How is technology transforming the consumer lending industry?

The consumer lending industry has seen a lot of technological innovation. Consumers can now find loans and lenders through various digital platforms.

With so many options for consumers, the competition is fierce. So what makes you stand out from your competitors?

Your onboarding and loan processes are unique in their efficiency, convenience, responsiveness, and customer experience.

This article will talk about how technology is changing consumer lending. We also discuss digital lending trends that could impact the lending industry in 2022.

Let's begin!

What does "consumer lending" mean?

Sometimes we need financial help to meet our specific needs. We can get that push with consumer loans.

Let's say, Mr Chris, a painter needs money to pay his daughter's school fees and rent. He would need a loan from his bank or another financial institution for a consumer loan.

Consumer lending is the financing of personal loans. This refers to loans that are primarily intended for individuals' personal use. These loans are usually long-term and provided by financial institutions. Sometimes, the lender might also be a company that provides credit to individuals as part of a deal with the company.

Consumer loans are not collateral-free, unlike business lending.

How is technology changing consumer lending?

It was difficult to get a loan until a while back. First, the lengthy, complicated forms required by consumers would be completed. The approval process would then take several weeks.

Borrowers can now receive almost instantaneous loan approvals and money in their bank accounts thanks to an increase in lending companies adopting cutting-edge technology.

Digital transformation is changing the rules of consumer lending. Likewise, the sector is being transformed by technological innovation. More flexible competitors will leave behind one that doesn't keep pace with these changes.

• Consumer data

A large amount of data is essential for the consumer lending industry. In addition, this structure of data exchange is vital for the development of consumer-oriented lending services.

Lending firms can use technology to organize data exchanges and standardize data analysis. By analysing borrowers' credit histories, you can make your lending products more customizable.

Your digital solution will also benefit from the ability to analyse your consumer's credit history. You can also access other credit data sources, like property and bill payments, to get a better picture and make more accurate risk assessments.

Credit scoring that is based on other data can help improve lending performance.

You can also access this data at a central repository to analyze it easily and make critical decisions.

• Innovation in vetting applicants

Innovative, tech-driven credit systems are emerging in this sector. They argue that traditional methods for applicant approval no longer suffice. They are a poor indicator of creditworthiness.

New credit models can be created by integrating AI technology. These models are built on various data points, including the borrower's employment history, education, and spending habits. As a result, AI-backed algorithms are better at checking if the borrower's information is correct and if they can pay the debts on the due date.

The future of lending is the new credit scoring system based on technology.

• API integration and process automation

Millennials and other young customers want quick, easy access to loans. This is not possible with traditional methods. The speed and simplicity of digital solutions are no longer optional features. They are essential for modern digital solutions.

RPA (Robotic Process Automation) is a new, technologically advanced solution for digital lending. RPA automates loan initiation, documentation verification, and other time-consuming tasks to improve the customer experience.

When RPA is integrated into APIs (Application Programming Interfaces), this creates a win-win situation for everyone.

Integrating RPA and APIs allows your customers to access various digital lending products while giving you more scope for innovation. In addition, it allows you to securely engage customers and access data from any location.

• Artificial intelligence

Artificial intelligence is revolutionizing consumer lending.

Artificial intelligence in lending aims to reduce administrative burdens, free staff from tedious tasks, and allow them to focus on customer relations.

AI integration allows for seamless customer onboarding and low turnaround times in compliance and risk processes. You will also get customer loyalty and referrals because AI integration promises positive consumer experiences.

AI can help you make predictive lending possible and increase customer retention. In addition, it can help you analyze and combine raw data to provide valuable insights.

• There is no need to use intermediaries

Blockchain revolutionizes the customer lending industry.

Digital lending firms can use blockchain to create a low-cost, high-trust solution.

Blockchain-based platforms enable borrowers to deal directly with lenders about the interest rate, number, and duration of the transaction.

Both can agree to terms in smart contracts. However, if the borrower cannot adhere to the smart contract terms, late payment fees will be added to the amount paid.

• The efficiency of increased upkeep

Cloud computing solves the problems of the consumer lending industry's downtime. How? This makes loan disbursal easier and faster than ever before.

Digital lending solutions that use cloud storage can streamline the loan process and promote transparency among all stakeholders, including borrowers, regulators, lenders, investors, regulators, etc.

The cloud also offers unprecedented scalability and data integrity.

• Identity and cybersecurity

Identity protection and cybersecurity are becoming increasingly important in the world of lending.

Lenders are concerned about defaults by borrowers. Lenders can make confident business decisions by keeping their credit information up-to-date.

Blockchain and biometrics are two technologies that can detect discrepancies and make them transparent.

PerfectionGeeks Can Help You to Create digital Lending Solutions

The digital lending market has become highly competitive, with traditional financial institutions competing with or joining forces with fintech solutions.

Digitization continues to grow at an amazing pace.

Do you also want to create a dynamic lending platform for your customers?

PerfectionGeeks can help improve your lending and borrowing experience, especially in light of the rapidly changing digital lending landscape. As a result, we can create a modern but simplified lending solution for your business.

Our digitalized end-to-end solution will meet your customers' personal, auto, student, and home loan needs.

Contact us by creating a custom lending solution, we will help you meet your borrowers' expectations.