The 2008 Great Recession unsettled and transformed the banking sector, which has never been the same ever since. As regulatory compliances increased and market conditions became increasingly uncertain, this inevitably led to a stark rise in competition among fintech players. Additionally, In the last few years, we have even witnessed technology giants such as Apple, Google, Uber, Facebook etc. joining the bandwagon as they step foot into the financial services market.
It is evident that in this competitive digital era, banks can no longer sustain by relying on traditional banking systems, particularly when it comes to retail lending, the profit center for financial institutions.
Owing to the standardized nature of retail lending operations, financial institutions didn’t perceive a need for improving lending technologies in the last decade. Now, with a substantial change in the technologies at their available technologies and 3rd party systems, financial institutions are feeling the need for improvement in lending systems. As per industry reports, retail lending technology has been among the top 3 investment priorities of banks in the last 3 years.
Reasons to Modernize Your Retail Lending Solution
report reveals that banks running by the old playbook will not survive, and the winners will operate like modern tech companies with advanced data capabilities, a cutting-edge tech stack, and an agile operating model.
To succeed in this rapidly transforming market, banks need an advanced and adaptive platform that can transform the retail lending process. Banks that can go to market faster, modernize their legacy systems, and contain the lending cost are the winners of today and tomorrow. Here’s how a digital lending platform can transform your retail lending operations:
1. Automate End-to-End Lending Process
Imagine approving loans to your customers in minutes! That’s what automation brings to the table. It does away with dependency on paper documents, manual follow-ups, missed TATs, human errors, and more. Right from the creation of a lead to pre-screening of applications to processing, underwriting, and disbursal, your end-to-end process is streamlined. Cases that are straight-through involve faster loan approval and disbursal, which in turn can reduce the abandonment rate. Even communication with borrowers on additional information or documents needs to be effectively streamlined with digital portals.
2. Deliver Top-notch Customer Experience
In today’s fast-developing market, with competitive pressure at its peak, it has become integral for banks to offer a smooth and seamless customer experience to reduce churn rate. To achieve this, some financial institutions have created online e-forms or pdf forms in lieu of a digital portal but it has simply led to an inefficient process and poor customer experience.
If your customers can initiate loan applications from any channel of their choice, get a decision/soft-approval online instantaneously, and track the status of their loan process at any time, then you have a winner in hand.
3. Control Fraud and Risk
The retail lending process is document intensive. Without the right automation technology, tracking and monitoring applications can become very challenging. Detecting inconsistent information the first time, weeding out errors, cross-checking with AML/blacklist checks, credit bureau data, and dedupes, and adhering to government compliances are paramount to thwart fraudulent requests. Additionally, AI-based behavioral models are also available for detecting fraudulent applications in real time. An API-first modern lending system integrates with a plethora of such 3rd party applications that can empower banks to perform identity verification/authentication and application filtering.
4. Make Changes On-the-Fly
- What if you can change your bank policies in the system in minutes?
- What if you can configure new products without dependency on IT?
- And what if you can accommodate new regulations and compliances without any delay?
Wouldn’t it be empowering for your users? A modern retail lending solution that is built on a low code platform will give you the flexibility to do all this and more, without any business disruption.
In an era where market conditions are ambiguous, and future possibilities remain hazy, banks now desperately need a responsive and flexible retail lending application that can help prompt decision-making, render a customer-focused experience, accelerate turnaround time, and deliver an omnichannel personalized experience.