Modern lending systems are all about providing access to funds anytime, anywhere, for customers who are increasingly tech savvy. Digital channels fulfil the customers’ need for convenience and continuous availability, while at the same time offering lending firms’ new opportunities for growth.
But transitioning to a fully digital lending firm is not always easy. Lack of robust software solutions, concerns over compatibility of new systems with legacy systems, costs of transformation, regulatory compliance, and management and budget restrictions have all deterred firms from digitizing the lending process.
The path to becoming a true digital lending organization involves:
User Centric Design: Lending firms should employ a user-centric design which can orchestrate the process, keep it focused on customer needs, inspire people, and ensure that the organization doesn’t allow its new vision to be limited by the way it does things today.
Data Driven Decision Making: The consumer lending business is centred on the notion of managing the risk of borrower default. So lending firms should follow the art and science of analysing and modelling data to gather insights that can be used to make meaningful decisions. It includes mathematical techniques, machine learning techniques and processes that are applied to historical data, identify trends and make a best valuation of what will happen in the future.
Flexible Infrastructure: Firms need a software-based architecture to future-proof their IT infrastructure, which enables flexible transformation to adapt to future competitive threats.
Organizational Agility: Must be able to come up with new ideas, test them quickly in the market, make quick decisions about what you’re going to pursue or not pursue, and how you’re going to change and evolve.
While these demands might look intimidating, the benefits, once digitization is properly implemented, are huge. Not only will it give a distinct competitive advantage to the firm in a cluttered marketplace where quality borrowers are spoilt for choice, but also have a disproportionately positive impact on its bottom line.
Digitization make multiple demands on firms like:
- Reduce lead to disbursement lag
- Better utilization of loan officer’s time
- Fraud reduction
- Relevant, simple and easily bought offers
- Better decision-making, utilizing customer risk and marketing data
- Consistent cross-channel execution
- Better understanding of the customer and his behaviour
- Paperless processes
- Zero compliance slip-ups
- Any-time, anywhere service
The future is here and now
Any lending firm that does not digitize immediately risks falling by the way side. Even as we speak, newer technology like Artificial Intelligence, and Blockchain, the technology that underpins cryptocurrencies currently, is further revolutionizing the space. More importantly, borrowers have actively started demanding many of the benefits afforded by digitization. It is no longer a question of whether to digitize or not, but how fast a firm can digitize and keep pace with the changing demands of its customers.
So, can you afford to be left behind? How far is your firm on its digital journey? How can digitization transform your business?