What is the new frontier for the world’s largest technology corporations? Apparently, it’s financial services. In 2018, The Wall Street Journal uncovered that Amazon was talking with banks like JPMorgan Chase to develop a checking account product. In 2019, Apple launched its own credit card with Goldman Sachs — though there were some hiccups with their credit decision algorithms that we covered in an earlier blog post. And now, Google is partnering with Citi to offer consumer checking accounts.

Why are consumers so willing to entrust these companies with their money, even though they are just entering the banking arena? Consumers these days have become used to and expect digital tools and seamless experiences. They also want to deal with names they can trust—hence their willingness to try banking services with big-name tech companies like Google and Apple.

These events should be forcing banks to reexamine their digital transformation efforts lest they lose their competitive advantage to non-traditional players. While banks have invested in digital transformation, most focused on providing online and mobile banking for traditional deposit-based accounts. While the online experience for consumer banking is fairly robust, the facilities for commercial banking customers often fall way behind—which is why many businesses still print checks and track finances in spreadsheets.

At the same, the lending process for most banks is still a disjointed, even painful experience. Banks may provide application forms online, but few save the largest banks provide a seamless all-in-one digital experience for the lending process. And while marketplace lenders (think Lending Club, Lending Tree, Credit Karma, and many others) provide consumers with seamless and even elegant online lending experiences, commercial borrowers are still stuck with a mostly paper-based application process.

Both of these areas—providing a better online banking experience for commercial banking customers and presenting a smooth, end-to-end online lending process—are opportunities for banks to hold their own against both the tech giants and the marketplace lenders. At the same time, the Googles and Apples of the world continue to raise the bar on what constitutes a great user experience for consumer customers, too.

To meet the challenge of tech giants encroaching on their territory, banks need to rethink their digital transformation. Often, though, businesses focus such efforts on changing the front-end applications without thinking through the underlying operational decisions that need to be made. However, finding the right partner to help transform a lender’s back-end operations is just as crucial as finding one to create an exceptional user experience.

Banks can achieve the greatest degree of back-office transformation by investing in applied AI—the ability of a software system to perform a discreet human task. A report by Autonomous Research LLP, showed that companies applying AI to back-office tasks like underwriting and collections will reap a savings of $200 billion by 2030. Companies can use these savings to invest in launching new products and entering new markets—like the opportunities mentioned above. In short, lowering the cost to serve customers allows you to serve new customers in new ways, increasing revenue.

Most fintechs have a long way to go before AI can fully transform their operations, but the back office is an ideal place to start taking incremental steps. Financial services companies can apply AI to improve daily decisions in reviewing credit applications, underwriting, prioritizing collections, and monitoring for suspicious activity.

Here’s where Enova Decisions can help. Enova Decisions provides solutions that automate and optimize real-time operational decisions by using data, machine learning, and the cloud. As a financial services provider, we can provide you with smarter, unbiased credit decisions, proactive risk mitigation, and transparency. And when you’re ready to expand your AI-powered digital transformation to the middle and front office—KYC/AML identify verification and smart chatbots, for example—we can help there, too.

Contact us today to learn more!