How Digital Transformation Is Ushering in an Era of Consumer Lending

Lenders are switching to digital modes that consumers are comfortable with while improving the financial inclusion experience

How Digital Transformation Is Ushering in an Era of Consumer Lending
How Digital Transformation Is Ushering in an Era of Consumer Lending
Manikanta Racharla - 11 October 2021

Digitalisation has changed the essence of consumer lending. Earlier, the process was complicated; approvals could take up to a week regardless of the collateral. Now, however, in many cases, loans are approved in less than five minutes.

Leading lenders have switched to digital methods, which is what consumers are also comfortable with and it enhances financial inclusion. Going digital has removed many of the operational charges and helped in building a good customer base. Lenders who are not willing to adapt the digital finserv methods may face a challenge in retaining customers and acquiring new ones.

Digital transformation in the lending industry is only the tip of the iceberg. We have yet to discover many aspects like efficiency, cost control, cost reduction, and the most important, customer experience at its best. Let us look at the ways in which digitalisation can improve the overall lending and investing sector.

Increased Customer Participation and Transparency

Digitalisation is allowing increased customer control. It has made the entire lending process mutually beneficial. The lender is able to gain the customer's trust and the borrower has the liberty and eases to check the status of the application at her convenience. More recently, consumers also have complete access to keep track of their financial activities. In addition, transparency enables the customers to benefit more by gaining control over financial data and improving their credit score, which improves their loan metrics.

Artificial Intelligence (AI)

Using digital methods allows for better integration of Artificial Intelligence (AI) and machine learning (ML). It can bring about a revolution in fraud management and can protect the lending space from massive losses of capital and profit.

The lending sector depends on data and AI can help it scale new heights through simplification, up-gradation at the administrative level, and giving direct value like enhancing customer satisfaction.

Machine Learning and Robot Process Automation

Qualities like efficiency and speed are a need of the hour. Robotic Process Automation (RPA) can reduce the time taken to complete verifications, initiate loans and other tasks that weigh down operations.

ML allows faster and more accurate decisions. It helps get insights into different trends, patterns, and data present in large quantities. ML improves efficiency and processing, streamlines compliance, enhances accuracy, and saves cost.

The combined force of RPA and ML can lead to a transition of the new age.

Voice Assistants

While the digital transformation enables having the banking experience at the tip of your fingers, speech can be faster and more inclusive. Smart voice assistants service customers through conversational methods and use a source language to accomplish financial commands. The voice medium is faster, more engaging, and easier. It is also an intuitive approach.

Digitalisation for the Future

The entire lending industry has to digitalise, else fall behind. The customer not only looks for loan approval but also quality and reliability. To attract and retain customers, lenders need to:

  • Improve the experience across different lines of financial processes
  • Be transparent
  • Have consumer-centric terms and conditions and privacy policies
  • Have hassle-free and user-friendly repayment modes
  • The modern customer can be demanding and wants to find value. Lenders must look at enhancing the overall customer experience rather than just handling approvals for loans.

The author is Chief of Growth and Co-founder at Coine.ai

DISCLAIMER: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.

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