Why should banks or financial institutions focus on digital lending?
Today, consumers have become more demanding of digital experiences. The pandemic has only amplified the need for easy access to banking products, services, and information.
With increased competition, stringent regulations, cultural shifts, and the rise of the ever-demanding consumer, banks need to adapt to the customer-first approach in this ever-changing environment to continue to lead the space and gear up for the next step in Digital Domain; Digital Lending.
Digital lending is a platform which has provided advancement in the lending and borrowing process where a person can borrow within a short period, without any paperwork. It involves lending through web platforms or mobile apps by utilising technology for authentication and credit evaluation.
Digital lending brings several benefits like –
- Boost customer experience with omni-channel user journeys, rich UI/UX, ease of use etc.
- Better actionable insights driven by data analytics.
- Reduce overhead costs by 30-50%.
- Save time; like in the case of SME lending, credits from 2-5 weeks can be reduced to almost instantaneous for small amounts and 2-5 days in the case of larger amounts.
- Negotiate better pricing by floating offers within 24 hours against non-digital competitor who could take 2-3 days even with lower pricing.
- Gain higher win rates that translate into higher revenue.
How should banks get started?
Banks can start by:
- Identifying bottlenecks and challenges in the current processes like long processing times, operational inefficiencies (in customer onboarding, risk assessment, credit underwriting, disbursement, repayments etc.), cumbersome paperwork, disparate systems, lack of transparency, data storage, and maintenance etc.
- Improving turnaround time (TAT), optimising costs, enhancing operational effectiveness and precision, simplifying compliance, and generating higher revenues.
- Identifying the roadmap for prioritisation – Start with tangible minimum viable products in a specific business segment to build confidence and credibility before scaling to the whole organisation.
- Select digital partners who can provide state of art technology like omni-channel support, rich UI/UX, low-code, microservices architecture, AI/ ML, robust security, cloud services, hassle free deployments etc.