COVID-19 Pandemic Accelerates Shift to Digital within Financial Services
TransUnion explores how lenders and consumers have adopted digital platforms
The COVID-19 pandemic sent shockwaves through the financial services ecosystem and has challenged the way lenders have historically operated. As more commerce moves to digital platforms, empowered consumers hold even more power in today’s global, tech-driven economy. This was one of the key revelations during TransUnion’s (NYSE: TRU) Financial Services Summit, attended virtually by more than 160+ global financial services executives between Sept. 21-23.
During the “Future of Lending” roundtable at the Summit, discussions primarily focused on the need for increased digital capabilities to ensure lenders create more engaging relationships with their customers. A market research survey commissioned by TransUnion on Sept. 21, 2020 reinforces the need for more digitalization.
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Since the onset of the pandemic, the trend towards digital platform use has become especially prevalent, with 40% of consumers now using these channels more frequently. The increase is happening at a time when 60% of consumers say that the majority of their financial transactions are conducted via mobile applications. In terms of frequency, one in three consumers are engaging with their preferred financial institution multiple times a week via digital channels and roughly two in three are utilizing such platforms a minimum of once a week.
“The pandemic has acted as a catalyst for lenders to adopt new technologies and stay competitive in this changing environment. A strong digital presence is now all but required to meet the evolving needs of consumers,” said Liz Pagel, senior vice president of consumer lending at TransUnion and the moderator of the Future of Lending roundtable. “Financial institutions that prioritize digital innovation to optimize their consumer interactions are likely to see the most upside over the long-term.”
While the lending industry as a whole faces a period of recovery following the pandemic, organizations are looking to the future. A group of 20 financial services executives were queried during the Summit and half of these leaders believe the lending industry will take a year or longer to return to pre-COVID levels. However the same percentage of executives also noted that their organizations will be making more investments in digital capabilities as a result of the COVID-19 pandemic.
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“Consumers are now accustomed to receiving highly customized retail offers through online channels. As a result, they now have higher expectations for their interactions with lenders. Lenders who integrate into the purchase moment, or who provide customized, relevant credit offers are seeing outsized growth,” added Pagel.
Consumers also are hungry to receive relevant credit offers that are tailored to their financial needs. In the consumer survey, 33% of consumers found customized credit offers to be very important and another 33% cited this as somewhat important. To generate more leads and capture market share, lenders are capitalizing on these digital trends. With a wide variety of tactics available – from targeted digital audiences, digital invitation to apply or prescreened offers – lenders are leveraging strategies to offer easy ways for consumers to accept and apply for offers online.
“As retail and financial services interactions continue their accelerated shift to online channels, lenders will need to continue to invest in seamless engagement, underwriting and servicing experiences – companies who can make every consumer touch point customized and smooth will win in the future,” concluded Pagel.
Lenders can learn more about taking a digital first approach to lending and about each phase of the consumer digital journey by downloading TransUnion’s new report, Deliver on Digital: The Three Phases to a Better, Faster Customer Experience.