What Is Digital Lending?

How Digital Lending Can Improve Banking Services?

Digital lending is now at the forefront of the market. Learn what digital lending is, its 4 levels, and how it adds value to banking services. 

The year 2020 brought about a sudden shift to digital. Almost all fields have found ways to digitize their services, while people embraced it with welcoming arms. One of the leading trends in finance today is digital lending. Learn more about digital lending with us.

What Is Digital Lending?

Digital lending involves the management and processing of loans online. This process may cover various levels of lending—from online loan application to documentation, credit analysis, decision-making, pricing, and so on. We are one of the leading providers of digital lending for federal employees and public sector employees.

Both consumers and financial institutions acknowledge the convenience and opportunities that come with digital lending. However, it does entail a major investment such that some institutions or companies do not go fully digitized.

4 Levels Of Digital Lending:

Before a financial institution becomes fully digitized, they have to navigate four levels of digital lending.

Level I: The Digital Entry Point

The entry point for most institutions is building a digital front-end for their customer base. This may cover the initial steps of the application process, but the rest still relies on manual processes, such as phone calls or in-person visits. Because it still relies on manual processes, it still takes a lot of time to process an application, therefore falling short of customers’ expectations of digital services. Staying on Level I adds value to the institution, but digital lending could offer more.

Level II: Digital Workflow

At this level, the entire process has become digitized on the customer’s end, though they still need to upload documents. However, the back-end workflow remains manual so that employees manually review the documents uploaded by the customer. While a fully digital customer experience is a significant improvement for customers, the time and effort required to process an application remain a burden for the people in the back-end.

Level III: Automated Decisions

In Level III, front-end and back-end processes are digitized, such that both customers and employees benefit. With automated decisions, banks can process large amounts of data and make faster, more accurate decisions. In the end, it’s not just customers who are satisfied, but also the institution and its employees.

Level IV: Intelligent Decision-making

The last level involves more complex analytics. Investing in advanced technologies that can improve decisions allows banks to expand their loan portfolio with new and existing customers while keeping risk manageable. This allows them to drive growth and improve their services.

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