Praveen Paulose
Financial institutions have been under more pressure than ever to embrace and adopt cutting-edge technologies in the aftermath of the pandemic. With that in mind, in 2022, the digital lending landscape witnessed an increase in end-to-end automation as customers pivoted towards digital-first platforms. An incredible digital lending experience was made possible by automation, enabling financial companies to offer immediate loans after quick credit approvals, streamlining processing, and enhancing personalized products such as state-of-the-art chatbots. Financial businesses also provide their clients with an omnichannel experience supported by technology.
Thus, 2022 has marked a turning point for the financial sector that will fundamentally alter the landscape for the next ten years. For example, digital lending firms have upgraded their digital lending software with analytics, unified dashboards, and digital client accounts and rolled out one-stop applications. As a result, in the years to come, the digital lending industry will be propelled by technology-enabled insights and strategies to satisfy borrowers’ desires for tailored, efficient, and convenient transactions. This year’s trends might set the bar for the sector in the coming years, so financial institutions must remain at the forefront.
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Following are a few digital lending trends that impacted the digital lending industry in 2022
End-to-end automation
Automated systems and artificial intelligence have reshaped the lending landscape for user experience, efficiency, and cost control. The entire process of lending is now entirely automatic, including application processing, applicant assessment, screening, servicing, collection, and analysis. For example, credit approval is evolving owing to the trail of data customers leave behind while exploring the automation processes across the enterprise’s digital presence. With sophisticated AI models and ML credit scoring approaches like ensemble learning, hybrid genetic algorithms, and support vector machine (SVM), financiers can automatically optimize the model and improve lending strategies. These AI models can reduce the need for human touch by eliminating bias and error and increasing churn volume.
When combined with AI, automation may expedite the application-to-disbursal process by enhancing the lending process’s quality and stability, boosting productivity and reducing excessive overhead. It helps lending companies reduce fraudulent activity risks by ensuring high AML compliance levels. Additionally, digital KYC driven by AI is also being used by digital financiers to offer hassle-free and seamless onboarding of new customers.
Hyper-personalisation
While addressing the financial requirements online, consumers in the digital lending industry want more tailored experiences. Financial institutions have access to a wealth of consumer transaction data, allowing them to implement data and analytics and customize banking experiences for their customers based on their needs and preferences that meet their expectations and set them apart from their competitors. Consumer-centric hyper-personalisation utilises real-time data to tailor products such as personalised rates, credit terms, pre-approval of loans, and pricing to meet current and future needs. The insights are generated through behavioural and data science by leveraging AI. The data generated may be utilised to create tailored dashboards and appealing recommendations based on loan offers, goods, and potential future demands.
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Integrated API
Application Program Interfaces, or APIs, in financial institutions’ digital lending products and services allow them to adapt to changing client demands. It helps digital lenders to swiftly assess loans by accessing data from any third-party vendor, including public and private organizations. Since APIs do not carry any data, they are reliable and safe. Financial institutions connect APIs with services to speed up the digital lending process; for instance, KYC and mobile phones of borrowers may be integrated to give digital lenders pre-filled information. One advantage of using APIs is the ability to automate workflows, which reduces errors and costs, and improves the efficiency of operations. Additionally, APIs are used to run programmes and gather and transfer data to meet the demand in reporting requirements.
Cloud lending
Financial institutions increasingly use cloud lending platforms to satisfy growing consumer demand for better financial services. As a digital platform that enables financial institutions to speed up the lending process while improving the client experience through automation and configuration, cloud-based lending solutions are more flexible than their forerunners. At the point of sale (POS), digital lenders can improve the volume of applications for instalment loans while reducing operational bottlenecks. Cloud-based lending systems that use artificial intelligence and machine learning to improve underwriting efficiency swiftly upgrade with minimum disruption. Additional cloud lending features include scaling up to meet demand as the market grows and protecting data from breaches using the most recent compliance guidelines and procedures. Additionally, it enables digital lenders to emphasize company expansion as hosting platforms take care of support tasks such as maintenance, backup and recovery, and software patching.
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Omnichannel experience
Financial institutions increasingly gain a competitive advantage by processing loans in an Omnichannel delivery ecosystem. It enables cross-channel application processing to initiate, store, and resume without interruption in every phase of the customer experience. It ensures the possibility of a potential customer to start their research and application process on a smartphone, complete it and submit their papers on another digital device, and receive real-time support from a help desk or branch lending professional without losing ground. It provides full event transparency, creating a seamless customer experience across the application process. High-worth loan origination procedures are powered by omnichannel delivery environments, improving institutions’ capacity to satisfy client demands while delivering a cohesive lending experience for borrowers and digital lenders.
Conclusion
Financial services will continue to undergo transformations beyond 2022 since the digital lending landscape is constantly changing due to evolving customer demands and disruptive technologies. As a result, financial institutions must embrace innovation by leveraging automation, end-to-end digitization, AI, and machine learning to push the envelope and give their clientele a modern lending experience. Backed by technology, the digital lending industry is well-positioned to scale and grow by adapting as quickly as possible and, at the same time, providing better access to financial products to the customers, which will facilitate financial inclusion in the country.
