There’s been a lot of noise in the market recently about end-to-end digital delivery – essentially, allowing financial transactions to take place without any human interference or input.
These kinds of innovations have been described by some as being part of a ‘digital revolution’ in financial services, or ‘disruption’. Of course, there’s no doubt that the likes of personal banking, consumer mortgages and business overdrafts can benefit massively from end-to-end digital transformation. The customer experience is being dramatically improved, with turnaround times radically reduced and paper forms quickly becoming a thing of the past.
However, I think we need to be careful about applying these terms too widely. Some types of finance rely on human relationships and trust to provide an effective customer experience. Attributes that can’t simply be replaced by a few lines of code.
There are some things you can’t build an algorithm for
I talk, of course, about the likes of commercial mortgage lending to SMEs. These types of transaction are worlds apart from personal mortgages, which have their own unique characteristics.
Commercial mortgage lending is an entirely different ballgame, which needs to take into account numerous qualitative factors of an application, alongside the quantitative. Each business has a unique management team and individual history, in-depth plans for the future and past trading history. All these factors have their own story, and when it’s a long-term commercial mortgage they’re after, it remains a people-based business.
A digitally-driven application process may easily be able to assess the financials of a company, but it won’t understand the context: where the business is today, what its challenges and opportunities are, what the business needs to succeed. There’s not a chatbot in the world that can do that!
Having worked as a broker for over a decade, and in my time subsequently at Allica Bank, every application I have seen has had a story behind it. If an SME or broker can’t pick up the phone and speak to an experienced relationship manager to talk it through, then how can you expect them to get a fair outcome? Only human judgement and a human relationship can properly unearth the story behind the application.
That’s why we’re encouraging as many conversations as we can with brokers, to talk about the SMEs they serve. High street banks are closing branches across the country, meaning brokers are increasingly becoming the go-to source of advice for business owners in need of finance. We need to do all we can to build trust with them.
Technology should be an enabler, not a disrupter
Of course, there’s a huge opportunity for technology to transform relationship-based SME banking, too. However, the focus should be on enabling and enhancing it, rather than taking the place of all human interaction.
For example, a broker sending client documents to us from their iPad, rather than physically, is a big step in the right direction. Or being able to log in to the Allica Introducer Dashboard to get updates on the progress of an application, instead of having to phone up during office hours. Or dramatically decreasing the amount of time an application is in credit or underwriting by using automation and real-time data feeds.
These factors all contribute to creating a seamless experience for customers and brokers alike, but rely on successful human relationship and understanding in the first instance.
Contemporary banking with traditional values
The traditional lenders have struggled to keep up in many ways with the digital challengers. Legacy systems and processes have put a strain on their efforts to innovate, massively impacting the customer experience.
That’s why I feel lucky to be part of a new type of tech-driven bank. Allica isn’t constrained by outdated, cumbersome technology. We have the freedom to innovate and leverage the latest digital technology to create a fantastic customer experience. However, we also recognise the importance of human relationships in properly understanding and building trust with brokers and customers.
We’re currently building an industry-leading tech team to help us do just that. However, bucking the trend of the big banks, we’re also actively growing our network of relationship managers based out in the field, able to provide local expertise and sit down with SMEs face-to-face to understand their story. We have a vision to create a truly digital bank, powered by technology, but grounded in human expertise.
Never mind the digital revolution. Let’s create something that really works.
Nick Baker is Head of Intermediaries at Allica Bank. He has spent his entire career supporting the aspirations of SME businesses, with experience both in brokerage and lending.