Perspectives
Innovation in the Latin American lending market
Discover how design thinking, a new problem-solving approach based on customer needs, helps Latin America banks improve their lending process.
By John Wang
Design thinking is gaining prominence — not just in design schools but in engineering and business schools. It’s a new way of looking at problems based on customer needs, asking: What job does our customer need to accomplish?
With that question in mind, we explored an opportunity in the Latin American small business lending market. Though growth in the market has been in the order of 10% to 30% per year, loan advisors were facing productivity challenges because the pen-and-paper application processes were inefficient. Often, loan officers were making repeat visits to client sites to correct simple errors. And sometimes it was because customers didn’t have all the necessary paperwork with them when they applied for loans.
The app not only confirms when all documentation has been received, improving compliance, it also gives officers the opportunity to cross-sell products such as credit cards.
Both lenders and borrowers needed a solution that improved efficiency, ensured compliance with lending regulations and helped build trust between them.
Together, we came up with a solution that was elegant in its simplicity: a mobile application that enables loan officers to capture all relevant information from the customer on a single visit, including signatures and photographs of required documents. The app has several advantages: it not only confirms when all documentation has been received — improving compliance — it also gives officers the opportunity to cross-sell products such as credit cards.
The final step before building the prototype was making the case to our Innovation Council that the solution was worth direct financial investment on our part. Deloitte, of course, is not a “tech” company with core business in application development. Our business is problem-solving whatever form the solution may end up taking. But it’s our commitment to a spirit of innovation and discovery that drives our willingness not just to “think outside the box” but to dispense with boxes altogether.
The mobile loan advisor is currently moving out of the prototype stage and we expect to introduce it to North America in the near future.
Design thinking: Based on customer needs
Design thinking is a brainstorming process that also directly involves the customer. In the case of Latin American small business mobile loan advisor, we engaged four banks early in the design process to include their specific requirements.
An international team of Deloitte professionals with a range of experience and knowledge then used design thinking to fully clarify their strategy, based on customer needs.
Why mobile banking made sense
It is estimated that there will be 140 million mobile banking users worldwide by 2015. In Latin America, 98% of the population can receive a cellular signal and 84% of households subscribe to a mobile service.1 But not every gap can be immediately filled, and sometimes the gaps are filled with solutions that may work but that people don’t necessarily want.
As it happens, Latin America is at the vanguard of global growth in the use of mobile technology. According to the World Bank, the number of mobile subscriptions in the world grew from fewer than one billion to around six billion between 2000 and 2012.That means roughly two-thirds of the world’s population now has access to a mobile phone, opening up new opportunities for social and economic development in previously underserved and impoverished regions.
The developing world in particular is doing it differently, too, following a “mobile first” path. This is in contrast to the developed world, where mobile technologies have mostly “added value to legacy communication systems and have supplemented and expanded existing information flows.”
John Wang is a partner with the Financial Services Industry group. He specializes in core banking systems.
