Demystifying Digitization in Consumer Lending

There’s a continual rise of digital adoption, and the term “Digital” has been redefined in the consumer lending industry. Borrowers’ expectations have shifted drastically, and new opportunities are enabling lenders to provide additional value to borrowers, and they must focus on new sources of differentiation to gain competitive advantage.

These changes are ushering in a true paradigm shift, creating a new generation of Digital Mortgage. Embracing these changes can be a good thing and is undeniably a big opportunity for lenders.

Digitization should not be seen as a replacement of the loan officer but should be seen as an opportunity to increase efficiency and get rid of 100% of cumbersome transactional activities that the loan officer performs today, so they can spend 100% of their time on clients and enhance the customer experience.

There are many trends that are dramatically reshaping the consumer lending industry; the more prominent ones among those include:

•    Increase in automation– Consumer lending automation enables fintech enterprises to transform their cumbersome manual lending process to a truly digital process that not only increases productivity but also meets the expectation of today’s customers. The automation allows banks to enhance customer service, reduce costs, improve compliance and generate revenue faster.

•    Emerging technologies like AI and machine learning leverages algorithms to enable lenders to predict borrowers’ requirements, inform underwriting decisions and accelerate the lending process. There is also a growing comfort with virtual assistance and Voice interfaces.

•    Blockchain Technologies to add transparency and efficiency into the lending process while reducing risk- Making use of a distributed ledger, parties involved in a mortgage transaction process could witness what’s happening with the loan and have a cryptographic level of security to claims against that data.

•    Adoption of design thinking approach and gamification techniques for more engaging customer experience

•    Changing customer behavior due to Self-service–  Self-service technologies are changing customer behavior. These technologies now let service businesses streamline transaction processes, reduce overhead, and potentially increase revenue — all while giving the customer more control over the service process.

•    Offering live chat services, Proactive advice, and recommendations by viewing the customer’s journey and predict borrowers’ needs even before they realize what they need.

Delivering an excellent digital experience is no longer an option for lenders in today’s marketplace- it has become a strategic imperative. Lenders should no longer question whether or not to invest in digital but focus on how to deliver long-term value.

Advantages of digitalization

•    Processes/tech transformation– Digitization optimizes non-customer-facing processes through modern technology that is used to deliver superior customer experience.

•    Better transparency– Digitization allows organizations to target their customers effectively with thoughtful, relevant, and more appropriately timed actions and offers.

•    Innovative products and services– Inherent in digitization is innovation, which supports a redesign of products and services based on customer research, segmentation, and analysis.

•    Delightful borrower experience– Provide delightful personalized experiences to borrowers across digital channels

•    Faster processing with reduced operational costs– Back-office automation enables increased operational efficiency and reduced cost.

Key opportunities for lenders

1. Know your customers

2. Put money into digital and time into traditional

3. Keep things simple

4. Make the customer experience your differentiator

5. Identify the gap and determine the top priorities

Final thoughts

Borrowers perceive home-buying as a single transaction and anticipate all stakeholders to work together effectively and seamlessly. Lenders who effectively serve as the central point to orchestrate the overall transaction can position themselves as trusted advisers and improve the overall customer experience.

Are banks and credit unions keeping up with consumer demands when it comes to digital banking offerings? Are your competitors’ digital lending platform leapfrogging your online capabilities and customer experience? Is your overall digital lending transformation failing to achieve your desired goals?

If your answer is yes, then you are not alone, and a strategic shift in your approach to digital can fix the problem.

You are just a step away. We would be glad to arrange a meeting with you. E-mail us at [email protected] for more information.

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