The world is the middle of Digital transformation, with the financial services sector on its forefronts. Banks, as well as lenders, are have already started functioning very much like tech companies. Because of the rapid adoption of several new technologies, familiar signifiers of traditional banking for instance branches as well as ATMs have started phasing out.
Banks as well as the service sector in common, have been ahead of the curve for existing. The business has always been mainly been aided by software for its functioning since the last three decades almost.
However, this as well means that several banks are moving towards an era of digital transformation along with the legacy systems baggage. Keeping on with competitive entails is a great move that includes shifts in approach. As well as necessitating risk-averse leaders in order to overcome their skepticism of new technologies. As existence depends upon these changes. New banks might find it easier without those constraints, on the other hand, the others demands for digital lending platforms, have now started pressurizing all the lenders without exemption.
Here are some of the demand for transforming the business of digital lending:
- Approval of Loan in less than 5 minutes
- Creating Products on the fly
- Incorporation with several credit rating agencies
- A strong mechanism over de-duplication
- Extreme volatility in the structure of Interest rates (Such as customized payment plans, deals over existing loans and flex interest rate).
- Maximum offers as well as discount arrangements over assets.
- Lines of credit, dealer finance as well as risk pools – This means banks should provide finance to arbitrators for instance dealers & distributors.
- On the fly method as well as changes in a workflow – This implies shortening flexibility.
- Several modes of acquiring customers along with healthy infrastructure for the process of communication – Such as buying a loan from the ads shown on the social platforms.
Usually, lending has been a Workflow or CRM or Accounting centric, along with one of them being at the initial point. As well as several others working around it. A lot of commercial off-the-shelf (COTS) structures are also made over this principle.
Currently, new solutions necessitate having a specific type of structure such as Lego. Also, mechanisms like fail-fast have rapidly replaced the long waiting system of 6 months to one year. In order to figure out if something is wrong or not. Moreover, this Lego architecture has the API Management part at the middle i.e. the layer speaking to a number of systems. This provides agility as well as reducing costs. As the disrupters get in new tech, lenders in the marketplace would move to this structure so as to stay relevant.
Furthermore, lenders must be very inventive along with their business models. The IT mechanisms ought to create and/or designate on the basis of business models and not vice versa. However, if certain mechanisms fail to work, they need to be replaced as soon as possible.