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ABA: The American Bankers Association
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New ABA, Accenture Report on State of Digital Lending Provides Roadmap for Digital Transformation at Banks

WASHINGTON —

A new report released today by the American Bankers Association and Accenture provides a roadmap to help bankers speed up their ongoing digital transformations to meet rising customer expectations for hybrid experiences, bridging online and person-to-person options. The report, titled “The State of Digital Lending,” includes key considerations for banks, including how to identify pain points, select partners and develop a transformation framework.

“Digital transformation is not as simple as flipping a switch — it’s a continuous process and this report will help banks define their goals and develop customer-centric solutions,” said Rob Morgan, senior vice president of ABA’s Office of Innovation. “Consumers expect to be able to get a loan online, move money instantly and even obtain financial advice any time on their mobile device or computer, and the pandemic has only heightened those expectations.”

The COVID-19 pandemic drove more consumers—even those who until 2020 lagged in digital adoption—to online and mobile banking. According to the report, baby boomers increased online usage with 68% skipping human interaction to make a decision about banking products compared to 55% before the pandemic. These changes in digital habits are expected to be permanent. The report cites a KeyBank 2020 Financial Resilience Survey, which showed 85% of respondents were likely to continue conducting some or all of their financial transactions digitally.

According to the report, the banking industry receives high marks for customer satisfaction in part due to its successful in-person relationship model. In a recent small business credit survey, large banks achieved a customer satisfaction rating that was 35 percentage points higher than online lenders, while small banks outscored them by 49 points. To satisfy consumer desire and compete effectively, the report suggests implementing a hybrid model—meaning banks offer both digital efficiency and a human touch when needed.

To achieve this hybrid model and drive the shift to digital, the report describes several actions bankers can take:

  • Get to know the landscape and adopt a mindset of continuous learning;
  • Get leadership buy-in;
  • Look at the ecosystem and understand how any changes will course through the technology stack;
  • Be tactical in building out the architecture; and
  • Partner with a third party to execute and identify quick wins and “no regrets” investments.

Chris Scislowicz, who leads Accenture’s Credit group in North America, said: “Digital engagement is here to stay. The hybrid model will require banks to address the evolving needs of their customers through a robust digital-engagement channel, while maintaining the human touch via in-person relationship options.”

In addition, the report provides a broad look at the vendors that can help banks of all sizes achieve their digital lending goals, as well as several considerations for evaluating them. It also explains the key regulatory concerns around digital lending products, including:

  • Managing the risks of artificial intelligence;
  • Imprecise rules for electronic signatures;
  • A hodgepodge of rules for remote notary;
  • More rulemaking for data access;
  • Identifying the true lender; and
  • Vague online mortgage rules.

“The rapid convergence of banking and technology was already well upon us pre-COVID, but the pandemic has really accelerated the digitization of banking,” said ABA President and CEO Rob Nichols. “Through this report and other initiatives from ABA’s innovation team, we remain committed to helping banks navigate their technology challenges and providing them with the tools they need to continue enhancing the customer experience.”

This report is the first in a series from ABA’s Office of Innovation, which provides strategic guidance to ABA members on trends impacting banking and the technologies needed for banks to stay competitive, as well as advocacy on policies that will allow banks to continue innovating in today’s rapidly evolving market. Future reports will cover issues like wealth tech, small and medium-sized business solutions, and artificial intelligence.

To read the entire report, click here: https://www.aba.com/news-research/research-analysis/the-state-of-digital-lending.

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About the American Bankers Association

The American Bankers Association is the voice of the nation’s $22.8 trillion banking industry, which is composed of small, regional and large banks that together employ more than 2 million people, safeguard nearly $19 trillion in deposits and extend $11 trillion in loans.

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