In today’s commercial lending market, cloud-based solutions are increasingly serving loan origination and loan management requirements, shifting from manual operations to cloud automation built on the premise of easy access, scalability, and speed.
As financiers signal their increased appetite for consumer lending, it is important to speed up digitisation and cater to the newer generation of businesses through the cloud. This article will explore cloud technology and its advantages for lenders and businesses alike.
Benefits of Cloud-based Technology in Digital Lending
The traditional manual loan creation and management process is cumbersome for the financiers, borrowers, and banks. Here are some of the issues encountered during the legacy lending practices:
- Lack of standardisation
- Confusion due to underwriting and workflow needs
- Tedious process of customer data verification
- Delay in manual selection process due to human errors
- Security and compliance issues
Renovating the finance industry is the need of the hour and cloud technology is a key enabler, assisting in better management of lending processes to meet business demands. The cloud gives financial enterprises of all sizes a reliable, secure, and cost-effective way to bring its advantages to operations. Here are some benefits of choosing cloud technology for your lending business:
1. Data Integrity and Security
Digital migration of lending businesses calls for better data storage, achievable through cloud computing. Remote storage of documents is secure because of an encrypted centralised server system that protects sensitive information like income records and tax identification numbers.
Financiers with a reputable cloud provider can minimise security risks by conducting detailed security audits, implementing multi-factor authentication, and IP lists that are accessible to authorised users only.
A major component of cloud data storage is data integrity — preventing unauthorised data breaches. Many cloud solutions notify admins of any mismatch by comparing the current state of data to the last good state.
2. Better User Experience
Today’s customers demand superior service, be it loan processing or timely response to their queries. With an automated cloud-based loan origination software (LOS), customers avail the following advantages:
- Elimination of unwanted delays
- Less human errors and redundancies
- Positive response time
With improved mobile technology, customers can submit loan applications using their smartphones, which can be verified by a cloud-based LOS.
And as for lenders, the customer relationship will forge beyond loan disbursement with the dynamic features of cloud technology.
3. Easy Availability and Collaboration
A cloud-based user interface makes it easy for big organisations and lenders to get easier access to customer information from anywhere. This can help with capturing and accessing consumer data in a centralised location and keep track of loan origination progress.
In a challenging mobile economy, a good cloud-based loan system with dedicated communication channels brings out a singular view for the loan department. Granting permission via easy cloud access becomes hassle-free without waiting for unnecessary approvals. Since a lot of data is just a click away, the whole process of loan origination and management is streamlined to meet business efficiencies.
Other than this, an open-source cloud-based LOS makes collaborations easy without any face-to-face interactions. With minimal or no training, underwriters can easily work on cloud.
4. Backup and Recovery
IT downtime can cost a lot of money, leading to interrupted customer experience and delays.
Using cloud-based solutions can help minimise the risk of downtime and enhance productivity, agility, and efficiency. Such a LOS can implement automated rules with advanced-reliability measures, all in a paperless procedure and sans human intervention. Further, most of the cloud providers come with backup and recovery plans to back up data even in case of unpredictable scenarios like natural disasters or ransomware attacks. With prudent planning and customisation, financiers can take care of backup and recovery jobs of any complexity using cloud.
Scalability is one of the compelling reasons for the lending business development. In conjunction with security, transparency, and cost-effectiveness, financial institutions will have the ability to add features to the cloud platform. This can help meet loan volume needs without any significant investment or additional IT resources.
Cloud technology also gets rid of disaster recovery, upgrades, infrastructure maintenance, and unnecessary backups. This minimises the reliance on IT support and spending. In short, cloud makes the LOS scalable by focusing on building better customer experience, innovation, and productivity.
6. Less Implementation Time
Cloud technology has drastically improved computing demand peaks and reduced downtimes.
With the right cloud-based loan origination and management system, businesses can achieve faster loan approval rates at different stages of the loan servicing cycle. Within a month, cloud-based lending platforms can run a new software with increased convenience, simplicity, and consistency.
7. Easier, Safer Documentation Management
With an increasing consumer base, documentation management for loan processing can become a hassle. Handling thousands of application forms, customer documentation, correspondence, and contracts manually is not just error-prone, labour- and time-consuming, it is unsustainable as well.
A cloud-based loan origination system can help manage consumer documents systematically. Some benefits include:
- Easy storage of document templates
- Automatic pre-filling of consumer information
- Easy generation of client summary, loan analysis, and credit memo
8. Better Regulatory Compliance
The number of regulations affecting the finance industry and the sheer volume of consumer data and money associated is a key concern for financiers. With cloud-based solutions, regulatory compliance becomes easy and time-efficient across all stages of the lending pipeline. Cloud builds an ideal environment for enabling compliance by making sure real-time data classification, logging, storage, regulatory reporting, maintenance, redundancies are achieved.
It also helps identify and manage risk gaps beforehand and make a course correction to the regulator’s expectations. This can assure lenders that all data entered is error free and can be extracted efficiently on demand. In addition, companies stay immune to compliance penalties.
Financial institutions and lenders are now migrating to cloud technology to access cloud-ready networks for their business needs. Used wisely, it can control costs in an efficient way, reduce disruptions, and give quick return on investment, all in a virtual environment. Last year, the public cloud hit $1 trillion enabling institutions more flexibility than ever.