bankingciooutlook

Digital Lending: Using Technology to Revolutionize the Loan Process

Banking CIO Outlook | Thursday, February 24, 2022

Digital lending is the process of making loans available through digital channels for application, disbursement, and management

Fremont, CA: A modern, growing, and robust economy is built on the foundations of increasing financial inclusion. It entails providing reliable and responsible providers with access to financial services and products to all individuals and businesses across the social spectrum at an affordable cost, promptly, and tailored to their specific needs. In addition, technology has revolutionized industries worldwide, including the financial sector, in recent years.

The Procedure for Digital Lending

Globally, the digitization of the lending process has yielded mixed results, with a strong emphasis on hybrid models, where a combination of technology and accessibility offers the most viable and scalable propositions. Digital lending can be divided into five categories. The digital lending process encompasses everything from acquiring and onboarding a customer to evaluating, disbursing the loan, and receiving payments.

Acquiring New Customers

Digital lenders acquire customers through a combination of digital marketing tools and digital onboarding channels supplemented by strategically designed physical touchpoints and referrals. The identification of the customer is an essential aspect of the acquisition. Before lending, digital lenders used technological innovations to access government, and private sector verified records.

Analytics for Approval

Digital lenders use technology to analyze the loan seeker's background. Lenders use digital data to make faster, more automated, and accurate underwriting decisions. Digital lenders use traditional and alternative data sources, advanced algorithms, and analytics to quickly and remotely confident choices.

Repayment and Disbursement

Loans are disbursed and repaid remotely through digital channels like bank accounts, eCommerce accounts, or mobile wallets. By providing access to their funds in a matter of seconds, these cashless channels improve operational efficiency and reduce fraud.

Collection

Digital lenders use data and algorithms to aid in the collection process. After going through a customized recovery strategy, customers who fail to pay their bills will be blacklisted. As a result, they lose future credit, a powerful motivator.

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