NBFCs and MFIs are increasingly strategizing ways to grow and compete in the largely untapped arena of commercial lending, in a rapidly evolving market. There is a massive opportunity for lenders to leverage on the opportunity to serve their business customers better, contribute to their bottom lines, and garner higher returns for their benefit in the year 2020.
To cater to the growing needs of the market and industry, on the whole, lending businesses need to plan and adapt to the trends that are expected to fetch the most significant impact on the commercial lending space in the year ahead.
Lending Lifecycle Management Trends for 2020
Trend 1# The Mammoth Move to the Single Platform Loan System
Loan evaluation and origination officers often struggle with paper-based processes. Most lending companies still grapple with multiple-platform clunky and disparate systems. Being multifaceted, these platforms often create inefficiencies, resulting in a lack of transparency and thus end in poor user experience.
2020 is all set to end the use of multi-platform lending systems for the better. More and more financial lending institutions are set to adopt a centralized platform approach. A single platform lending lifecycle management solution effectively accommodates all facets of the lending exercise, including the lending team and the borrowers.
With the push of ‘Make in India’ campaign of the Indian government, there is a necessary crop of small businesses that seek easy financial assistance. Usually, lenders find it very difficult to manage loan underwriting for his particular sector because of the absence of any clear distinction between personal and business assets and liabilities and expenditures in this segment. It contributes to a fault customer experience for business owners and un-leverage opportunities for lenders.
Adopting a single platform for lending management allows lenders to serve borrowers throughout the entire lifespan of the relationship, from online applications and loan origination through portfolio monitoring and renewals in efficient ways.
Trend 2# User Experience Guides Lending Lifecycle Management Practices
Given the ‘instantaneous’ demands that modern-day user tends to put across to businesses, the user experience remains a critical factor when it comes to commercial lending.
The year 2020 is all set to bring forth an overwhelming dominance of the user experience of lenders as well as borrowers when it comes to lending lifecycle management tools. In the year ahead, the industry is more likely to witness a preference of businesses for instant and digitally optimized interactions between employees and customers.
Lenders intend to offer an intuitive lending experience to the borrowers to streamline the process of loan disbursal and to compete in a rapidly evolving marketplace. Also, in a quest to poach the underbanked and unbanked market segments because of unprecedented competition and tight budget restraints, lenders can’t afford to offer poor employee experiences.
Markets will likely see how lenders prioritize simplification and streamlining of interfaces they use, to ease the borrowing process for the lender. The focus would be on creating processes that are easy to understand and enjoyable to use. At the same time, they leverage meaningful data that allows lenders to access relevant information at the right times. Come 2020, the focus will remain on integrating new technologies to enhance digital offerings for providing a more valuable, more personalized experiences for our clients.
Trend 3# Technology Partnerships
While the market, on the whole, is enjoying a slight tilt towards digital processes, lenders are in the race to digitize and automate the lending procedure to offer better customer experience and streamline workflow. Customers need financial technology like smartphone payments, better rewards integration, and mobile banking from their lenders.
A lender who is trying to build its platform from scratch faces hurdles like shortage of resources like time and money.
From 2020 the year ahead will welcome new technology partnerships and collaborations for efficient lending lifestyle management. Financial lending vendors have been hit by the stark realisation that they don’t have to build solutions independently. It is more beneficial if a lender builds its own specialty, and then partners with reliable technology vendors for their unique skill-sets.
The market is likely to witness a massive influx of large loan origination systems that provide a profiteering opportunity for lenders to enhance the overall experience within the environment. Various Application Program Interfaces (APIs) allow technology vendors to benefit from each other’s strengths.
2020 is going to be the year of a more robust solution for both borrowers and lenders, thanks to technology-based collaborations. Not to mention that the digital-first mindsets promote transparency and empower borrowers to take charge of their finances.
Trend 4# Lending Lifestyle Management will Involve Using AI to Mitigate Risks
Given the times, financial lending institutions will need help embracing AI to its utmost potential.
In the times ahead, we will see lenders using the prowess of artificial intelligence (AI) to extract greater insight from the borrower’s portfolio to gain the advanced notice of potential delinquencies. The knowledge from leveraging AI-based solutions can also help identify opportunities and generate personalized recommendations for additional products or services.
With AI, vendors can quickly analyze hundreds of variables and payment trends from user data and develop predictive models. In fact, they can also fine-tune to the unique market segments of the lender. Using AI tech, vendors will uncover valuable insights regarding collection efforts in loan servicing.
An automotive procedure by nature, AI-backed lenders, can continually work on improving portfolio performance and collections activities.
Lenders embracing an automated approach towards proactive risk mitigation will bring consistency to the lending process. The insight gained from AI will ensure that all steps and actions were taken by the lender also comply with regulations enforced by the authorities.
As lending facilities for all borrowers are advancing rapidly, lenders need to adopt new capabilities like delivering immediate, quantifiable benefits for the borrower. Proficient lending lifecycle management makes it possible for lenders to serve the borrowers better and earn higher profits for themselves.
We hope that these trends that are likely to dominate in the year 2020 will shape the lending landscape in new ways. Finezza is a lending lifecycle management solution that fortifies the lending practices with the help of AI and ML technology.
To know more about Finezza, get in touch with us!