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Financial firms need innovation strategies to attract borrowers

Oct 24, 2013 Walt Wojciechowski

Whether its a short term lending outlet or a bank that specializes in auto financing, financial institutions need to adopt a corporate plan that places a priority on innovation. New tools and technologies are changing how consumers make payments and even take out loans. Banks and lenders that address this changing market by offering useful, new services and products are more likely to see long-term growth. Firms that fail to take this emerging dynamic in stride could see the competition attract more new clients.

Currently, this is a major concern for financial service providers, as the global economy continues to rebound. Consumers are finding that their finances are improving, which has made them more likely to spend and borrow than during the recent recession. As a result, companies are in the midst of an intense battle for new customers.

For banking outlets, this trend has already affected their operations. CNBC cited an Infosys and Efma survey of banking institutions from across the world that found 60 percent of respondents have a innovative strategy in place. Five years ago, just 37 percent had such a plan in action.

In particular, the source found that the modern consumer is becoming more interested in using social media programs for banking and financial services. Despite that fact, only 29 percent of financial leaders said they have implemented peer-to-peer payment technology that provides a more interactive, mobile experience for consumers.

Apart from social tools, CNBC reported that many financial firms are using a wide range of innovative processes. The source noted the example of a Grow Financial, a American credit union, that has created a video screen outside its office for consumers to play games and win money on, as an out-of-the-box innovation that could attract more customers down the road.

Product development is also key
Apart from implementing new, interactive tools, credit enterprises should not lose focus on how to improve their current products and services. For example, Credit Union Times recently reported that TransUnion now offers enhanced consumer credit reports that provide financial companies with more insight into customers' credit histories.

Using such tools is important for any modern lender. The data obtained from similar products can help loan providers make more informed decisions on borrower applications. With so many new customers up for grabs, it's important for lenders to improve their operations wherever they can.