Consumer finance functions are impacted by ever-changing customer needs, increased regulatory pressure and competition, and the demand for more real-time transparent loan management. Financial institutions face challenges trying to embrace advancements due to legacy systems, improper infrastructure, and a lack of talent. In order to cope with these changes, financial institutions are leveraging technology-rich platforms provided by service providers, which enhance customer experience and provide an automated and transparent financial lending workflow process.
Despite short-term disruptions due to the pandemic, the demand for third-party support by financial firms for the consumer finance process is expected to grow at a steady rate, motivated by an increased openness to engage with third-party services.
Service providers are championing the move to platform-based ecosystems for service delivery. Such innovation-driven platforms will enable easy integration of existing legacy systems with third-party products and services.
As we move toward an increasingly globalized and digitalized economy, banks will need to think much differently. To survive in the digital age, banks and financial institutions must build continuous innovation into their DNA.
Financial services players are investing in next-generation digital technologies, collaborating and entering into partnerships with service providers to catalyze growth. This market has not been spared by technology advancements and ever-changing customer expectations. The internet and use of smart phones forced banks and financial institutions to shift from a traditional to a digital lending culture, with increasing emphasis on reducing loan processing time and improving customer acquisition and experience.
Going forward, we expect both service providers and global in-house centers (GICs) in the consumer finance space will increase their focus on the use of digital technologies such as analytics, automation, blockchain, augmented and virtual reality, and the Internet of Things (IoT). These advanced capabilities will help banks and financial institutions stake their claim in this highly competitive marketplace.
By Dr. Pradeep Mukherji, President and Managing Partner, and Harsh Kapoor, Associate Consultant, Avasant.