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LendIt fintech conference takes it to a new level

Customer experience through collaboration

LendIt Fintech 2018 extends its focus beyond online lending to customer experience through collaboration.

April 25, 2018

A blog post by Stephen Fromhart, banking and capital markets research manager, Deloitte Services LP.

Since 2013, LendIt—an organization focused on thought leadership for the online lending industry—has consistently and significantly increased the size and scope of its annual US online lending conference. This was the third year that I attended the conference, and as many years that Deloitte has been a significant (platinum) sponsor. Instead of debuting a white paper on the online industry as we have in the past, one of our west coast-based subject matter experts shared the stage with a LendIt representative to present the results of a collaborative survey on the cost of capital for online lenders. But this was not the noteworthy difference to past events. Rather, this year’s LendIt Fintech 2018 USA conference, boasting 5,000 attendees, took the event to another level, adding the word “fintech” to its title and expanding its subject matter well beyond online lending.

In line with the conference’s expanded scope was the variety of attendees. Twenty-eight percent came from traditional banks, second only to the 35 percent from fintechs, followed by 15 percent from investment firms, 15 percent from service providers, and seven percent from other organizations. The range of topics included not only digital lending in all asset classes, as would be expected, but also blockchain, financial innovators, cybersecurity, asset-based financing, structured products, financial inclusion, bank-fintech partnerships, and financial alternative investments, to name a few of the 15 different tracks. Each track included a steady stream of back-to-back sessions on a variety of topics.

Customer experience and collaboration take center stage

With the variety of topics and speakers, it was telling that two very prominent themes weaved through the three days: customer experience and collaboration. “Customer ownership” was a term often spoken interchangeably with customer experience and could be interpreted both as the company owning customers’ patronage and customers owning an increasingly transparent and seamless experience across financial products. As many presenters noted, one way an organization can offer a suite of services and products, as well as the “rails” to distribute them, is to build it all in-house. But none of these presenters—not those representing behemoths with large customer bases nor those from fintechs with the most advanced technology—thought this was a realistic or timely strategy, especially one that could scale at the speed customers are demanding. In short, representatives of big banks, community banks, wealth managers, investors, and fintechs of all types agreed that a digital platform-oriented customer experience was the best way for financial services providers to achieve a sustainable presence in a rapidly digitizing financial services market, and they agreed that various forms of collaboration was essential to their strategies to achieve it.

Since the word “lend” remains in the name of the conference, we’ll frame this through cost of debt. In the opening keynote address, a CEO of one of the largest online lenders declared 57 percent of Americans to be financially unhealthy. Since 2000, a one percent increase in household income1 has accompanied a 31 percent increase in home prices2, a 69 percent increase in college tuition3, and a 102 percent increase in healthcare prices4, while for the bulk of this period, the savings rate plummeted. Although mortgages have shrunk as a proportion of household debt, household debt itself has increased eight percent to $13.1 trillion,5 and half of Americans’ income currently goes to servicing it.6

Meanwhile, two-thirds of consumers under 30 years of age don’t have a credit card, putting them in a low 625 FICO score range.7 Even among prime borrower credit card holders, less than 20 percent use the fixed-term loans they secure from online lenders to pay off their credit card debt8.

Microphones

A cure for financial illness?

So what is the remedy to this financial illness? The consensus was that data must be more accessible to the customer via regulations that mandate it (e.g., the European Directive on Payment Services open bank application programming interface, or PSD2 open API compliance) along with better and more connected technology that puts knowledge and options into the hands of customers to help them get out of a cycle of perpetual debt and make them smart borrowers, savers, and investors.

It behooves providers to use technology to make customers smarter.

The participants also agreed that the days of financial service providers putting margins and fees at the center of their profit strategies are short-sighted; that successful financial services providers of all types will be those who get the right products to their customers at the right time; and that the best way to do this is through collaborating in the rapidly evolving technology ecosystem. To this last point, attendees agreed that financial services providers must rethink channels: they must go where the customers already are instead of insisting they do everything via exclusive portals. An example is when a bank provides customers access to its contact center through social media messaging apps. To do this, providers must leverage and open APIs.

Finally, it behooves providers to use technology to make customers smarter. Examples that presenters gave of ranged from technology that alerts consumers when their spending doesn’t align with their expenses and income to unique credit cards based on their credit profile that contractually convert to installment loans. Unlocking data that is trapped in certain government agencies or through monopolistic behavior is one way to start. Also, where just a decade and a half ago the challenge was squeezing data out of isolated organizations and legacy systems, our new reality is an avalanche of data that is proving difficult to harness. If you do harness it, and modernize data accessibility, and make it seamless within and across organizations, you gain the loyalty of a customer base. Better yet, you gain a better informed, financially healthy customer base. And don’t be afraid to give them a real person to talk to every once in a while.

Maybe it’s not so surprising that I saw a lot of consensus among representatives of very different financial service providers, both “disruptors” and incumbents, around the themes of customer experience and collaboration, and many of them sitting on stages describing how they were already working with each other. I would love to hear your thoughts on whether you’re seeing the same trends, or even better, whether you have anecdotes of your own. Join the conversation on Twitter @DeloitteFinSvcs.

1 “Real median household income in the United States,” Federal Reserve Bank of St Louis, 2017.
2 “Median and average sales price of houses sold,” US Census, 2017.
3 “Trends in higher education,” CollegeBoard, 2017.
4 “2017 employer health benefits survey,” The Henry J. Kaiser Foundation, 2017.
5 Northwestern Mutual, April 2017.
6 Federal Reserve Bank of New York, Q1 2018.
7 “America’s financial health crisis and what we can do about it,” presentation at LendIt Fintech 2018, Lending Club, April 9, 2018.
8 ibid

QuickLook is a weekly blog from the Deloitte Center for Financial Services about technology, innovation, growth, regulation, and other challenges facing the industry. The views expressed in this blog are those of the blogger and not official statements by Deloitte or any of its affiliates or member firms.

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