What’s on the Horizon for the Banking and Lending Industry as we Head into the New Year? 

Let’s explore the trends that are set to redefine the way we bank and borrow. 

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The past few years have shown us that change in the financial landscape is not just constant, it’s accelerating at a rapid pace. Research from an Arizent survey conducted with American Banker shows that in 2023 consumer demand for digital enhancement drove the financial services industry toward innovation—especially as tech giants like Amazon^®, Apple^®, Meta^®, and Google^® expand their financial services offerings. 

As your bank or credit union gears up for another momentous year, what takes precedence in your strategic agenda?  

We’re exploring the trends that are expected to continue redefining the way consumers bank and borrow in the new year.  

Drawing Inspiration from Other Industries 

The transformation we’re witnessing in banking and lending isn’t unique. Just peek into the playbook of industries like retail, entertainment, or even transportation. They’ve all undergone similar revolutions, embracing technology, personalization, and accessibility to meet evolving consumer demands. 

Think about how streaming services like Netflix^® altered the entertainment landscape, how food delivery services like DoorDash^® transformed dining experiences, or how travel platforms like Airbnb^® reshaped accommodation choices. These industries won hearts by adapting to changing consumer behaviors. Similarly, banks and credit unions have a lot to gain by aligning with these trends into the new year. 

The Rise of On-Demand Banking Services   

Consumers now expect banking and lending services to be as accessible and customizable as their favorite entertainment, food, or travel experiences. The pressure is on to provide instant, personalized financial solutions that cater to individual preferences, goals, and immediate needs. 

The consequence of falling short of these expectations?   

A recent study conducted by Accenture found that 59% of consumers recently acquired a bank product from another provider instead of their primary financial institution. Those odds present a risk too significant to ignore—especially with competitor financial services being just a Google search away. 

For financial institutions, the solution is twofold. First, it involves technological advancement to enable these on-demand services securely and efficiently. Second, it requires a profound shift in mindset—a transition from traditional, product-centric approaches to a consumer-centric model. 

Securing Consumer Loyalty 

Consumers want to be seen and treated like distinct individuals, not just numbers.  

A Salesforce survey found that 73% of consumers expect companies to understand their unique needs and expectations, and a remarkable 88% of consumers feel their experience is as important as the products or services provided.  

As we anticipate the events of 2024, these statistics will become more prevalent requiring financial institutions to strategically invest in an experience that transcends beyond transactional relationships and prioritizes the end-to-end journey—attracting new consumers, transforming them into loyal members or customers, and nurturing those relationships over time. 

Digital innovation serves as the catalyst for meeting these needs, providing community banks and credit unions with the means to earn long-lasting consumer loyalty. So, as you’re looking at your 2024 plan, here are five essential tools your FI should pay attention to:  

1. Composable Digital Lending Solution: Featuring adaptable modules, this solution empowers your FI to swiftly acclimate to market shifts while tailoring lending processes efficiently. Its flexibility fosters innovation, integrating advanced technologies to streamline operations, optimize costs, ensure compliance, and expedite the launch of new lending products. 

2. Artificial Intelligence & Automation: AI-driven credit scoring, powered by advanced machine learning algorithms can refine your credit assessment models, enabling you to gauge borrowers’ creditworthiness more accurately and provide instant loan approvals and fund disbursements. This, in turn, broadens the scope of eligible consumers who can access loans, reduces wait times, and enhances the overall user experience.  

3. Biometric Authentication & Digital Identity Verification: These technologies can revolutionize your approval process by introducing a heightened level of security and efficiency. This not only helps to minimize the risk of identity fraud but also expedites the authentication process, offering a more seamless user experience. 

4. Business Intelligence & Data Analytics Tools: Data analytics combined with the predictive capabilities of business intelligence can offer you a more granular understanding of your consumers’ financial habits and risk profile, allowing you to tailor offerings that precisely match their needs. This insight powers a level of personalization that not only enhances consumer satisfaction but also increases the likelihood of successful loan approvals and long-term financial partnerships. 

5. Open API/Integration Partnerships: Modern technology architecture should include open APIs that power continuous innovation and flexibility to evolve with the unique and ever-changing needs of the market and consumers. A well-documented, open API framework can enable you to easily integrate your LOS into services that will enhance the digital lending and account opening experience. 

Banking’s Bold Future  

The year ahead promises an exciting journey for the banking and lending space. Speed, personalization, and accessibility will serve as the guiding principles. Drawing inspiration from other progressive industries and aligning with these trends, financial institutions are ready to not only meet but exceed consumer expectations, paving the way for a future where banking and borrowing are more convenient and personalized than ever before.  

It’s going to be a new year, presenting new opportunities to boldly step into the future of banking. At MeridianLink^®, we’re committing to supporting you through that journey with our interconnected, data-powered digital solutions.