Like you, we are continually examining the state of origination in financial services. We recently published a new whitepaper that takes a fresh look at the current realities of credit cards, white label/retail cards, auto loans and demand deposit accounts in light of the changing origination landscape.
For demand deposit accounts, the current climate is one of fierce competition. Banks and other financial institutions (FIs) are scrambling to attract and retain new deposit dollars, while market forces like shifting Federal rates, digital competition and consumer preferences all have an impact on their ability to win new business.
When it comes to credit cards, growth is the name of the game. Steady increases in consumer card numbers, as well as increases in total card debt, continue to make credit cards an attractive line of business for FIs. With white label and retail cards, the story is similar, although balances are on the decline. Differences from traditional cards include APR ranges and prevalence of minority and thin/no file customers using white label/retail credit products.
Auto loans continue to shine as a line of business, with steady volume, increasing outstanding balances and generally longer terms. But the number of newly delinquent loans is on the rise, and many FIs are showing a risk-aversion strategy that is opening doors for other lenders willing to provide loans to consumers that fall below super-prime and prime credit segments.
Origination across all these lines of business continues to mature, from how and where lenders engage new prospects to the kinds of processes, logic and tools they use to make a decision about creditworthiness. One common thread is the increasing amount of – and access to – available data to inform credit risk decisions.
Modern lenders have a variety of expanding technology options to access, interpret and act on the available data. Top financial institutions are exploring open, data agnostic decisioning platforms to acquire new customers, deliver superior experiences and secure their market leadership roles.
As consumers and banks embrace the new digital landscape, the way in which DDA and credit origination happens is changing to keep pace. Long gone are the days of waiting in a branch lobby to open a new checking account – customers expect to open a new account in minutes through any device. Anything that stands in the way is a showstopper, and can easily send someone straight to a competitor who makes it easier and faster to open an account.
The future, too, looks to be increasingly digital. With advancing technology, people are relying on things like biometrics, behavioral biometrics and more to manage and protect their financial assets. Whether the account origination of the future involves microchip-embedded fingerprint scans, retinal scans or some yet-to-be-developed technique, one thing is certain: Change.
