital lending platform to enhance the efficiency of the bank’s small-business lending and underwriting process, including tasks such as pulling credit reports, gathering financial statements, and sending reminders to applicants. Burling Bank holds the loans on its books, and underwriting is based on the bank’s criteria.
 
To download a complimentary copy of the report, visit http://response.aba.com/DigitalLendingReport. To see ABA’s endorsed digital lending solutions, visit: https://www.aba.com/Products/Endorsed/Solutions/Pages/BusBnkComLen.aspx.

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About the American Bankers Association

The American Bankers Association is the voice of the nation’s $21.1 trillion banking industry, which is composed of small, regional and large banks that together employ more than 2 million people, safeguard $17 trillion in deposits and extend nearly $11 trillion in loans.

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