The world is witnessing massive changes in all the major industries where AI and machine learning are replacing mundane and repetitive workflow processes with automation. After initial inertia in changing to a new norm, now financial institutions are embracing digital banking solutions.
The primary benefit of adding commercial lending is increased working hours without increasing the workforce or related costs. Studies have suggested that out of an eight-hour workday a human being is productive approximately for three hours. And in a year they work for close to 240 days.
In comparison to a human being, digital solutions that are unmanned and robotic assistants can serve customers 24/7 and 365 days. Thus digital assistants or chatbot services can aid customers eight times more than a human employee. This feature alone is enough for any financial institution to adopt a commercial lending software that can integrate their databases and automate their loan origination process. On the other hand, round-the-clock service is just one of the benefits a lending business gets from transitioning to digital lending software.
To understand the relevance of digital transformation in the banking and lending business, check these benefits that are required to scale a business:-
Unified source of data
In legacy and CRM, banking data integration with different verticals for the same task is time-consuming and is constantly at risk of data theft. The compliance cost of maintaining the data integrity increases as the information is spread out. It is also difficult to understand the reports without contacting another employee to understand reports or insights on business metrics.
The digital lending solutions for consumer software have a single genesis of truth that is accessible to every authorized personnel. With neural networks and API integration, the applicability of data is enhanced in analytics. This in turn reduces the time and increases the accuracy of strategic decisions that are business-centric.
Loans are complex products concerning due diligence, lengthy calculations, and spreadsheets to arrive at the decisions that will boost growth. These calculations are also highly regulated and have to meet stringent risk metrics. The likelihood of human errors when making long calculations are high.
In the digital loan origination process, the calculations are done through algorithms that have been backtested. The calculations are free from errors, computed in a few minutes, and display the results on dashboards with easy infographics.
Efficient loan portfolio management
A loan cycle does not end till it is completely paid off. Each loan has to be reviewed regularly for red flags. They have to be checked for taking adequate measures to cover the additional risk that may arise during a loan. An automated loan portfolio reviews the loan constantly and sends automatic reminders to pay in time. Any change in cash flows of the borrower is reflected on a real-time basis through neural networking and API integration. Any flag will create an alert for the banker to check and address the issue immediately. Thus a banker plays an adjunct role of a consultant who can engage the borrower to focus on paying in time.
Boosts team’s productivity
A business agile approach is achieved through digital loan solutions that deter from repetitive tasks. Automation takes care of speed, flexibility, access to information, and seamless communication between different verticals and departments. Tasks, like checking and responding to emails and importing data from spreadsheets for compilation, are discontinued or minimized. They are replaced with real-time alerts that appear on the interface.
With changing times and increased awareness in short periods through constant updates from parallel media, consumers are aware of the wonders and scope of AI and machine learning. The attention span and patience levels to perform a banking task by physically walking in is no longer a preferred mode. With rising consumer demands and the ability of automation tools at disposal, if banks don’t change to adapt to a digital route, then they will not only be left out of new business growth but may lose existing customer share to the pioneers of this change.
The multiple benefits like efficiency, time and cost-saving, improved customer experience and employee productivity have a sine qua non-effect on the growth and numbers of lending and other banking business. However, for a lending business to be operational, the deal breaker or maker is the ability to be risk-agile. Any process that can increase productivity but also stresses the bank’s assets are not the right proposition.