The current economic downturn, driven by the after-effects of the pandemic, the war on Ukraine and significant supply chain disruptions, is not exclusive to Malaysia, or even Asia – indeed, it is happening globally, and its effects will be far-reaching and felt for some time to come. Already we’ve seen significant, wide-scale lay-offs across all industries, interest rate rises and a general slowing in overall economic activity and growth.
However, unlike previous recessions, many of today’s financial service providers have access to innovative technologies that can mitigate the impact of this economic upheaval, particularly when it comes to the provision of credit to businesses.
Enabling The Flow Of Credit Is Essential To Economic Recovery
Financial institutions and other organisations offering credit will always be in demand during tough times, as businesses seek short-term solutions to keep the lights on and the doors open. Having access to credit is vital for the global economy, and ensuring this credit is flowing where it’s needed is a critical role of the lending industry.
Technology plays an enormous part in ensuring credit gets where it’s needed, whether that’s through simpler digital application processes offered by tech-enabled SME lenders, AI-driven credit reporting, easier access to account information via mobile apps, or the ability to rapidly launch new products or features to meet the changing needs of customers.
Technology also enables faster approval rates for businesses and individuals seeking loans, which can provide a much-needed cash injection just when they need it.
Tech-Enabled Banks And Financial Service Providers To Survive And Thrive
Having next-generation technologies at the heart of a financial institution can make a significant positive difference to the bottom line when times are tough. Modern, cloud-native technologies that are charged on a per user, SaaS (Software-as-a-Service) basis can be incredibly cost-effective, with organisations only paying for the service that they use. This can enable financial institutions, lenders, and others providing financial services, to scale efficiently – both up and down – as the market dictates.
As an example, composable, cloud-native banking and lending platforms, which enable greater flexibility, also effectively lower technology costs, which can have a significant, positive impact on operations during tough economic times.
In any business, we know that the key benefits of technology are increased efficiency and productivity – reducing costs and increasing output. Leveraging the power of technology like cloud, data and analytics, artificial intelligence and machine learning can help to streamline processes, speed up decision-making, and lower overall operational costs.
Crisis? Or Opportunity?
Recessions can, of course, be catastrophic to businesses, however it’s important that organisations are also aware of the potential opportunities that these testing times can deliver. Changing customer needs and behaviours, combined with slowed market conditions, can be an ideal breeding ground for innovation and new ways of thinking.
By understanding your customers and acknowledging their specific pain points, banks, financial institutions, fintechs and other organisations offering financial services can develop unique solutions that meet the specific needs of their customers in the current economic environment, while also opening up new revenue streams.
As the macroeconomic climate continues to deteriorate, financial institutions, lenders and fintechs must leverage the power of technology to boost the lending pipeline and develop new and innovative customer-centric lending solutions to ensure their survival.
About the Author
William Dale is the Regional Vice President Asia Pacific at Mambu, the cloud banking platform that powers hundreds of the world’s most well-known banks and financial service providers, including Western Union, Commonwealth Bank of Australia, N26, BancoEstado, OakNorth, Raiffeisen Bank, ABN AMRO, Bank Islam and Orange Bank.
