The business pressures are inescapable: Time for lenders to get hyper-agile?

Posted on: August19, 2019 by Kuldip Chiheru

Reading the Atos whitepaper,The Digital Business Continuum: Enabling organizations to thrive amidst disruption, one question sprang instantly to mind:

Why aren’t lenders embracing hyper-agility?

Hyper-agility is a subject close to my heart. Here at Atos, it is something I talk about with our clients every day. It’s also something no one is really doing. Yet.

Lending businesses just haven’t been able to embrace the idea of using different approaches to the different speeds with which different parts of the organization are working

But read the details behind the Digital Business Continuum and it’s clear that it’s the only way forward for lending businesses that want to stay relevant to consumers in the future. That’s because it’s the only way to optimize what they have always done whilst rapidly advancing new ideas so customers can benefit quickly.

Hyper-agility gives lending businesses the ability to do this, leveraging Smart Data to launch new products and services quickly. So what’s holding them back?

For traditional lenders to build a best in class digital bank they must handle three types of challenges that are driving the pace of innovation in the market. In the Digital Business Continuum these are known collectively as the Disruption Trinity.

  1. Societal (and business) challenges:
  • Consumer demand for personalized lending products.
  • Competitive offerings launched within days, even hours, rather than months.
  • New channels that bring in new partners are restricted by inflexible platforms.
  • The cost of processing per loan remains too high.
  • Scaling operations to address new country specificities or volume growth with a common platform.
  • International subsidiaries face local regulations, inconsistent processes and poor synergies.
  1. Regulatory challenges
  • Open Banking and agility around use of data are encouraging new digital innovators.
  • Handling a complex and changing regulatory environment means additional reporting requirements are adding crippling new workloads (e.g. KYC, GDPR).
  1. Technological challenges:
  • The high cost and low flexibility of legacy systems lowers profitability and the viability of establishing smaller, start-up style business units capable of competing.

This last point in particular is crucial.

There are multiple layers of technology that run the traditional lending business. From the customer journey layer, product/service layer through to the people/process, open APIs, information and systems layers. To address the Disruption Trinity and enable continual transformation espoused by the Digital Business Continuum, all those tech layers must be aligned.

A target operating model will define this alignment. But it must be one which is built on unique and personalized customer journeys facilitated by a high-efficiency approach and which allows you to innovate faster. In my view, the only way to do this in lending is to fully embrace hyper-agility. And in my next post, I’ll be exploring what lenders need to ask of themselves to do just that.

Read more about the Digital Business Continuum in Journey 2022 thought leadership publication 'Resolving Digital Dilemmas'.

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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.