We’ve had the doors open at LenderClose for five years now and recently closed a second round of capital investments. But, like many fintechs often experience, not every conversation with a credit union or bank turns into a new client or investor.
As we’ve discovered over the years, there are plenty of financial institutions (FI) with reasons for not investing in fintech. And there are definitely a few reasons we’ve heard more than once.
While many titles are fitting of this year’s global pandemic, when it comes to the financial industry and investing in technology, I think the most appropriate is the “excuse obliterator.” Many of the barriers we ran into regularly basically vanished overnight.
I wish that meant these beliefs were gone forever, but even despite this year’s extreme circumstances, changing mindsets takes time. But, here are some excuses on shakier ground in the post-pandemic world.
“We don’t have the budget.”
It might sound cliché, but it seems more obvious than ever that community lenders can’t afford not to invest in fintech. I can’t imagine any institution regretted their fintech investment when the pandemic hit.
And while there was little advance warning that institutions would need to pivot to stronger mobile presence, cloud-based vs. on-prem solutions and end-to-end digital banking suite of products almost overnight, the writing has been on the wall (or the touch screen?) for quite some time now. Pandemic or not, FIs need to invest and reinvest into exceptional consumer facing user interfaces.
Most community banks and credit unions don’t have the time or resources to develop software applications. Nor should they. We hire the best and continuously innovate so you don’t have to – but your customers sure will think so.
“We need to invest in a new branch.”
I admit I was surprised to hear this one recently. Changes have been coming to branch banking, and the pandemic only accelerated it.
I understand there are still members who may find the need to visit a branch. But believe me, no one – especially the today’s members traditional intuitions are vying for – wants to HAVE to go into a branch, especially for simple transactions like signing forms.
FIs simply can’t prioritize branch spending before they have a great contactless, mobile-first experience in place. Whether by choice or necessitated by the pandemic, financial consumers are doing more via mobile than ever before, and they aren’t going back. Not only do they expect the same services digitally they can obtain in-branch – they expect them to be better. Before you sink money into physical space, make sure your online banking services are as convenient, efficient and robust as possible. Consider the cost of lost opportunity if “cost” is an objection.
“We’re not sure which FinTechs to partner with.”
Unless your institution has the time and resources to develop its own technology, it’s time to get comfortable with fintech partnerships. Change just keeps coming and the pressure to innovate is coming from all directions. Large FIs are pouring billions (literally) into technology companies – including Big Tech players like Google and Apple – are getting into financial services, and consumers expect the online banking experience to keep up with the likes of Netflix and Amazon.
The path to exceptional service is a tough road for community lenders to go alone. And right now for many consumers, the only way they are experiencing your brand is mobile-first. Find a fintech partner that focuses on “user experience” as one of their guiding principles for developing products.
Remember, oftentimes excuses are just self-imposed obstacles getting in the way. Everything is scary until it’s not. We cannot afford to maintain the “status quo”. FIs must invest heavily in user experience.
Learn more about how LenderClose helps community lenders reimagine the home equity lending process for speed, efficiency and exceptional borrower experience.