Most banks have already integrated a digital banking offering into their services. Allowing for fund transfer or cash withdrawals without human interaction is not new. The next step for banks is digital lending: allowing customers to apply for, receive and access loaned funds instantly and automatically, using any device. This kind of offering has many benefits; here are a few to consider:
1) Cut loan origination costs—and your risk.
Digitalized lending uses customized models, industry best practices and existing customer data to automate the lending decision-making process. Customers apply for and receive loans using a self-service channel such as a computer or smartphone. Bank customers are happy with instant, around-the-clock service, and you can make more loans at a lower cost. In addition, since these models are fully automated, there is no human element of poor decisions or improperly trained staff. The decision engine will make the right decision, every time, and can even be trained to integrate new customer data on behavior and repayments as it is gathered.
2) Cut turnaround times for loan applications from days to minutes.
For many banks, it still takes days to approve loans, and longer than that for small business loans; loans have to go through the teller who takes the application, the branch manager, the credit team, the risk team, etc, etc, etc. With digital lending, the whole lending process is streamlined, automated and instant. There’s no more waiting for anyone’s manual approval—customers today demand instant answers, and digital lending enables you to provide them.
3) Offer a greater diversity of products.
Banks with digital lending are able to leverage existing credit products and customer data to see what customers need and offer products to meet those needs. Using digital lending, you can expand to new loan products, growing quickly and easily to meet customer demand. See that a new need has arisen among customers, given time of year, unexpected weather, or changing trends? Roll out a new product quickly and easily with no need to train staff.
4) Target your customers and let them take a loan whenever and wherever they need it.
Fully automated lending will allow you to reach your customers in unique ways; since you’re connected with them via their cell phones, you can use their banking data to anticipate and meet their needs. You can reach out to parents before the start of a new school year, or farmers during peak agricultural season. Instead of offering the same options to everyone, with mobile lending, you can customize offers to meet customers’ needs instantly. When you see or predict a customer’s need, you can instantly and automatically send them a loan offer to meet their need—no more waiting, and better service for your customers.
5) Serve more customers with your existing staff and branch network.
Digital lending lets you serve more customers, faster. Instead of waiting in a line to speak to a staff member to apply for a loan, customers apply and get instant answers from the comfort of their home or office, any time of day or night. Automated, digital lending makes it easy to grow your relationships with customers. Bank staff are freed from tiresome data entry and form processing and able to focus on fewer/higher level activities such as building relationships with customers, and handling KYC (Know Your Customer) processes.
6) Gain a competitive edge over other banks and alternative lenders.
It’s no secret that business is moving to mobile. In addition to your direct competitors, your bank may now be competing with financial services from alternative or online lenders. Your bank can either keep up or be left behind, and now, before mobile lending is everywhere, you have the opportunity to be a market leader—offering a product few or no other banks do. Your customers already trust you for their financial needs—by offering mobile lending, you can ensure that rather that switching to a mobile money provider, they continue to look to you for financial services. Your customers have an easier time banking with you, and you provide a service no one else does. Win/win.