Community banks are unlike any other financial institution. They truly understand the individual needs of small businesses and the community members they serve and make personalized lending decisions based on that knowledge. But to support such a hyper-localized system, they have to focus on the community bank technology trends that will have the most meaningful impact on their customers.
It’s not about upgrading to a state-of-the-art system that can handle millions of accounts and loans; it’s about leveraging technology to provide the best possible loans and services for clients who depend on you. To help, we’ve created this quick guide to the top community bank technology trends of 2024.
7 Community Bank Technology Trends You Need to Know
Many state-of-the-art, out-of-the-box banking systems don’t fit community banks. They are too costly or contain features that a community bank will likely never use. This is why community banks need to consider which community bank technology trends they want to embrace. Here are seven community bank technology trends to look for in 2024:
|1) Automated Decisioning
|Using automated decisioning technology, a modern community bank can automatically approve or deny a loan application within minutes.
|2) Artificial Intelligence and Machine Learning
|AI and ML can help community banks dive deep into the data and offer targeted product recommendations and tailored promotions to customers.
|3) Big Data Analytics
|Big data analytics automatically collect and analyze both traditional and alternative credit data and any other pertinent information about each customer.
|4) Cloud Banking Compliance
|Cloud banking compliance for community banks has several benefits, including enhancing security, regulatory compliance, operational efficiency, and agility.
|5) Mobile Banking
|Community banks can harness mobile banking as a strategic tool to boost revenues by enhancing customer engagement and expanding service offerings.
|6) Open Banking
|Open banking principles allow community banks to share data securely with third-party providers and offer customers a broader range of fintech services.
|7) End-to-End Loan Origination Software
|End-to-end loan original software (LOS) includes many of the features above, as well as call center, auto loan and lease care, collections management and remarketing services.
With these technologies, you’ll streamline your lending process, provide better customer support, and significantly reduce the risk of defaults and delinquencies. Here’s what each trend does for you and your customers:
#1: Automated Decisioning
If you’re still structuring your loans manually, you are falling way behind your competitors. One of the most crucial community bank technology trends is transitioning from manual decisioning to automated systems.
A modern LOS can automatically approve or deny a loan application within minutes using historical data, advanced algorithms, and configurable rules. This task would typically take a loan officer a few hours to complete. Sometimes, a customer may not hear a decision on a loan until a few work days have passed.
When you automate these tasks, you:
- Reduce human error
- Get your customers a decision as fast as possible
- Attract customers who need emergency loans right away
- Improve operational efficiency
- Free up your loan officers’ time so they can focus on personalized customer care
As a customer-first banking institution, community branches should delegate as much work as possible to computers so that they can spend more time with the people who use their services.
Want to find out more about our software and services? Contact our team today.
#2: Artificial Intelligence and Machine Learning
One of the fastest-growing community bank technology trends of 2024 is using machine learning algorithms to predict the outcome of different loans and lending strategies.
Artificial intelligence and machine learning find historical data patterns that may apply to future scenarios. This is a more advanced form of predictive modeling because it learns from each prediction. If the algorithm predicted a certain outcome that turned out to be slightly off, the system will take this error into account when it makes its next prediction. It is constantly evolving and improving.
This is particularly important for community banks because they can dive deep into the data and offer customers loans that other financial services providers might avoid. With more reliable predictions about customer behavior and loan outcomes, you can become a hero to the community by being a better lender to everyone.
#3: Big Data Analytics
Big data isn’t just for large banks anymore. Community lenders also collect more data to compete against federal banks and offer customers personalized loans. However, big data analytics come with challenges. You need a system that can securely collect and store large amounts of data. This data must also be normalized and connected before you can perform any in-depth analysis.
Thankfully, some of the most advanced custom LOS systems include big data governance and analytics as part of the package. These systems automatically collect traditional and alternative credit data and any other pertinent information about each customer. From here, the system normalizes and securely stores the data in the cloud. Community banks can then decide what to do with the data. They can:
- Decide on a loan application
- Calculate risk to structure a new loan
- Keep track of delinquency and default rates
- Create visualizations of the data to drive future decisions and more
#4: Cloud Banking Compliance
Nearly all banks, including community banks, have transitioned to digital lending. Customers expect to have access to information about their loans available online. More customers are also demanding instant answers to loan inquiries via an online application portal.
You need to improve your cloud security to provide your customers with this convenience. The best way to do this is to hire an LOS provider that takes data security seriously and follows all state and federal compliance regulations. The benefit of hiring a provider to handle this is that you don’t have to continually check that your system is compliant. The provider will ensure you get all the necessary security patches and avoid expensive non-compliance fines.
#5: Mobile Banking
With mobile banking, community banks can increase customer engagement and expand service offerings, boosting revenues. First, community banks can attract more customers by developing user-friendly mobile banking apps.
By offering features like mobile check deposits, fund transfers, and real-time account monitoring, you can make it easier for customers to use your services more often. You can then cross-sell additional products and services, such as loans, credit cards, and investment products, directly through the mobile platform, strengthening customer loyalty.
You can also partner with fintech companies to integrate innovative solutions into mobile banking. Adding peer-to-peer payments, robo-advisory services, or contactless payment options can attract tech-savvy customers and generate new revenue. In addition, you can offer small business features like invoicing, expense tracking, and mobile point-of-sale solutions via mobile banking platforms.
#6: Open Banking
Through open banking principles, community banks can securely share sensitive customer data with third parties and offer their customers a range of financial services. Collaboration can lead to innovative products, like personalized financial management tools, investment services, or specialized loans. Fee-sharing arrangements with fintech partners can help community banks make money, creating a mutually beneficial ecosystem where both parties contribute their expertise.
With open banking, you can harness customer data responsibly. You can create targeted and personalized offers based on customer spending patterns, preferences, and financial behaviors, improving cross-selling and upselling. As a result, you can offer highly relevant and timely financial solutions to your customers, which enhances the customer experience and generates additional revenue. You can become an innovative player in the financial ecosystem by embracing open banking.
#7: End-to-End Loan Origination Software
Our last community bank technology trend for 2024 is end-to-end lending and banking platforms that include some of the features above, as well as call center services, auto loan and lease care, collections management, and remarketing services. Rather than having multiple systems or vendors for each task, which is costly and complicated, seek a provider that will provide each of these services for you. These services are especially valuable for smaller and mid-size community banks that might need help to afford them.
This also ensures that each piece of the puzzle fits together perfectly. You won’t deal with issues like incompatible files or security vulnerabilities. With an end-to-end system, everything works harmoniously, and all data is encrypted in the cloud. You also know who to contact if you have any troubleshooting questions.
Focus on These Important Goals in 2024
Ultimately, following these seven community bank technology trends isn’t about looking tech-savvy or modern (although this is a great way to attract customers). The true goal of these upgrades is to improve the services you offer. Each of these trends will:
- Make your customers feel more supported
- Reduce your institution’s financial risk
- Streamline your workflow and operations
- Protect your institution from banking fraud
- Predict where the banking industry is headed
Your customers deserve the utmost care. With these tools, you’ll help your community grow stronger.
defi SOLUTIONS is redefining loan origination with software solutions and services that enable lenders to automate, streamline, and deliver on their complete end-to-end lending lifecycle. Borrowers want a quick turnaround on their loan applications, and lenders want quick decisions that satisfy borrowers and hold up under scrutiny. With defi ORIGINATIONS, lenders can increase revenue and productivity through automation, configuration, and integrations and incorporate data and services that meet unique needs. For more information on community banking technology trends, contact our team today and learn how our cloud-based loan origination products can transform your business.