Digital lending to drive business continuity for banks

By Béla Vér, Founder and CEO, ApPello

The COVID-19 crisis has amplified the need for digital processes on an unprecedented scale. With the new threat of localised lockdowns, it’s an essential requirement that banks can continue to run their operations remotely without delay or disruption.

What has been made abundantly clear is that a number of financial institutions, whose employees are home working, do not have the technological tools in place to efficiently deal with customers that need loans approved quickly in these testing times to help keep their companies afloat.

Time for change

Banks now have to adapt to ensure they have the flexibility and digital capabilities at their disposal, to respond to the market changes or they risk being unseated by start-ups and neobanks.

The pandemic has opened the eyes of many customers on how analytical and data driven technology can simplify everything from keeping in contact with colleagues easier, through platforms such as Zoom, or getting meals delivered to loved ones that have had to shield.

With consumer behaviours changing drastically and everything needing to be carried out online via user-friendly interfaces, business models of traditional banks must also pivot to stay relevant.

For banks to drive business continuity they must ensure that they fully embrace digitalisation.  One of the biggest challenges for banks within the context of the ‘new normal’ will be to future-proof their technology for home working. At the same time, they must optimise employee engagement, placing the management of their people at the heart of their operations.

So, how can banks prepare for this new way of working?

Retaining market share through digitalisation

Firstly, by adopting a cloud-native lending platform, traditional banks will be able to retain the market share of businesses that desire a fully digitalised experience and that can provision for demand swiftly.

A digital platform will accelerate a seamless lending experience for customers: from application to loan execution. This is especially important for SMEs at this given time, as the slow cumbersome ways of banks on-boarding clients – through a mixture of digital and paper processes – is not fit for purpose. As a consequence, this will result in delays, leaving companies in precarious cash positions, unable to cover bills and pay staff.

Secure working environment

Having the ability to manage a bank’s back office from a home office, is all well and good, however, this needs to be done securely. A cloud-native platform uses a number of highly sophisticated authentication methods, to keep both the client and the bank safe from cyber threats.

A cloud-native lending platform also improves security with front and backend systems communicating through secure communication channels and 2-3 factor authentication methods in place.

At the same time, with banks taking an Omnichannel approach to managing the back office in ‘lockdown’- such as the use of personal phones, laptops, and tablets – they must exercise vigilance. According to Action Fraud UK there have been 2,866 victims of coronavirus-related scams with reporting losses of over £11 million – a very real challenge for banks to make sure they get their security right and protect their company and customer data.

With employees using their personal devices as the ‘new normal,’ it’s essential that banks deploy the right technology including a secure web channel and strong user identification in the place of special company devices and physical protection.

Communication is key

Another advantage of a digital lending platform in the cloud, is that employees can easily communicate with one another without the need for a third party communication tool.  From voice chat and messenger to a MS Outlook plug-in to attach letters directly to a workflow from a correspondence, integrated workflows and communication channels will help back office staff communicate any issues or approvals on the platform itself – providing a simpler way to collaborate and greater visibility internally at every stage of the lending process.

Sharing what we know

As remote working becomes the norm there will need to be a large emphasis on knowledge sharing and training to not only fully digitalise operations, but learning how to make processes safer and slicker for the customer. Currently the business models of many traditional banks don’t have the resources to implement home working effectively, and they must focus their efforts on training and up-skilling their employees.

With banks adopting the benefits of cloud-native lending platforms, data will be processed and analysed at greater speed and evaluated more thoroughly through machine learning capabilities, instead of having to manually document the process when each new request comes in. This will accelerate the process of informing the customer if their loan application is likely to be successful, pending legal documentation and passing all the necessary checks.

Alas, the traditional banks of the future will only be successful if they embrace cloud-native digital lending technology platform that can offer a single click assessment, eliminating time-consuming box ticking  – thus providing swift loan approvals and a stress-free experience for the customer from start to finish.

The pandemic has caused much uncertainty and delays for those desperately in need of economic assistance, and the need for traditional banks to go digital has never been more critical.

COVID-19 has signalled the end of an analogue era and adopting a cloud-first approach is the key to ensuring traditional banks don’t get left behind. If they fail to do so, challenger banks will be hot on their heels to try and disrupt in this new and uncertain market dynamic.