AFSA’s featured Business Partner for March is RSM. We asked them a few questions about the value of their business partner membership and the issues they’re facing. Learn more at rsmus.com.
What are your financial services clients telling you are their biggest challenges in 2021?
The impact of the COVID-19 pandemic on our clients in many ways has been very different from what we witnessed during the last economic downturn around 2008. With government stimulus programs that were very targeted to the consumer and the expansion of deferral programs offered by lenders, loan delinquencies and charge-offs have been relatively low and consumers have been paying down loan balances. As a consequence, demand for certain consumer loan products has declined. Therefore the challenge has been in generating loan growth and loan volume. Many of our clients see this as their biggest challenge heading in 2021. One other challenge that many clients recognize in 2021 is uncertainty around the agenda of the regulatory bodies and their enforcement activity. With a change in administration, a change in regulatory focus is certain and companies need to ensure they are staying up-to-date on the latest developments and responding as required.
What about opportunities for 2021?
In an effort to generate that loan growth, clients have identified opportunities to expand their market, primarily through digital channels. A successfully implemented digital lending operation allows for companies to reach a greater market, develop multiple product types and collect data. Utilizing such data allows companies to make more strategic credit decisions and respond nimbly to the risk of regulatory change when compared to those companies whose operations have concentrations to one particular product or area.
What have you heard are some key initiatives for your clients in 2021 that you are planning to support?
Many companies are recognizing the benefit of embracing the digital transformation of their businesses. As mentioned earlier, this investment can greatly assist companies in expanding their market presence. We support many of our clients in these initiatives with a variety of consulting services that are directly targeted to middle-market financial services companies.
Conversely, we’re also seeing many financial services companies partnering with technology companies (or fintech companies) to integrate third-party technology based solutions into their traditional lending model with great success. If integrated efficiently and effectively, this is a very valuable strategy to incorporate in the overall digital transformation of the company.
What are some of the lessons your clients have learned throughout 2020 that will help them be more sustainable?
Like most other industries, our clients had to quickly pivot during the pandemic to a remote environment for many of their back-office and support functions. The companies that were able to do this most successfully were those that had adequately invested in remote working capabilities such as information technology infrastructure and information security systems. During this, our clients quickly learned that either (1) they have a model that can successfully be executed in a remote environment without any significant disruption to the customer facing side of the business, or (2) they have model that cannot nimbly respond to disruptions such as we saw in 2020. If companies were able to successfully operate in a remote way, they have opportunities to drastically change the way in which they operate by taking advantage of a more remote workforce and the potential savings from an overhead perspective that could entail. It also enables those companies to expand the scope of their employment base by looking for the best and most capable candidates wherever they may be located. If companies were less successful, they have learned that strategic planning and strategic investment is required for them to be able to respond to disruptions and such investment and planning is critical in a competitive environment.
What types of responses are you seeing from financial services clients in response to evolving mobility and digital retailing trends?
The first step in creating a successful digital presence is a clear articulation of the customer and an understanding of not only how their customer currently interacts with their financial services provider, but also how the customer wants to interact with their financial services provider. Consumers are increasingly demanding the ability to access their financial information real-time and on-demand across multiple channels. The ability to interact digitally across all stages of the loan cycle from origination to payoff is of high importance. Consumers also value an experience that can be customized to them and their needs. This understanding has shaped digital strategies of companies and allows for targeted investment.