Top 5 Takeaways from Webinar: Lending in a Box
The impact of COVID-19 on consumers and banking has been profound, primarily towards the accelerated use of digital technology. However, even with the resurgence of digital lending operations, the looming feeling of uncertainty has left all of us wondering – what can we expect next?
In this webinar featuring Forrester, Microsoft and Kuliza, we delved into the top lending insights of 2021 and recommendations for the future. From modernizing lending through cloud computing services to reinventing SME financing through Ecosystem-based Lending, here are our top five takeaways from Lending In A Box: Ecosystem-Based Approach to Loan Book Evolution:
#1 Lenders will begin transformation by targeting Origination and Onboarding first
According to Senior Analyst, Forrester, Zhi-Ying Barry, “For many lenders, their lending journey seems to be digitized but still have manual processes in place. Loan journeys still have broken pieces which makes origination not truly end-to-end”.
The product discovery to engagement period is crucial for lending institutions and requires efforts from marketing teams to help with better discovery and exploration, and product capabilities to further omnichannel origination. This in addition to seamless onboarding could be the first and best place to begin the evolution of lending processes.
#2 Loan Servicing, Monitoring and Debt Management will become more important than ever
The onset of COVID-19 and lockdown restrictions posed many difficulties to lenders when it came to loan collections. This became an eye-opener among financial institutions who soon realised that they needed to focus on debt management and monitoring first and foremost, to avoid problems in the collections stage.
Thus, the ability to use analytics to diagnose loan portfolios will become an incredibly important asset to help lenders set priorities for risk management and business growth. Continuous monitoring of loan books and overall portfolios was also stressed as a valuable feature to identify changes in vulnerability and opportunity among consumers.
#3 The Future of Lending is OPEN as lenders will embrace ecosystems and use open banking as an enabler
The lending industry is not immune to platform-driven change, of which the marketplace approach is the most likely winner. Few enterprises are already at the forefront of leveraging marketplace-driven financial services, so to stay ahead of competition lenders should actively work on evolving their business models toward a more open, participative marketplace approach.
Using an ecosystem-based approach, lenders can access the latest banking technology. Forrester revealed that the “hottest technology” included AI and ML, APIs, Chatbots and Computer Vision among others.
#4 New Business Models enabling Open Financing
BFSI Industry Executive of Microsoft, Bala Somasundaram talks about Open Finance saying, “ Open Finance is an initiative which will offer a wide array of choices to the customers so the customers would be in a position to compare and contrast products and services from different players”.
Open Finance is nothing but an extension of the concept of Open Banking, thus to emulate this value addition in lending, new business models will have to aim to be:
- Platforms with Open and/or White Labelled Services
- Bidirectional Data Driven Partnerships
- Large dataset and model sharing in addition to APIs
- Marketplace models
#5 Loan Book Evolution: Going beyond Transformation
Ecosystem based lending can only be achieved with rapidly evolving systems and digital lending must go beyond transformation to reach a state of continuous evolution.
Thus leveraging low-code to evolve in lending systems would make it easier to invest in upgrades, give users a steady pace to understand and also remove the need to completely discard older systems. Using lean methodology to make gradual changes would give FIs the chance to explore a fail-fast, learn fast approach because of confidence in the agility of the system.
Born out of low-code and a desire to leverage ecosystem-based lending, we launched Lend.Business – The first of its kind low-code, full-stack, loan book evolution software created specifically for SME lending. Know more about Lend.Business here.