The global market size of digital lending platforms holds a bright future, with a projected annual growth rate of 26.5% by the year 2030. The private and SME lenders need to capitalize on this opportunity by ameliorating their loan processing systems and leveraging innovative FinTech solutions.
Automation in finance opens the gateway for lenders to enhance the overall customer experience, proactive management of debt collection, superior fraud management, and several other aspects of loan management.
The combination of higher efficiency, usability, and accessibility are some of the factors responsible for the rise of automated lending platforms. Let us understand the difference between traditional lending and the automated lending system in detail.
Traditional Lending VS Automated Lending
Speed Of Loan Approval Process
According to a survey, 46% of people say that financial lenders take up to five weeks to approve their loan, and 16% report the time up to eight weeks. Moreover, in some cases, the loan approval process can take up to several months in the traditional system due to several factors like improper communication, slow document verification process, delayed collection of credit reports, etc.
These irritating factors can frustrate the borrowers and may push them to lose interest in the lending firm. On the contrary, an automated loan approval system can streamline the whole process for lenders. They can speed the process by investing in AI-powered smart systems with NLP and OCR features to reduce manual error and effort and maximize efficiency. Moreover, they can reduce the cost of the whole process by 50%, which can save a lot of capital for lenders.
Accuracy Of Risk Assessment
There is no unified platform for the lenders to collect the data for risk assessment in the traditional method. They have to collect credit reports from the credit bureau, which can result in significant delays in the whole process.
However, with loan processing automation, lenders can leverage the power of AI and ML predictive models to analyze market trends, borrower data, and other significant economic metrics. They can use the insights to deploy proactive measures for proper risk mitigation and offer accurate pricing to their customers.
Possibilities For Loan Portfolio Diversification
Lenders in the traditional system have to go through several regulatory requirements during the whole loan process. Failing to meet any requirement can lead to penalties for lenders.
However, with the advent of smart bots in loan automation software, private and SME lenders can offer the right portfolio to investors according to their budget and risk appetite. They can help small companies to make smart and informed decisions while planning their financial goals.
The borrower experience in the realm of traditional lending often suffers from the absence of standardized procedures, transparent communication channels, and efficient workflows, leading to a lack of smoothness in the overall user journey. These inadequacies give rise to numerous discrepancies during the loan approval process, significantly diminishing borrowers’ patience and eroding their trust in the lending firm.
However, in stark contrast to this challenging landscape, the advent of a smart loan automation system holds the key for private lenders to unlock a realm of personalized experiences for their customers, tailored precisely to their unique profiles. Leveraging the power of automation, these forward-thinking lenders can achieve a remarkable reduction in processing times, allowing borrowers to receive swift decisions on their loan applications.
One of the defining features of this transformative system lies in the integration of intelligent chatbots, enabling real-time support for borrowers throughout their journey. Customers benefit from rapid responses to their inquiries, facilitating a seamless and responsive communication channel. This quick and efficient support not only expedites query resolutions but also augments the entire borrower journey, elevating customer satisfaction to unprecedented heights.
With a smart loan automation system at their disposal, private lenders can foster an environment where borrowers feel genuinely valued and attended to with utmost care. By addressing the pain points of traditional lending through streamlined workflows and transparent communication, lenders instill a renewed sense of trust in their clientele, forging lasting relationships built on reliability and efficiency.
Ultimately, the marriage of automation and personalized customer experiences empowers private lenders to chart a new course, where borrowers find solace in the simplicity and convenience of their loan journey. As borrowers witness the tangible benefits of this modern approach, their trust in the lending firm flourishes, cementing the institution’s position as a frontrunner in the competitive financial landscape. Embracing the smart loan automation paradigm enables lenders to reap the rewards of enhanced borrower satisfaction, propelling their enterprise towards unparalleled growth and success in the ever-evolving world of finance.
Default And Collection Management
Lack of real-time data in the traditional system causes several issues in debt recovery. Customers in debt can change their details which can raise several problems, like debt validity issues, prolonged negotiations, and legal disputes.
However, AI-powered tools can help lenders to go through piles of data quickly and manage risky accounts efficiently. Moreover, they can improve the accuracy of their insights according to changing input variables of the customers.
In the realm of automated loan processing systems, lenders are granted a unique opportunity to harness the power of intelligent tools, such as cutting-edge smart chatbots, to curate seamless and secure experiences for their esteemed clientele. Through the adept application of predictive analytics, these sophisticated systems have the capacity to proactively identify and mitigate potential anomalies that may precipitate fraudulent activities and loan defaults, thus fortifying the foundation of financial prudence.
Gone are the days of grappling with the perils of manual data handling and tedious procedures; with the integration of these advanced technologies, lenders can streamline their operations and unlock unprecedented levels of efficiency. Embracing the transformative potential of intelligent automation enables lenders to not only safeguard their institutions from unwarranted risks but also enhance their collection endeavors with a refined finesse.
By capitalizing on these progressive advancements, financial institutions can forge a formidable path toward sustainable growth and resilience in an ever-evolving economic landscape. Forward-thinking organizations should seize the moment and leverage the power of automated loan processing systems to pave the way for a brighter, more secure financial future.