The Road To Digital Lending With New Age Banking


The relatively new concepts of digital lending and digital loans have the potential to change the traditional lending scene in the country. However, the road to achieving perfect state is still full of unexpected turns and needs the lenders to revisit their strategies, writes Achintya Gupta, Director, Kuliza, a company that helps financial enterprises in their digital lending implementation and digital commerce transformation journeys, for Elets News Network (ENN).

Digital lending and digital loans are very quickly changing the lending scenario and have become a hot topic of discussion across board rooms in banks. The reason why so many banks are interested in digital loans is because of the scale and financial inclusion they can bring to the table along while solving the massive operational challenges related to the traditional offline lending models.

But what only few leading enterprises realise is that the road to digital lending cannot be traversed with existing legacy engines and system architectures. If an enterprise wants to achieve digital enablement of loans in its true sense, they need to think very differently and challenge every legacy system that would hinder their speed and product requirements.

Creating a New Digital Lending Architecture

One of our clients, a leading Non Banking Financial Company (NBFC) in the country, decided not to use any of their existing legacy systems for their digital lending SBU. Instead, they chose to build a new digital lending system with us on an open source stack that can provide them the agility to go to the market in a couple of months and the flexibility to create their own product roadmap. As a result, their business is governing technology and product roadmap rather than the other way around. They have complete control on the features they want, the partners they want to integrate with and the parameters they want to include in their credit model.

With a more flexible digital lending architecture, today they have the capability to configure and launch new loan product to micro-customer segments very quickly in the market.

Customer Experience

Digital lending aims at managing the customer’s complete loan lifecycle on a digital interface, from sourcing to evaluation to disbursement and servicing. If the enterprise wants this journey to happen through a selfserviced digitally enabled model, it becomes extremely important to take care of customer experience.

The technology architecture of the digital lending platform will play a key role in ensuring that the right customer experience is delivered. The speed of the application is one of the key reasons why customers drop off. Another architecture failure is when you realise that your desired UX / UI design cannot be delivered in a certain tech framework.

Hence, having the right tech architecture that enables desired customer experiences is of paramount importance to the success of the digital lending strategy. Here, the modern micro-services driven/service oriented architectures are especially useful. They achieve abstraction at every level to ensure the back-end or business logic provides no constraints onto the presentation layer or user interface.

The technology architecture of the digital lending platform will play a key role in ensuring the right customer experience is delivered. The speed of the application is one of the key reasons why customers drop off.

Building Your Own Digital Lending Product

Our past experiences show that the biggest hurdle to a successful digital lending initiative is the enterprise mindset to procure software products to fuel their digital lending strategy. The true power of a digital lending platform can be explored when one starts getting the flexibility to launch features, products and capabilities based on the business requirement and have least technology constraints to it. Hence, it is not possible to build such kind of a system over an existing software product that by default comes with a limited set of features and is not engineered to handle quick upgrades and enhancements.

Perhaps that is the reason that we have seen some of the most successful digital lending initiatives choosing to build their own product rather than taking a system integration approach.

The concept of digital lending is still fairly new, and the road to achieving the perfect state is still full of unexpected turns. However what is undeniably true is that to achieve digital success, banks will need to acquire a “digital-first” mindset.


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