As technology continues to evolve at a rapid pace, the lending landscape has started witnessing a paradigm shift towards digitization and automation. Several financial services providers are switching to fully digital lending, which enables them to manage and process loans in a fully automated manner, right from origination to disbursement, without requiring any manual intervention.
The entire lending process can be quickly automated by integrating tech innovations such as cloud technologies, analytics, and imaging. These technologies allow companies to handle every part of the process ranging from managing applications and collaterals, credit analysis, electronic signatures, pricing, decision making, and ongoing administration digitally.
The digitization of the lending process has been further necessitated due to the continuous evolution of payment trends, wherein the need of the market is to disburse loans within seconds without compromising on the processes, due diligence or the underwriting. Lending companies going fully digital can witness lower loan processing costs, faster turnaround times, better loan disbursement decisions, and enhanced compliance during the loan repayment period. Fully digital lending is undoubtedly a better version of the conventional lending process with improved steps.
What is Making Digital Lenders A Preferred Choice of Under-Banked and Unbanked Masses?
- Easy Capture of the Applicant’s Information
When it comes to applying for a loan, digitization removes the geographical barriers, by enabling borrowers to quickly initiate loan applications from anywhere, anytime. Moreover, virtual lending platforms offer customer-centric services and tailor-made user experience, smooth loan application procedures, and ease of entering data quickly. Digital lending minimizes the chances of human errors by correcting data entries wherever necessary. The digital scanning of the borrower’s validation documents makes the entire process a whole lot quicker and easier than it conventionally is.
- Optimized Loan Underwriting Procedure
Many financial lending companies can leverage underwriting efficiency and decision quality if they want to get better returns. Digital onboarding enables applicants to submit information such as credentials and documents digitally and eliminate all kinds of manual procedures. When a system is integrated with cloud, it can seamlessly sync in data from credit bureaus, alternative credit scoring data, valuations, and risk services too. The automotive technology can be leveraged to apply decision rules to applicant’s configured credit scores to find out if a borrower’s loan application is at acceptable risk. Together, the AI-powered algorithms and machine learning provide highly polished underwriting expertise than human judgment.
- Faster Decision Making
Instant loans are becoming the norm today, and embracing digitization and automation enables lenders to exhibit auto decision making for an easy application approval procedure. The time-consuming manual verifications are nowhere entertained now. Digitization of a lending platform allows lenders to instantly run client credentials and documents through the verification and decision-making process. Even the loan disbursement can be done instantly.
- Analytics-powered Lending
Digital lending simplifies the loan disbursement process and creates a stock house of the applicant, underwriting, and funding data. Adding a pinch of analytics to this paves way for a highly efficient lending process and superior portfolio performance. The interesting factor is that the analytics work even when the company stakeholders don’t. Lending companies seek higher consistency in both the credit approval process and portfolio management to achieve better ROIs. Analytics makes the lending platform highly reliable.
- Allows Borrowers with No Credit History to Raise Loans Easily
The conventional lending relies on credit scores to disburse loans. As digital lending relies on alternative credit scoring data, even first-time borrowers can enjoy easy access to loans. This is among the key reasons behind the digital lenders becoming the preferred choice of under-banked and unbanked masses.Presently, there are numerous digital lending SaaS and PaaS frameworks that can be seamlessly integrated into an NBFC or MFI system. These solutions are not only tailor-made but also offer end-to-end services to help a business become the best it can be, in an ever-evolving world.
One such loan lifecycle management solution is Arttha. Arttha’s lending solution follows a comprehensive approach to alleviate the troubles of the vendor and helps them to offer a premium lending experience to the borrower.
Manage Loans seamlessly with Arttha Loan Lifecycle Management Solution