With consumers increasingly expecting a seamless lending experience and more non-bank digital lending players emerging in the market, banks must embrace digital lending strategies to remain competitive, ABA said today in a new report on the state of digital lending. The report found that only half of banks with assets over $1 billion and 38 percent of those under $1 billion in assets currently use a digital origination channel.
Of the banks offering digital options for loan origination, the majority — 96 percent — have digitized their loan application, while just 47 percent have digitized document uploads, 41 percent have digitized e-signatures and 34 percent have made use of digital channels such as email or instant messaging for customer service. Only 19 percent said they offered instant credit decisions.
Bankers noted that efficiency, cost and process, operations and staffing were the biggest challenges they face with respect to consumer lending overall. When it came to implementing a digital lending solution, 60 percent said they were concerned about integrating it with the bank’s core processing system, 57 percent were worried about compliance, 53 percent were worried about cost of acquisition and 53 percent were concerned about ensuring a superior customer experience.
Despite these challenges, however, nearly three out of four bankers said they were interested in using a third-party digital platform for consumer loan origination. Bankers were most interested in partnering for auto loans (71 percent), unsecured personal loans (71 percent), home improvement loans (56 percent) and student loans (44 percent).