bankingciooutlook

The Impact Of Technology On The Digital Lending Landscape

Banking CIO Outlook | Friday, April 08, 2022

Data, in addition to technology, drive the digital lending landscape. Data is processed throughout the digital loan process, from initiation to underwriting and post-disbursement.

Fremont, CA: The accelerated adoption of digital tools positions technology as a key enabler of the digital lending market. In contrast to the traditional lending market, digital lending addresses major market challenges that have served as a bottleneck to growth for many enterprises and individuals in India. Customers' frustrations with traditional banks, such as the lengthy disbursement process, complex eligibility criteria, and lack of clear credit history, gave rise to digital lending startups. These digital leaders are leveraging technology's potential to fill gaps where banks and NBFCs make the lending process inaccessible to customers.

Artificial Intelligence (AI)

AI combined with Machine Learning (ML) algorithms transform the core lending process for consumers. It automates redundant human-oriented administrative tasks and keeps the staff busy with routine tasks. Today's digital leaders are reaping the benefits of AI and ML to free up employees' time to focus on more productive tasks that foster customer relationships. For example, AI-powered chat bots handle a significant portion of customer interactions previously handled by humans.

Data Science

The digital lending industry relies on massive data to improve financial delivery and customer strategies. Therefore, it is critical to design consumer-oriented digital lending services that provide value and security. The cutting-edge technology assists digital lenders in structuring data exchanges, standardizing and analyzing data to understand the borrowers' backgrounds, and making lending products more customizable for them.

RPA and API

Customers in the digital age want quick and easy loans to get. RPA is being used by many technologically advanced digital lending platforms to address the industry's long-standing challenges (Robotic Process Automation). For a better customer experience, it automates loan initiation, documentation, verifications, and other time-consuming tasks.

Furthermore, RPA's integration with API (Application Programming Interfaces) simplifies access to digital lending products while allowing for greater scope for innovation. Furthermore, it enables digital lenders to access data from any location and engage with potential customers more securely.

Cloud Computing

Cloud computing is having a significant impact on the lending market. It alleviates the sector's uptime concerns by making the entire loan disbursement process faster and easier. It enables lenders to stay ahead of the competition by hosting disruptive technologies such as AI, machine learning, deep learning, big data, etc. Furthermore, digital lending platforms can centralize data access by utilizing cloud storage, which streamlines loan documentation and promotes transparency among various stakeholders such as borrowers, investors, lenders, and regulators.

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