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Welcome to the tenth edition of Accrued: After Hours 🎙️! This weekly newsletter will provide you a short recap and the main takeaways of each episode from LoanPro’s Accrued podcast series on Fintech Confidential. 

Hosted by @Tedd Huff and LoanPro’s CMO, @Colton Pond, Accrued explores fintech through the lens of lending with insightful conversations from experts and leaders across the industry. 

You can stream the Accrued fintech podcast, (brought to you by LoanPro), in all the usual places.

Pull out your headphones, because season 1, episode ten of the Accrued podcast series by Fintech Confidential is up. It’s Time for an OS Upgrade: Your Core Banking & Lending Systems Need This!

In this episode, Tedd and Nate are joined by Anthony Peculic, Head of Cards and BaaS at Cross River Bank. They discuss shifts in fintech, covering both the opportunities and hurdles facing banks, and how those businesses are adapting with next-gen loan management software and a focus on both compliance and customer experience.

Here’s what went down

The three industry experts discussed a few major topics:

  • The emerging trends that are shaping the industry
  • How companies are evolving and shifting 
  • Key strategies for banks, lenders, and other companies

The macro trends shaping the industry

Tedd, Nate, and Anthony discussed the overarching patterns that are shaping the industry. Some of these are top-down changes, like shifts in regulations or changes in interest rates. These are compounded by a rapid shift in customer behavior, with more consumers preferring to do business from mobile devices, and demanding a higher standard of customer care.

From these market trends, they drew valuable insights about the best paths moving forward. Brands and digital banks that deliver the best experiences to their customers will continue to draw in more applications, and they can best accomplish this by working with a banking core or loan management system that streamlines a broad range of activities, allowing them to maximize both customer experience and operational efficiency.

Banking is evolving

Responding to those macro trends in the banking industry, many financial institutions are changing their approach. Rather than acting as mere service providers, they are now active partners in innovating financial technology. Some banks have upgraded their core banking system, catching up to and even surpassing the fintech disruptors who have made such great strides in the past few years.

With a focus on delivering superb customer care, banks have shifted to capture growing loan and credit markets, such as embedded finance, personalized cards, or other new ventures. But offering more loans and other credit products in a diverse and appealing range of course requires a digital transformation to an adaptive and flexible back end system. Legacy loan management systems typically have a rigid, siloed approach to core banking and credit tasks like loan origination, loan servicing, and payments.

Upgrading to a modern loan management system is crucial, and should be the first step for any company whose core banking system is still lagging behind.

Strategies for adaptation

Throughout the episode, Tedd, Nate, and Anthony identified several specific strategies to upgrade the core banking and lending services companies provide, including both the tech-driven and interpersonal.

Before launching into development, they recommend product owners work with both internal compliance officers as well as representatives from their regulatory body to discuss their new product’s compliance feasibility.

Better digital technology will also be key to improving and customer experience across the industry, particularly through personalization. Using alternative data to identify what drives consumer behavior allows credit providers to fine-tune products at the individual level, an unprecedented reality now possible through modern loan management software.

Key takeaways

Here are the five key takeaways from this episode.

1. Stay on top of regulations

Anyone in the financial services industry must stay informed about regulatory changes. And with an understanding of those changes, make sure your core banking systems and loan management software can keep up with requirements for customer data storage, secure money transfers, interest calculations, avoiding human error, and other aspects of compliance.

2. Open doors with regulators

Communication is key, especially with regulators. Compliance problems will kill the long-term viability of any loan product or business model. The product management team should work directly with regulators and internal compliance officers to ensure their operations align with current laws.

3: Technology is the new frontier

Technological advancements can give a significant competitive advantage to the credit providers who recognize and leverage them. There’s already evidence for success in how tools like a digital platform can boost customer engagement, ultimately leading to increased payments and revenue. Any bank looking to stay ahead should continually reevaluate whether their banking core and loan management system are the best available tools.

4. AI is your new best friend

Investing in data analysis and artificial intelligence can lead to more tailored financial products and services, lending crucial support to your core banking and loan management solutions. AI tools present a wide range of applications, from approving each loan application more quickly to preventing payment delays by analyzing the history of customers’ accounts.

5. Embrace tech-savvy banking

Lenders, whether they’re a bank, credit union, fintech, or other part of the industry, need to embrace the advancements that come from an improved core banking system or loan management system. Modern enterprise software can enhance virtually every lending process—like how your system intakes loan applications, processes daily banking transactions, or reports to credit bureaus, just to name a few.

Jackson Stone

Product Marketing Manager