The landscape of the digital lending market has truly shifted these past few years. It has evolved impressively with a lot of opportunities arising at every corner. While most of these advancements have obviously been brought about by the pandemic by necessity, the further digitization of financial services (and lending in particular) would have happened anyway.
The numbers don’t lie. According to the latest statistics, the global digital lending platform market will continue to expand to a compound annual growth rate (or CAGR) of 24% from 2021 to 2028. So to keep up with the industry growth, you should transfer your services to digital. Having a mobile application for your lending service shouldn’t just be an add-on. Instead, it is a requirement, and it’s high time you should start developing it. Read on to learn what latest trends in lending software to consider if you want to stay ahead of the competition.
The Increased Use of ML and AI
There are two technologies that you might want to shift your focus to if you want to stay ahead of digital lending trends. These are Machine Learning (or ML) and Artificial Intelligence (or AI). Both can significantly empower the typical blindspots and latent opportunities that you are missing out on.
For instance, Machine Learning can prove efficient in the following aspects.
- Sales and Marketing. As a business, we understand why you might be concerned about acquiring new customers but are you really making the most of your existing ones? What a lot of lenders fail to realize is how valuable their existing customer data is.
ML can help analyze these data sets and identify who among them has a higher interest in taking out new loans. It will also help you determine where to expand your services best.
- Risk Management. This same analytics can also determine existing risks to better help you in risk management. In relation to this, ML can also help improve the customer verification process and prevent fraud.
- Back-Office Operations. Lastly, it can automate routinary processes that will increase the productivity of your staff.
Meanwhile, artificial intelligence can help support the following business functions:
- Customer Acquisition. With the help of ML and AI, you will be able to generate more leads and create personalized and targeted marketing campaigns as well.
- Credit Scoring. Lastly, these technologies can also cut the resources it takes to check customer eligibility in half. It will also gain access and retrieve information from the necessary channels almost instantaneously. This will allow your customers to access your services whenever and wherever they want.
No wonder ML and AI are leading lending software development trends.
We have mentioned one of the most important keywords in lending app development trends recently: automation. Think of your entire loan process. How many of those tasks are routinary and repetitive? Is there really a need for your actual personnel to handle all of them?
From credit analysis, determining the most ideal loan programs, decision-making and approval, and risk management, you will be surprised by how much of your process can actually be automated with the right technology.
Going to Cloud
Two of the biggest challenges of any lending organization are data and accessibility. This is more true for online lending companies and brick-and-mortar lenders that were forced to accommodate remote employees due to the global health crisis.
Fortunately, there is a way to manage that vast amount of data and make them accessible to anyone within your organization. This is the main benefit of cloud-based technology. It can also reduce capital, streamline your workflows, and leave room to scale up on-demand.
The Use of APIs
Now that you have gone cloud-based and have integrated your system with ML and AI, the next step is to determine how these programs will communicate and transact with each other for a faster and more streamlined process.
The key is in the application programming interface (or API). In a nutshell, it is a technology that allows two applications to exchange information with each other.
According to recent digital lending industry trends, these fintech APIs are a must-have for a lending app:
- Onboarding APIs. These are APIs that are specifically designed to handle onboarding information such as the amount of loan required, the expected (or preferred) duration range, and the type of loan.
- Credit Underwriting APIs. These are APIs created to gather data from different sources and deliver it to lenders. You don’t even need to distribute them across your system because the API will take care of that too.
- Loan Fulfillment APIs. This type of API is used to deliver information from the lending program to the customer. The best thing about APIs is the added cybersecurity that it provides to protect your company and customer’s financial information. You can learn what banking institutions do to keep their customers secure here.
To quickly summarize the article, here are the key trends that experts predict will redefine the future of lending:
- Machine Learning and Artificial Intelligence. These technologies will help sort through and manage the ever-expanding amounts of data you receive from both new and existing clients.
- Automation. Save time processing requirements and getting your loans out to your borrowers by automating routines, tasks, and report-making. Doing so will also free up your personnel and make them more productive.
- Going Cloud-Based. Keeping everything printed out exposes your important documents to significant risk. Digitizing them is not enough, though, as it will still limit access especially to your customers and staff who are in remote locations. Going cloud-based offers a more secure solution that makes it convenient for everyone.
- Application Programming Interface. Lastly, you need to tie all the platforms involved together by using a secure API. There are different types of APIs that you can integrate with your business processes, such as onboarding, credit underwriting, and loan fulfillment.
Keep in mind that these are not the only technologies that you can expect to make waves in the following years. These are simply the ones we’ve found that are most promising and therefore most pressing to incorporate into your current digital lending software development efforts.