Essay Example on Digitization a big revolution in the lending process









Digitization a big revolution in the lending process Digitizing the lending landscape sounds like an unusual thing as lending was perceived to be an exercise so deep in physical signatures complex regulatory compliance endless documentation lengthy candidate assessment arduous risk profiling and manual labour But the digital bandwagon is redefining the current banking sector It s no longer an option it s the imperative In the current commercial lending market financial institutions are increasingly mindful of improving their practices in many areas to increase efficiency decision speed and productivity and to enhance their customer experience But the currently difficult market environment presents banks with major challenges to leverage growth potentials while at the same time increasing the efficiency of the bank organization Loan decisions are a highly complex field of action in this context The changing customer behaviour is another challenge the banks facing Retail customers increasingly demand simple and affordable bank products which do not require bank consultants and which can be quickly and conveniently purchased anywhere In this scenario the digital revolution in lending process emerged as a major response to many of these challenges 

Digital channels fulfil the customers need for convenience and continuous availability and at the same time offer banks new opportunities for growth Paperless digital processes allow for efficient processing and thus also make competitive prices possible Automated processing is possible wherever individual process steps or entire process chains can be standardized Digitizing lending The digital transition changed the way the lenders interact with borrowers and how technology interact with both parties Paper has been turned into pure data that can be passed through the hands of all lending parties intact and instantaneously The process of becoming a digital lender for the long term moves investments from digital features to a digital mentality and process that can support changing digital lending options It is a major move from investing in just digital output to investing in the digital input that works behind the scenes The path to become a fully functioning digital lending firm is not easy To transform into a digital firm banks must look at all current processes refining what was done to better accommodate a digital consumer using data advanced analytics and artificial intelligence to eliminate steps and improve the process The key is to avoid recreating bad processes online instead fixing underlying inefficiencies by letting design lead technology decisions

Rising competition from online peer to peer P2P lenders and non bank companies have compelled banks to enhance their digital expertise Moreover these P2P lenders are forming strategic partnerships with both banks and non bank companies to gain a larger market share in the lending business Building on the rapid mobile adoption online lenders offer loans at a quicker pace with less documentation They are prudently exploring this option to gain competitive advantage over the traditional lending institutions Customers who are rejected by banks due to their inadequate credit scores or small businesses whose loan requirement is less than the banks threshold limits can avail the facility Digital lending start ups can perform well in area include relevant simple and easily bought offers better decisions that are informed by customer risk and marketing data consistent cross channel execution technology that enables a smart view of the customer efficient digitalized processes migration of customers to anywhere anytime self service and rapid innovation and business reinvention A paradigm shift in small business finance Digital lending has made a bigger impact on small and medium enterprises Technology not only drastically reduces the need for human resources in the documentation area but also allows for tapping unconventional sources of credibility identification and interest classification It s also possible to remove geography from the equation now since most SME users are equipped with mobility making them able enough to connect to loan personnel anytime anywhere 

Further there is a lot of scope of cross selling revenue increase and optimization of payments when there is a technology backbone in the entire cycle With the integration into the entire FinTech ecosystem small businesses can participate in many solutions that were previously only available to larger companies The future starts The future of digital lending will reduce the friction associated with the borrowing process eliminating paper and moving all of the steps of the customer journey to an online and mobile capability Such a customer centric and digital approach has the potential to bring significant efficiencies in the financial sector leading to enhanced benefit to overall economy It is redefining the industry in small but impactful ways and this is a clear indicator of how much technology can affect a space when used well for the right customer at the right time Banks must adapt to the revolution in the lending process as soon as possible to avoid losing competitive strength in the years ahead How Insight Consultants can help We help financial enterprises go digital We offer end to end lending solution with digital loan origination platform credit assessment engine business process automation and complete loan cycle management We transform the loan process from an offline process to digitally streamlined processes that include paperless operations workflow based automated decision making and credit scoring powered with insightful analytics

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