Across sectors—and into each of our own daily tasks and chores—COVID-19 is reshaping the way we do everything. Many of us find relief in thinking about these changes as temporary and circumstantial. It’s true that some are; at the same time, many changes will be permanent. In the case of a long-documented consumer desire for digital lending options, this is a good thing—for both your bank and for all small business borrowers.
The acceleration of digitization
The banking industry has always been behind the curve in technological advancement and digitization when it comes to serving small businesses. According to a pre COVID survey by the American Bankers Association, a paltry 26% of banks used digital loan origination channels for small business lending, 12% supported digitized document uploads, and 11% supported e-signing of loan agreements. Now, with bank branches largely closed across the world, digital lending is the primary lending option. However disruptive it is in the short-term, enabling digital loan origination for your bank is undeniably a step in the right direction.
Before anyone had heard of COVID-19, your small business customers wanted digital. In a report from 2015, over 60% of small business owners expressed a preference for applying for loans entirely online. That was over 5 years ago. Now, it’s finally time to meet your customers where they’re at (and where they’ve been)—or risk becoming obsolete amidst lenders who successfully adapt.
The expiration of face-to-face
Right now, face to face contact is unnecessarily risky. It’s also (always) slow, inefficient, and uninteresting to younger generations. Consider: some small business owners—especially those in their 20s and 30s—have been managing their personal finances and ecommerce transactions digitally for years; in a pre-coronavirus survey, the majority of millennial business owners reported they would prefer—and even pay more for—products that allow them to avoid having to speak to a person.
This trend goes beyond lending. The COVID-19 crisis has accelerated digital everything. Consumers are ordering groceries online—and watching Hollywood blockbusters from their living rooms on release day. They’re benefitting from contactless payment methods and reduced co-pays for telemedicine. Why should they—or anyone else enjoying the efficiencies of digitization—be expected to go back to tedious in-person processes and extended wait times after this all ends?
If banks learn anything from the current crisis, it’s that your transformation to digital for small business customers is long overdue. If you’re not there yet, the time is now to accelerate the journey. The upside? Your changes—once integrated into daily operations—will serve you well in the long term.