Banks instant personal lending, the way to go beyond innovation

Banks' instant personal lending, the way to go beyond innovation

HOW CAN A BANK OFFER AN INSTANT LENDING SERVICE GIVING SOMETHING MORE THAN INNOVATION AND EFFICIENCY?

During his speech at the 3rd annual Conference on Fintech and Digital Innovation, held on the 26th of February 2019 in Brussels, Yves Mersch — member of the Executive Board of the ECB (European Central Bank) — argued that «Fintech is nothing new». Behind this statement is the observation of how technology has always driven innovation in financial services.

The first example of this is the telegraph and the transatlantic cable laid in 1866, which enabled communications between North America and Europe and allowed the first developments in global finance. ATMs (Automated Teller Machines), credit cards, internet banking and electronic payments shaped the modernity of the banking sector but the present and future of financial services belong to digitization.

Digital technologies introduce interesting opportunities for banks but also give new entrants, the so-called Fintech, better and cheaper ways to compete for core banking business. So, banks’ dominant position could be challenged.

 

PERSONAL LENDING MARKET, INCUMBENTS AND NEW ENTRANTS

Personal lending is one of the fields in which Fintech’s presence and the application of digital technologies have already produced remarkable results.

Today we talk about Instant Lending: loans that can be disbursed online, within minutes instead of days. In this field, digital technologies can speed up the processing of loan applications, reduce transaction costs and improve risk assessment.

Currently, Fintech’s lending still represents a minority share of total lending, but this share is growing rapidly. For example, in the US, 36% of unsecured personal lending was issued by Fintechs in 2017.

 

DIGITIZATION CHALLENGE, FROM DIGITAL TECHNOLOGIES TO DIGITAL TRUST SERVICES

How can banks differentiate themselves from Fintech and provide Instant Lending solutions that give their customers something more? Betting on Trust Services is a possible way.

In response to these new competitors and the expectations of customers who are increasingly accustomed to the speed and simplicity of online services, many banks have stepped up their investments in digitization and entered into partnerships with digital service providers. Within four years, banks’ global investment in Information Technology has risen from $180 billion in 2013 to $250 billion in 2017. But a bank should not only aspire to greater efficiency or a better customer experience, it must primarily strive to ensure the security of its customers and their savings.

Several risks could accumulate in the non-regulated sector, which could affect payment security. Therefore, banks should adopt solutions that not only innovate and make processes more efficient, but also seriously consider security in the processes of authentication and verification of user identities, as well as in the management and transmission of important and confidential information and data.

Digital onboarding and contract subscription require highly trusted transactions and certification of online clients’ digital identity.

 

INFOCERT TOP: STREAMLINE INSTANT LENDING PROGRAMS AND ENABLE BANKS TO DRAMATICALLY IMPROVE CUSTOMER SATISFACTION

A perfect solution to create both efficient and secure instant lending processes, already successfully adopted by several banks based in different European countries: IItaly, Romania, France, Croatia, Portugal,  Austria…, is InfoCert TOP (Trusted Onboarding Platform).

In a study conducted by Forrester Consulting, TOP proved to be extremely effective in simplifying instant lending programs and enabling banks to significantly improve customer satisfaction.

TOP  is the end-to-end solution for customer onboarding and distance contracting with full legal value, quickly completing any customer onboarding process and contract subscription, reducing time, cost and fraud and improving the customer experience.

It provides multiple identity assertion and electronic signature modules to fit different scenarios and enable business processes to identify customers, verify their identity and sign digital contract with high level of security and low level of risk:

  • by AML ID, current customers who intends to apply for an online loan can be verified by Entities subject to the obligations under Anti-Money Laundering (AML) laws;
  • by WEB ID or LIVE ID, prospects (individuals new to the bank) can be identified through a live video call or by a face-to-face meeting with an operator entitled to perform the recognition;
  • electronic signature module can manage both Advanced Electronic Signature (AdES) and eIDAS compliant Qualified Electronic Signature (QES), to meet different risk and trust levels required by business processes.​

Forrester quantified benefits, costs, risks, and flexibility based on interviews with an InfoCert customer. The examined customer, by adopting TOP solution for Instant Lending, moved from a paper personal loans lending process to an end-to-end fully trusted and faster digital process.

By adopting TOP:

  • the bank reduced dramatically the time from customer application to cash disbursement;
  • the number of customers that changed their minds and renounced taking the loan once offered declined;
  • the doubling of personal loan production growth enabled by InfoCert TOP led to an increase of revenue over three years.

 

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