Dive into the Jack Henry™ 2024 Strategy Benchmark to unlock key strategies for navigating today’s dynamic lending landscape and boosting your loan portfolio.
Impacts of market changes
If lending during the pandemic taught us anything, it’s that lending should embrace change.
After the pandemic, the market underwent a dramatic shift, transitioning from a period of originating new loans to one characterized by higher interest rates, reduced tolerance for risk, heightened delinquency rates, tightened lending standards, and elevated provision for loan losses.
Since the second quarter of 2022, credit unions have experienced a 31% decrease in lending, while banks have seen an 11% decrease.
Amid economic uncertainties and potential credit challenges, focusing on risk management, adapting to changing consumer expectations and technological advancements, keeping “time to money” top of mind, and modernizing your lending platform will be crucial to your success. This approach will not only enhance your borrower experience but maintain your competitiveness in an ever-evolving market.
Strategies to stand out
The lending outlook for the remainder of the year is expected to be sluggish. Nonetheless, now is the time to prepare your lending environments for increased loan volume due to rate cuts.
Use this time to reposition and differentiate yourself for a more favorable lending market by:
- Embracing digitalization
- Leveraging automation to streamline a loan origination system
- Combining open banking, alternative data, and data analytics to create an integrated approach to lending
These strategies can speed up your loan approval process, drive personalization and data insights, reduce risk, improve credit quality, and expand addressable markets (including SMB lending).
In fact, most financial institutions plan to enhance lending solutions over the next two years, with automated workflows, data analytic dashboards, and intelligent document processing and management ranking as the top three lending priorities for 2024 and 2025.
Use technology to optimize
Consider moving to the increasingly open financial ecosystem, where 75% of banks and credit unions have already developed a strategy and 43% of financial institutions intend to leverage open banking for lending purposes.
Open banking has the potential to revolutionize your lending process by unlocking real-time customer data and insights – fostering a customer-centric lending experience enhanced by financial inclusion and faster approval processes. Consider harnessing these capabilities to automate working capital SMB loans of less than $100k, capturing relationships that lead to greater relationship primacy and increased deposit opportunities.
Discover the potential of integrating GenAI internally for your lending team.
From analyzing vast amounts of data (especially with complex deals) to providing compliance guidance and personalized offers, assisting with fraud detection, and identifying anomalies – GenAI will further enhance the decision-making process, improve lending efficiencies, and allow your team to focus on growing accountholder relationships.
Take the time to optimize and automate. Utilize open banking, data, and AI to streamline your lending process, mitigate risk, and win and retain accountholders. Remain agile and continue to adapt strategies to evolve with the industry changes, regulatory shifts, and emerging technologies.
Download the 2024 Strategy Benchmark to create profitable lending strategies to help you sustain growth.
Ready to learn more? Connect with a Jack Henry expert today.
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