Time has seen society and its institutions evolve. Arguably, one of the most important institutions that have witnessed revolution is lending and banking.
From merchants who gave grain loans to farmers to 14th-century Italian oligarchs who created some of the first banks as we know it—the world of money and its transactions has changed.
Decades of development have brought significant expansions propelled by information technology and telecommunications innovations. In particular, the advent of SMS banking, mobile web services, and subsequently sophisticated mobile banking applications have continued to change the global financial landscape.
While run-of-the-mill bank services and transactions are still popular, lenders are beginning to piggyback on the wonders of mobile banking. They’re using it to optimise and ease loan originations and disbursals, amongst other perks. This article will see how lenders can harness mobile banking to cash on its benefits.
How Can Lenders Leverage Mobile Banking to Their Benefit?
Conventional lending methods may meet present credit demands, but can these current mechanisms continue to service growing populations and their need for credit lines?
The answer is most probably not, at least not without considerable adaptiveness. Finezza has compiled a list of ways lenders could achieve this through mobile banking integration, read on to know-how:
Additional reading: Top 5 Mobile Banking Trends to Look Out for in 2022
1. Quick loan origination processes
Under normal circumstances, the loan origination process is tedious for both customers and lending teams–such as outrageous amounts of paperwork and coordination between multiple decision points. Approval times could typically take up to a month.
However, by integrating mobile banking interfaces into the lending landscape, creditors can streamline processes and bring decision times down to as little as 24 hours.
Artificial Intelligence (AI) and Machine Learning (ML) can quickly collate and analyse customer credentials and credit history, which aid in deciding loan rates.
In addition, banking applications help in verifications and loan sanctioning through customer data access and greatly simplify the documentation process.
2. Broaden customer bases and increase retention
Affordable internet plans, increasing technological access and literacy, as well as high smartphone penetration rates, create the perfect platform for lenders to swoop in and increase their outreach.
Mobile banking can help lenders reach new, previously untapped geographies.
End-to-end digitised credit lines can target underserved and low-income populations. This offers a mutually beneficial solution to both parties, wherein customers receive affordable value additions to the regular services, while creditors can easily attract new clients.
Additionally, consumers who use mobile banking services are more likely to continue using them out of loyalty and comfort, thereby providing lenders with valuable data and insights into their spending habits.
This helps dramatically increase profit margins as customers and businesses move away from typical, face-to-face alternatives.
3. Optimise loan servicing, tracking, and repayment
With the technological prowess of mobile banking, lenders can easily track optimum and current interest rates to help better service loans.
Additionally, mobile apps streamline customer onboarding and customer service responses, bringing lenders and consumers into sync. By optimising administrative tasks, lenders can ensure smoother functioning.
Furthermore, mobile applications are powerful enough to process and collate customer data, which lenders can harness to analyse to determine repayment frequency and risk and delinquency rates.
Creditors can then leverage these 24/7 accessible access applications to secure their interests, while this access to data has proven to better debt recovery and minimise non-performing loans (NPLs).
4. Leverage data repositories
Consumer data is undoubtedly the most powerful tool an organisation can wield. With continuous insight into consumer spending habits and preferences, lenders are privy to a broad array of data points.
A highly sensitive feedback loop is created by leveraging machine learning techniques, which is then used to improve customer experiences.
Services and products are personalised to facilitate customer loyalty, boosting customer engagement and consequently increasing returns.
Additionally, lenders also use cohort analytics to learn about customer needs developing new financial products. This data accelerates product roll-outs and revenue stream creation of customised, functional outcomes in a few months.
Data is also utilised to ensure marketing is targeted at the right sectors, which provides that these products generate profits.
5. Reduce costs and enjoy higher returns
With global circumstances influencing a trend in moving away from traditional lending and banking channels, customers feel more comfortable transacting from behind a screen.
Incidences of paying visits to physical branches, and the willingness to connect with an executive via call, are reducing. In addition, instant online chat services, informative FAQ sections, quick loan applications, and hassle-free document eSigning and uploading have changed the face of lending.
Mobile banking offers lenders the unique opportunity to reduce operational costs. Mobile applications automate a significant lending process and customer service operations.
This reduces overheads for lenders and reduces human resource burdens, thereby saving time and allowing money to be redirected toward more profitable avenues.
6. Transform the business sustainably
Lenders who introduce mobile banking to their systems essentially implement a greener operating strategy by default. By going paperless and automating a large chunk of the work, leaders can not only avoid data silos, but this facilitate easier processing by avoiding unnecessary and repetitive paperwork.
As a result, saving time and money proves to be the greener, and more profitable option lenders prefer.
The Bottom Line
A rapidly changing lending landscape, coupled with the burgeoning need for credit, demands flexibility from lenders. The integration of mobile banking may be one way to do so. But, lenders can achieve optimal holistic functionality by efficiently managing credit evaluation and lending lifecycles. Finezza helps banks and NBFCs do just that by employing AI to ensure lender agility and provide cutting edge analytics. Book a demo today!
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