Why the future of lending requires adopting digital workflows

By Michael Haedrich, Senior Product Manager, US Mid Market Lending and Compliance

With financial institutions facing stiff competition for business and talent, the pressure to cater to stakeholders' expectations is intensifying. In the lending space, digital workflows are streamlining processes like decision-making and funding loans and helping traditional financial institutions keep pace with evolving demands.

Financial institutions operating in the current lending market face a number of pressing challenges: from ongoing industry consolidation and competition, to generational shifts taking place within their customer bases and talent pools, to mounting economic uncertainty. Navigating this tumultuous environment demands a commitment to digital transformation. Instant access to information and services is the norm at our fingertips, financial institutions can no longer afford to lag in their digital offerings. This expectation of seamless, readily available experiences extends to lending, making robust tech transformation not just an advantage, but a necessity for financial institutions to meet customer expectations, attract digitally native younger talent, and ultimately remain competitive in the evolving lending landscape.

By definition, digital workflows use technology to automate traditionally manual processes. In the lending space, adopting digital workflows offers financial institutions several important benefits.

Catering to the expectations of customers and talent

Seamless, frictionless digital customer experiences are no longer a novelty or a bonus; they're table stakes, even for financial services providers. Customers expect immediate responses and 24/7 accessibility, often via mobile devices. In other words, they expect applying for a loan to be as easy as ordering takeout, resulting in a growing demand for online loan applications, e-signatures, and real-time updates.

Consumers and commercial borrowers are also seeking faster times to funding than have historically been provided by traditional lenders. Where traditional financial institutions can take more than three weeks on average to decision a loan, alternative online lenders can provide funding in under seven days.

Businesses that fail to meet customers' expectations for simplicity and speed risk losing market share to competitors with superior digital offerings. According to Finastra's report, the CFPB's summary of 2023 data on mortgage lending, bank and credit union share of first-lien owner-occupied loan originations fell from 50% in 2011 to only 37% in 2023.

Customers aren't the only stakeholders with high standards for digital experiences: younger generations of bankers expect to work with modern, digital technology. As a result, institutions with outdated, manual processes risk losing out on top talent.

Adopting tools like LaserPro and its integrations can give lenders a competitive recruiting advantage by appealing to tech-savvy professionals. In addition, digital workflows streamline operations, allowing bankers to focus on more strategic tasks and more rewarding work. For example, digital workflows enable faster loan processing, data-driven decisions, and personalized services.

Operational advantages of adopting digital workflows

In addition to delivering exceptional customer experiences, integrated digital workflow solutions like Finastra's LaserPro can help financial institutions facing staffing challenges do more with less. This not only helps maintain productivity levels but also frees up valuable employee time to focus on higher-value activities. Digital workflows can help institutions with smaller teams manage their workloads, particularly amid issues like attrition and consolidation in the banking industry. Specifically, digital workflows can eliminate manual intervention, increase efficiency, and reduce errors.

Digital workflows that operate within cloud-based systems offer additional benefits. Cloud-enabled technology platforms can provide automatic updates as well as integrate seamlessly with other systems and applications. These tools have the potential to increase staff productivity as much as 15% to 20%. Cloud-based systems can also support features that are not supported by on-premises infrastructure, such as AI assistants, which can further streamline workflows and boost efficiency.

The rise of digital-native consumers and bankers is forcing a fundamental shift in the lending industry, and as a result, it's becoming essential for financial institutions to invest in digital workflows. Embracing digital transformation by investing in solutions like Finastra's LaserPro to future-proof their lending operations can help financial institutions meet evolving customer expectations, attract talent, gain a competitive edge, and navigate uncertainty.