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The world of finance is well known for its paper trails and manual processes. Despite rapid technological advancements in the last ten years, 71% of these processes remain manual. However, things are beginning to shift as this fiercely competitive market adjusts to technological advancements.
Technology is no longer being implemented for the sake of a “mild convenience” or as a “novelty.” It is now becoming a necessity to achieve growth in the current marketplace. Trends indicate financial institutions plan to increase their tech spending in 2024, marking a clear focus on innovative solutions. Fortunately, the fintech sector is booming with new automation solutions to boost efficiency and streamline processes. These solutions can help with various things like streamlining applications, crunching data with artificial intelligence (AI), and more. It doesn’t matter – the common denominator is that those in finance can finally work “smarter, not harder,” like so many others.
There are several critical ways that automation is revolutionizing the financial landscape that is worth a closer look.
1. Improved Customer Experience
When it comes to the financial industry, having the right technology in place can significantly impact the customer experience. According to a study by Bain & Company, 48% of consumers encountered some kind of digital friction when attempting to open an account or apply for a loan with a bank.
Many financial institutions are turning to automation leaders like MeridianLink to help provide the infrastructure to thrive in this competitive landscape. By partnering with the right expertise, financial institutions can confidently offer services like cloud-based digital lending, account opening, and personalized banking recommendations for an improved consumer experience. Additionally, there’s a massive benefit from the shared intelligence from a unified data platform.
Once that information is in the system, everything is designed to be as fast, user-friendly, and efficient as possible. This goes a long way toward eliminating time-consuming and often costly errors. By addressing common pain points with the right technology, financial institutions can grow a consumer base that will stick around for the long term.
2. Added Efficiency and Reduced Margins for Loan Origination
Part of the challenge that loan approvals have historically posed for the financial industry has to do with just how time-consuming and inefficient paper-based processes are. This creates an expensive, significant obstacle when discussing something as crucial as loan underwriting, which depends on consistency, auditability, and accuracy.
Automation can dramatically impact the lending process, saving costly overhead. Lenders can easily collect and access essential customer information from a single access point. Even loan terms and rates can be structured automatically, freeing loan officers’ valuable time to focus on more important matters.
One example of an innovative lending company leading the way in automation technology is Canopy Mortgage. Their loan technology, known as Nano, significantly reduces overhead costs to empower loan officers nationwide to grow their practices. Despite the cost of preparing a loan raising 275% in the last decade, this technology has allowed Canopy to remain over 100 basis points lower than its peers, which equates to around 1%. When you’re talking about loan percentages, that’s a big difference.
When it comes to loans, tech like this makes direct-to-consumer mortgages appealing while still allowing for personal touch through a Loan Officer. By lowering overhead costs through automation and technological efficiencies, clients can experience lower rates and reduced fees. That’s a win-win for all involved.
3. Minimized Manual Tasks
In an over-arching sense, automation is also invaluable to financial services because of the sheer efficiency it can add to once manual tasks.
According to one recent study, most people estimate that they could save six (or more) hours every week if their jobs’ repetitive, manual parts were automated. That’s nearly an entire workday. Think about everything that even a small financial institution could accomplish with an extra day in the week without increasing costs while creating a better employee experience.
To expand on that, freeing up an entire day a week per employee – or roughly six weeks every year- can save a Fortune 500 company with 500 employees approximately $4.7 million annually. That money can then be funneled back into other areas of the business where it can make the most significant impact. It’s also a great way to create a better experience for employees where they’re free to focus on things like career development, making attracting and retaining top talent easier.
Despite all this, there are still those financial businesses out there that insist on doing things “the old-fashioned way.” They lump paper-based and manual processes into the category of “if it isn’t broken, don’t fix it.” They fail to acknowledge that while it may not be “broken,” it isn’t particularly “good,” either. At least not by today’s standards.
Fintech Solutions are Here to Stay
Financial organizations should feel empowered to navigate the financial world faster and more efficiently than ever before. The financial sector is very much data-based, and that data is becoming more digitized with each passing day. Therefore, organizations must be able to derive as much value from that data as possible to remain competitive.
Adding efficiencies to loan underwriting creates savings that can be passed to the consumer. High-touch, easy-to-use platforms will improve the customer experience. The more time freed up by minimizing manual tasks, the more time employees have to focus on building relationships with customers and clients. The list goes on and on.
Considering the increased efficiency technologies like automation have brought to the financial industry in the last five years, it’s truly exciting to think about what the next five will look like.
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