A Virus outbreak has belted lenders with a ripple effect the size of a perfect storm.
Though many firms have responded quickly catering to the immediate needs of customers, Lenders are not immune to the current financial crisis.
COVID-19 creates new challenges for lenders which include, operational inefficiency, changing credit policies, delayed financial statements, temporary closure of borrower’s business, payment defaults, etc.
Now it’s time for Lenders to think about the NEXT steps to adjust to the NEW NORMAL and stabilize the business.
Globally brands have been pushed to re-strategise, re-align, re-think all together and spin into action. Lenders need to build trust with customers whilst doubling down on the strategic investments that accelerate their progress to the future of lending –this will not only protect short term business health but will also provide the foundation for competitively advantaged growth. However, while adapting to the new situation, lenders need to carefully manage the metrics, to minimize exposure to a sizeable financial risk.
The time to prepare for tomorrow’s success is today. Here are 5 steps to take:
Efficient credit management: The cash flow of many consumers and businesses is collapsing as a lack of demand flows through into lower business revenues and employee layoffs. This will result in new demand for credit as consumers and businesses are unable to make loan repayments. Lenders should focus on few credit management initiatives like:
a)Credit extension policies based on data-driven decisions
b)Introduce individual customer cash flow modeling to proactively reach out to customers with tailored, relevant solution proposals.
c)Set up loan accounting systems that can quickly participate and process government- guaranteed loans
Responsive customer service: Focus on targeted customer engagement initiatives. Establish frequent communication with customers based on their real-time situations, locations, and behavior trends. Re-configure sales and service model by enhancing digital customer sales and servicing and enable remote interactions across end-to-end processes, e.g. facial recognition and voice authentication for customer verification and digital KYC for new sales.
Sensing and actively mitigating risks: Enhance risk monitoring solutions to identify and adapt relief plans to customers who are financially at risk. Review credit policies to ensure credit decisions made to support customers comply with regulations. Monitor early warning signals and offer new short-term loans, e.g. unsecured lending, transactional, and working capital loans.
Cost control measures: Adopt an agile approach to crisis management. Keep tight coordination of actions across investments, regulators, customer groups, employees, trade associations, and many other stakeholders. Invest in automation solutions that had long-run benefits.
Technology- driven innovations: Improve the operating model by flexing people, processes, technology, regulation, and innovation. Embrace end-to-end digitization by accelerating new platforms, and ecosystem connectivity. Double down on the AI, analytics, digital and cloud agendas as key pillars for the new operating model.
Operating in an uncertain world means you must be digitally native, agile and, data- driven.
Insight Consultants can help you in the adoption and use of digital native processes, set up an adaptive, agile strategy, and build flexible solutions to respond to altered circumstances.
To find your footing in this new normal, Talk to us by filling the form below
