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Four benefits of using digital lending platforms

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The banking industry is retreating from the time-consuming traditional loan origination process, that depended on laborious processes that involved human errors. Changing with time and understanding what customers need are the core competencies of business intelligence tools. Several banks have comprehended that the lags in the system need to be addressed but could not take major steps because of an ambivalent view of automation and its scope. However, with time the industry acceptance of digital lending platform is growing and more banks and lenders are embracing automation to ease their loan origination process. 

Future of the digital loan market

Digital lending platforms automate the whole loan origination process right from customer onboarding to loan disbursal. Post-disbursal cycle is also efficiently carried out through the same platform. 

The ease of onboarding when seeking a loan and filling out forms without hassles enriches the experience for the end consumer. A borrower can apply for a loan through multi-channel platforms that can be accessed at any time. The flexibility and the dexterity of digital loan platforms help a consumer upload all the necessary information in a single step, in a paperless process, and that too without taking time out to walk into a bank. 

It is estimated that the digital lending market will grow at a 25.9% CAGR from 2022 to 2030. 

Benefits of digital lending platforms

  • Efficiency

The main advantage of digital lending platforms is the efficiency of the loan origination process from an end-to-end cycle that enables quick loan approvals. Automated systems value the time of the customer and the employee is valued, whereas repetitive and cumbersome tasks are carried out through digitization. It also reduces errors that limit a traditional process. Often digital loans are processed within twenty-four hours of a client submitting a loan application. The process is seamless while adhering to all the regulatory requirements that are synced in the algorithms of the platform.

  • Cost-saving

When paperless loans are processed at a remarkable speed the results will be cost-saving with enhanced revenue generation while mitigating risks in business. The entire process of automated loan generation saves costs not only for the lending organization but also for the borrower. 

Whenever a person or business applies for a loan, there are plans tied up to the loan that are crucial for personal or business growth. Quick approval of loans saves time and money for customers as much as it does for lending enablers. 

Auto credit assessment and decisioning ensure speedy disbursal of loans thereby enhancing the customer experience who can use the funds for the right purpose. Delays can cost customers and the lending business opportunities 

  • Process consistency

The digital lending platform software is pre-configured to comply with both the credit rules of the business and the regulatory framework. The entire process replaces human judgment which usually varies with an individual employee’s perception and can be clouded by many factors. 

When the system follows the rulebook of pre-set algorithms that account for all the features that are established by the business’s core to avoid risk and enhance efficiency, then consistency is established. Only the applications that meet the standards and permissible risk limits are accepted for loans and no leeway is given to insufficient or fraudulent data. 

  • Rational underwriting

Underwriting is the most important stage of a loan cycle. Digital lending platforms sync the data retrieved from the borrower’s loan application and verified using AI tools and third-party API integration from important touchpoints like credit bureaus, customer banks, and income tax returns. Credit decisioning algorithms process the application based on the risk assessment carried out by the digital system. The underwriting acumen of digital lending platforms is better than humans as it’s free of errors and biases. 

Conclusion:

With digital lending software, the lending business of banks and other mortgage institutions will change from the time-consuming and tedious traditional processes. Banks have also realized that cost-saving alone is not going to impact future growth as much as delivering speedy and efficient loan products that customers will appreciate.

 


DISCLAIMER – “Views Expressed DisclaimerViews and opinions expressed are those of the authors and do not reflect the official position of any other author, agency, organization, employer or company, including NEO CYMED PUBLISHING LIMITED, which is the publishing company performing under the name Cyprus-Mail…more


 

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