‘Laggard’ lenders to be left behind: Moody’s

Banks that fail to digitally transform are at risk of losing their competitive edge to the rising number of online players entering the market, according to Moody’s.

In its Fintech – Global: Bank of the Future report, Moody’s warned that banks that fail to adopt strategies that strengthen their digital platforms may struggle to maintain their current market position as customers increasingly explore finance alternatives from online lending platforms.

The report cited data from an analysis of the US mortgage market which revealed that 53 per cent of borrowers used online platforms to obtain home loans in 2017.

The figures also revealed that younger borrowers are most likely to obtain loans via an online platform, with 69 per cent of Millennials obtaining finance either fully or partly online, compared to 55 per cent of Generation X and 43 per cent of Baby Boomers.

“Agile incumbent banks that consistently assert digital leadership will thrive and prosper, while laggard banks that lack the vision or resources to develop competitive digital strategies will be disrupted,” the report noted.

“Ageing legacy financial platforms have created opportunities for new nimble entrants to capture a portion of banks’ profits by offering more customer-focused, responsive and efficient channels.”

Moody’s added that the “bank of the future” would cater to high and rapidly evolving customer expectations by integrating enabling technologies, leveraging increasingly mature and dependable digital distribution channels, and applying such tools across multiple businesses and product segments.

Further, Moody’s noted that it expects competition to stiffen between traditional banks, large technology companies and smaller fintechs.

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Source: ‘Laggard’ lenders to be left behind: Moody’s – Mortgage Business