Tips for a digital lending method for lenders

if you are a new player in the lending industry itching to start or an existing player looking to launch new products, this article helps you. We have come out with the basic framework to initiate a sustainable, long-term competitive digital lending product.

The way to becoming a true organization of digital lending that involves:

Identify target segment:

Lending companies aim on developing micro-segments and drive personalization methods for each of these sections. Lenders can provide the products for specific financing requirements such as consumer durable financing, user car financing, etc., or generic products for targeted sections such as unsecured personal loans for salaried persons, self-employed people, students, New to credit and senior citizens.

Drive Innovative products:

Launch creative products for targeting the requirements of customers in the identified segments. Creativity can range from how lenders can collect and use the data that does not available earlier to proactive re-pricing or modification in the way customers make repayment for their loan. Internal back-office and support functions will also be in digital format. For instance, credit requirements of millennials such as ‘Impulse purchase at POS’ or ‘emergency cash’ can be reached through creative operating approaches.

Drive Process:

Armed with creative products, it is very important for lenders to drive customized workflows for every product. Workflows should be modified to aims at the requirements of today’s consumers. For instance, every section of the product may need a separate set of documents. The key differentiators for lenders are an increase in digitization and automation of definite processes. This will suggest that in the organization lenders will have to develop the correct mindset and culture.

Data-Driven Credit Model:

As a lender, aims on data-driven risk scoring credit approaches for every product. You can pool the data from several resources such as credit bureaus, bank transactions, social media, etc., but the aim should be on reducing the cost of rejections and enhancing the approved application. Data-driven decision-making complements the pricing for every borrower by making sure that relevant insights are represented.

Finalize Customer Experience:

Decide how you want to connect with your customers in overall cycle? Though most of the lenders will aims on digitizing the process of front-end application, they fail to tap chances to apply user-centric design ideas in servicing and collections as well. Authorizing self-servicing and offering omnichannel support modifying in the way lenders interacted with customers covering the customer journey.

Reinvent credit models:

Lenders require leveraging the data represented in the process and enhancing the customer experience or decreasing the NPAs by changing their credit models. Lenders are required to have a scalable and robust technical backbone to reach the changing requirements and become agile. Emerging technologies such as Machine learning and Analytics can develop vast opportunities for lenders to often innovate their providings.

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