9 ways you know you’ve got a hyper-agile lending business


Posted on: Apr 18, 2018 by Kuldip Chiheru

In my previous post, I explored how the Digital Business Continuum is forcing lenders to look again at innovation. In particular, how they must embrace hyper-agility to stay relevant to their customers, keep pace with technological change and meet increasingly granular regulatory regimes.

On any continuum, everything changes. On a lending continuum, customer experience will get better and better; cost-income ratios will get better and better; and product excellence will get better and better. The result will be continuing superior market performance and top quartile growth. In my view, hyper-agility is what will move you along this continuum ahead of your rivals.

So how can you measure the progress of the target operating model for your lending business? And how do you determine whether you’re actually embracing the hyper-agility that will soon come to define market leadership in the sector?

There are nine questions I believe your business will need to answer:

1. Are you able to assemble a unique business model like building with Lego?

i.e. Adding new customer journeys, products, business services, and data services quickly and where they fit best.

2. Is your new model adaptable and does it have the tools to enable simplification?

i.e. Reducing the inconsistency across geographies that exposes you to credit risk.

3. Does your model leverage extended data?

i.e. Not just what people save but how they spend (within budget) and what is going on in their lives now (graduating) but what type of customer they are likely to be in the future (a medical professional).

4. Will your model allow you to test proof of concept?

i.e. Launch a product in one place, learn from the pilot, and apply the findings rather than a single, large-scale implementation based on ROI hypotheses.

5. Are you able to on-board new channels quickly in response to consumer demand?

i.e. Work with retailers, car manufacturers, and/or other banks when the need arises.

6. Can you construct aggregate products?

i.e. A loan that is linked to a consumer product and its associated long-term warranty.

7. Is it specialist or generalist retail technology in your stack?

i.e. A specialist lending business will have a breadth and depth of lending functional components. Generalist technology is unlikely to support all types of lending products and scenarios. Therefore, it is unable to support a unique business model. As a result, you will struggle to establish points of difference in the market without being susceptible to competitors.

8. Are you able to orchestrate an ecosystem of partners?

i.e. Using open standards based APIs to bring in outside organisations and seamlessly improve the experience or offer for customers. Or working with retailers to get closer to the ‘zero point of truth’ that connects lending to the purchase of other goods and services.

9. Can you use these partnerships on an industrial scale?

i.e. With an Opex based approach across all areas of your business to drive new product development. Instead of being restricted by a Capex based approach in your back office.

As the Digital Business Continuum concludes, Charles Darwin famously said “it is not the strongest of the species that survives, nor the most intelligent; it is the one most adaptable to change”. We would say that the same sentiment has never been more true in business. But we would go even further: faced with uncertainty, businesses must change the very essence of how they operate.”

Answering the nine questions above will go some way to determining whether your chosen target operating model strategy will build an adaptable, best in class lending business ready to take on whatever the future throws at it.

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About Kuldip Chiheru

Global FS S&BD Head
Kuldip Singh Chiheru is Head of strategy in Global Financial Services at Atos. Kuldip has been with Atos since 2008 and his particular area of focus is in the lending and loans division looking at how technology can improve this function for our commercial banking customers and for the sector more generally. Prior to this he worked in the Financial Sector advisory team at KPMG and has also worked for ICAP and HSBC Midland International Banking.