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Digital Lending – Build, Buy, Or Partner?

A comprehensive study by American Bankers Association reported that “efficiency” was the leading concern (72 percent) for banks in consumer lending followed by cost (61 percent), and process, operations and staffing (57 percent). With the ever-increasing demands in faster processes, hands-on user-friendly applications, the pressure on banks and non-banks to adopt digital transformation is mounting.
So why is this digital transformation making rounds in financial services? The answer is the encapsulating wave of digital lending practices.
Digital lending refers to using online digital platforms to originate loans directly to customers, usually consumers and small to mid-size enterprises. Through automation, digital lending can make it feasible for banks and non-bank lenders to reclaim the consumer and small business lending markets who may have exited for cost and efficiency reasons.

“Digital is no longer a nice-to-have, a ‘maybe we’ll get there someday.’ Digitalization is a must-have requirement. There’s no reason that you shouldn’t have something today.”

Chris Rentner, Founder and CEO, Akouba

Lending Software

To be true to reality, most of the lending processes—including online applications, onboarding, processing, underwriting, and funding have yet to be overhauled through technology. That means there is still a lot of opportunities to improve productivity, close more loans and increase revenue per loan with cheaper, faster, and automated services.

As a first step into digital lending practices, setting targeted and specific goals helps. Here are some which are taking the financial industry by a storm:

  • Acquiring high-quality customers (LTV) using data science
  • Automating mundane processes of underwriting
  • Providing low-cost options for loan management and loan origination solutions?
  • Improving software quality to ensure that end customers have the best possible customer experience?
  • Organizing application development/software portfolio management plans

A shift from traditional to digital may not be as easy as being said, there are limitations on resources, knowledge, skills, and cost.

According to PwC, “Many lenders are partnering with start-up technology firms or vendors offering solutions that are built to be integrated with their digital suite to enhance their offerings or gain a competitive edge. Marketplace lenders have excelled at the partnership angle and financial technology firms are looking for lender partners to strategically combine forces with a unique go to-market solution.”

Whether to “Build, Buy, or Partner” is a strategic decision.  Zuci understands the dire need to have great partners not just for implementations but also for consulting and dropping ideas to transform your services.

Join us at the LendConnect 2019 conference in Florida, as we talk about the disruptive technologies swaying the lending industry.

Trust us to speak from our enormous amount of experience in financial services!

Janaha Vivek

I write about fintech, data, and everything around it | Assistant Marketing Manager @ Zuci Systems.

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