The Unified Lending Interface (ULI) is transforming digital lending and promoting financial inclusion. By streamlining the lending process, ULI enhances individuals’ and businesses’ access to credit. Consequently, this innovation reduces barriers that traditionally hinder financial services.

According to a report by the Reserve Bank of India (RBI), digital lending grew by 172% between 2019 and 2022, highlighting the increasing reliance on technology in this sector.

How ULI Enhances the Lending Process

First and foremost, the Unified Lending Interface simplifies the loan application process. It allows borrowers to access multiple lenders through a single platform. As a result, applicants save time and effort, increasing the likelihood of securing loans.

Moreover, ULI promotes transparency. Borrowers can compare loan products from various lenders, making informed decisions. This transparency builds trust between lenders and borrowers, encouraging responsible lending practices.

The RBI guidelines on digital lending emphasize fair practices, which ULI supports by ensuring borrowers receive all necessary information upfront. This includes details about interest rates, fees, and loan terms, leading to better-informed decisions.

Unified Lending Interface (ULI)’s Role in Financial Inclusion

Furthermore, the Unified Lending Interface plays a crucial role in enhancing financial inclusion. It provides underserved populations with access to financial services. For instance, individuals in rural areas can apply for loans without traveling long distances.

Additionally, ULI uses technology to assess creditworthiness. By analyzing alternative data sources, such as transaction histories, ULI helps lenders evaluate borrowers effectively. Consequently, this approach opens doors for individuals who lack traditional credit histories. A survey indicated that 50% of potential borrowers in rural areas face difficulties in obtaining loans due to limited access to traditional banking services.

Conclusion: The Future of Lending with ULI

In conclusion, the Unified Lending Interface (ULI) is revolutionizing digital lending and fostering financial inclusion. By simplifying processes and promoting transparency, ULI empowers borrowers and enhances access to credit. As the lending landscape evolves, ULI will continue to drive positive change. The RBI’s commitment to regulating and supporting digital lending further solidifies this trend.

Ready to explore the benefits of ULI for your financial institution? Contact Fusion Informatics today to learn how we can help you implement this revolutionary solution!

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If you are a small-business owner in India, you understand the importance of massive support that Fintech is giving you more than anyone else! Fintechs provide companies, irrespective of small, medium, or big, with all those services that a typical financial service provider cannot, such as digital lending, instant seed capital,  apt financial advice, digital financial solutions, digital transactions, etc. Fintech is all about innovation, as well as huge transformation in financial services. The industry owes greater chunks of all these transformed aspects to the one and only ‘digital transformation’ in the financial sector. Why Fintech is leading in India for digital transformation? Why not other industries are equally adopting it? Because of the dire urgency, financial services encompass all the other industries while it is not vice versa. You can say, necessity is not only now the mother of invention, but also the mother of adoption. The conventional financial services industry wore a traditional outlook, but, the current pandemic has redefined its entire structure. It has powerfully accelerated a drastic shift by essentializing a massive transition from the physical form to digital form. This has required the Fintech industry in India to rise above par by empowering businesses with digitalization drives. Worth mentioning, this drastic shift can be greatly attributed to consumer behaviors that are rapidly changing, emerging newer patterns dictated by cashless & contactless operations, and so on. Let’s get into a deeper analysis of the fact why Fintech in India is leading for digital transformation :

Fintech Digitalized Landscape

In India, the Fintech industry is divided into four major categories,i.e., Payments, Wealthtech, Insuretech, and Lending segments. With the outbreak of COVID-19, the fintech sector has come out as the most significant lending and transaction platform, reshaping the traditional model of banking services and customer’s end-to-end journey. Not only the banking sector but all other segments that the Fintech industry in India covers under its wing. Fintech or Financial Technology allows digitalization of the business operations, improvement in production capabilities,employee-efficiency as well as resource management, to name a few. It guarantees an enhanced customer experience, as the role of AI-ML predictive analytics is immense for retrieving behavioral insights thus allowing a better decision-making process and transparency in the system.No  industries match this quantum of digital transformation other than Fintech is doing in India.

As per Adroit Market Research, the Global Fintech market is expected to hit a huge $460 billion by the year 2025. As per another published report prepared by  BCG and FICCI, the Fintech industry in India will touch a huge 150-160 billion USD by the year 2025, as well. You can now estimate the development quotient of the Fintech industry in India if compared with the global estimate!

Fintech replaces Legacy Lending Models

If you are a Start-Up, SMB, or SME in India, you are now aware of the limitations of the legacy financial systems and how Fintech is proving to be a cost-effective model for you! For example, traditional lending models. They are so inefficient as they are not scalable, and, would rather pose a barrier for you to access finance. Contrarily, the Fintech model allows you to cut down on your costs due to the lean operating model. And, Fintech is just accelerating the pace of digital transformation making operations smooth, seamless, paperless, automated in the ecosystem. However, anywhere in the world including India, transitioning from a legacy system to a digital ecosystem is not a walk in the park. For example, instead of going for a cloud-based lending mechanism, think of an alternative. Building an API architecture to seamlessly integrate with legacy systems, and then provide some sustainable, scalable digital model to facilitate an optimized lending solution. This would be an apt idea. So this amounts to one of the big reasons why Fintech is leading in India for digital transformation across industries.

Digital Fintech Platform for Varied Channels

As described earlier, the present COVID crisis has only triggered the growth of Fintech solutions in India. There’s a greater rise in the adoption of the digital platform during the pandemic; there’s been a spike in the demand for digital payment platforms, digital wallets, credit cards, etc. In short, the pandemic has revolutionized the pattern of digital payments in India. People are alert for their lives, preferring financial transactions contactless and online mode. So, if you are SMEs or StartUps, going for leveraging the massive scope of Fintech Solutions can fetch you greater returns, like, digital lending, is an easy way to avail of loans.No hassle, No tension.

Data Analytics for Operational Efficiency

Fintech Industry in India is faster than other industries for digital transformation because people need money, and loans for business and personal needs, too. And, these people hail from just any industry. The present platforms for digital lending are equipped with innovative digital tools and features, viz. Video-based KYC & personal identity, Social security basis for KYC, all these can be utilized by the account aggregators who can quickly access required customer data and get their consent as well. Not only this, Predictive analytics, data analytics help understand customer portfolio thus enabling loan processing an efficient task. Fintech in collaboration with Big Data Analytics can get useful insights into prospective customer’s credit history. Their preferences are also extracted out of the analytics and fraud detection becomes easy.

The Final Take

The fact that Fintech Industry in India is leading for digital transformation, we can also notice how other industries are also following a similar trajectory. For instance, the healthcare industry is adopting digital transformation introducing telemedicine, remote patient monitoring. Moreover, in some way or the other, every industry is adopting digital mode wherever possible. With the rise of consumer awareness, many SMEs and businesses are looking for adopting Fintech Solutions to accelerate their financial operations, and digital transformation is the straight way to that goal. Fintech has opened up an easy and transparent digital ecosystem through user-friendly applications and solutions.No doubt, digital transformation in the finance sector is very crucial to thriving in this competitive world. This makes Fintech the most charming Industry for digital transformation in India.

Whether you are a Startup, SMB, or Financial Institution looking to tap and scale into digital transformation, Connect to our experts and get started!

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Fintech stands for Financial Technology. Today, India is a leading hub for Fintech Startups in the world. As per a recent report prepared by Boston Consulting Group (BCG) in collaboration with FICCI, India’s Fintech industry is set to reach a massive 150-160 billion USD by the year 2025, and that will result in a 100 billion USD value creation opportunity in the sector.

The reasons behind the big growth of the Fintech industry in India are varied deep-rooted demands from customers, substantial tech- talent, diversity in the capital flows, and policy framework that is truly enabled.

What is Fintech?

As mentioned, Fintech means Financial Technology. It is a fine convergence of financial services with digital technologies. Empowered with advanced data & analytics capabilities, zero-processing costs, asset-light-platforms, fintech companies are providing a better, advanced form of financial solutions to their varied clients across industries.

These financial solutions happen to be in the form of digital transactions, digital payments, and the likes. The advent of the Fintech industry has led to the adoption of digital technologies in the business models of financial providers, replacing the traditional modes of payments with ace, digital solutions. In short, it is a one-click service to the end-users.

India’s Fintech Scenario

In the coming 5 years, the Fintech industry in India is supposed to carry on with its robust, upward trajectory. The dynamic Fintech industry in India today consists of around 2100+ Fintechs. 67% of these many Fintechs are set up in the last 5 years alone! That’s what gives this industry big motivating push-ups.

What else, this positive growth of the industry has not been deterred by the COVID-led pandemic, and as per the current data, since the last  January 2020, three new Unicorns, as well as 5 new Soonicorns (valued worth 500+Millions USD ) have emerged in the country. The estimation stands at $50 to $60 Billions value worth for the Fintech industry in India, today.

India’s 5 Fintech Business Models

The word ‘Demonetization’ is a word one can recall very easily. Most of the Fintech companies in India got a digital kickstart thanks to the famous demonetization drive in the year 2016. Moreover, the grand launch of the ‘Digital India Initiative’ has a big contribution to the transformed landscape of the payment interface of India.

Today, people want convenient and seamless online, digital payment modes like e-wallet system, credit/debit card payment, touchless payment system, and so on. The top  Fintech Startups and companies in India today are making a big wave in the way people are performing digital payments over the last few years!

Let’s see, how these top models of fintech companies in India, right from payment platforms to the ever growing insurance platforms, are achieving fames around the world.

1. Digital Wallets

You must have heard about Paytm, a popular mobile app-based digital wallet now utilized every corner, equally popular in all types of businesses in India. Paytm is a Fintech, digital wallet company based in Noida, and there are 150 million active, monthly users.

This form of the digital wallet has garnered many tractions just after the demonetization drive in 2016 and has never looked back, only increasing its user base. It is the growth in the ‘Digital-Payment’ space that has made this model processed around  1.2 bn payment transactions so far!

This model involves an application-based mechanism wherein a user preloads or puts virtual money into wallets for online transactions with businesses who accept this form of digital wallet as their payment mechanism.

Other examples from digital wallets that you may be knowing are Google Wallet or GPay, SquareCash, Venmo, etc. However, Paytm is India based business model that the whole world has acknowledged with open arms.

Another notable Indian Fintech company from this model is PhonePE. This platform is also used to transfer money, pay bills, buying from local vendors, recharges, shop online, etc. And know what? This app-based digital wallet is available in 11 distinct Indian Languages.

2. Digital Insurance

Indian Fintech companies like Policy Bazaar have set trends in the insurance sector as well. These companies are changing the landscape of the insurance industry by bringing their traditional mode of insurance services directly to the digital world. Policy bazaar has given people choice-based buying insurance policies all on their own.

What do people do? They make in-depth comparative analyses of varied insurances using this platform. Policy Bazaar is a living Indian Fintech example that acts as an insurance aggregator platform providing transparent and accurate information regarding insurance policies and other matters to customers from around the world.

Also, this business model offers varied kinds of life insurance, health insurance with a lot better underwriting practices, and, along with some personalized marketing plans, has a massive potential to create business possibilities across the boundaries.

3. Digital Lending

Indian Banks have shown immense resilience in the wake of the COVID crisis . for example, Bank of Baroda, a public sector Indian bank, decided to digitalize the entire lending operations for agriculture loans, home loans, auto loans, personal loans, MSME loans, thus reshaped a traditional lending system into digital lending.

The very bank reached out to BCG, McKinsey for consultation regarding establishing a digital version of the lending department on its own. And even instant digital credits could be possible now. This Indian Fintech model has shown the world that a vast country like India, with diverse languages and cultural backgrounds, and with such a huge population, can provide a seamless and smooth experience to customers and businesses alike with digital means of banking operations at all levels, departments.

Digital Lending is a striking business model under digital banking where open banking, alternative data, AI technology are disrupting the entire landscape.

4. Digital Banking

Indian Fintech model facilitating digital banking is the incorporation of digital tools and technologies for attending banking chores and activities, day-to-day operations becoming easier and smarter. Under this model, Indian banks do collaborate with Fintech companies for providing an improved, advanced form of financial services for a greater reach of customers.

The Fintech companies are equipping these banks with digital tools for efficient and productive outcomes. Digital banking offers so many options, such as AI-NLP chatbots that greatly enhance customer experience, real-time experience using a mobile application (where customer can have a quick look into a bank account on mobile only), as well as Machine Learning (ML) that works for securing against any fraud! In short, this Fintech business model turns the entire banking network, just from a limited & small branch phase, into a vast network spanning web, mobile, virtual & interactive interfaces.

This facilitates banks having a reduced dependency on their branches and a huge cost-reduction that’d otherwise involve a greater degree of real estate and manpower.

5. Payment Gateways

Under this model, Fintech companies integrate varied payment methods into the convenient form of applications or apps. These applications are adopted by online merchants, online businesses like e-commerce, and are easily affordable and seamlessly integrated on their respective websites.

Thus, the payment gateways are the convenient platforms that allow shoppers, consumers to pay for their shopping for a service/product, directly on the websites of e-stores or shops they are buying from, in the virtual-mode. Multiple payment methods include credit-cards, debit-cards, cryptocurrencies, digital wallets, etc. Here, banks are not involved which would otherwise charge a big transaction fee for these payment methods.

Rather, Fintech companies allow payment gateways to work on the line of varied payment applications where businesses sell their products and services directly to the end-users. As a shopper, you are directed to some online payment gateway, and you can make an online transaction for payment.

The Indian model on this line is Bill Desk. It is a prominent Indian firm for payment gateway, and it serves as a digital payment interface for more than 20 years. Today, it stands valued at over $1 billion, and received $257.5 Million of funding so far!

Conclusion

Fintech companies in India are seeing a massive surge and their value creation opportunity now stands at an enormous 100 billion USD. This is quite an impressive figure, and this explains why some of the Indian fintech business models are creating worldwide ripples in the financial sector.

The ever-growing financial sector, the very Fintech ecosystem, has generated these innovative business models that are being emulated by major firms. These innovative models have increasingly assisted in decreasing the financial loads, pressures over individuals, businesses, by providing them direct, on the app, finance solutions.

Are you an Aspiring Fintech who wish leverage the latest in technology which enables you to set a new business model or you wish to accelerate your fin-tech business? Feel free to reach us and take our industry experts guidance

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Digital Transformation is the transformation of industries using ace digital technologies like AI, ML, Blockchain, Robotics, IoT, Clouds, etc., and integrating them with their respective structures, as per specific company requirements. New platforms and applications are integrated to fetch that ultimate seamless experience for the end-users and customers. The fintech industry does not take much time for a complete digital transformation/makeover as compared to other industries like retail, healthcare, or education. The reason is that financial services are mostly dealing with structured, quantitative data that facilitate easier digitizing and automating of varied processes involved. Fintech brings innovation, transformation in all sorts of financial services. The massive surge in demand for mobile apps, digital payment systems such as cashless, e-wallet, mobile-banking, chatbots handling customer financial inquiries, all have led to the rapid shift in consumers’ demand and preferences. Whereas if we compare the quantum of digital drive in other aforementioned industries, it is not as fast as that in the fintech. Rather, fintech has some inevitable roles within the integrated functioning of other industries like retail , education or healthcare.

State of Digital Transformation for Key Industries

1. Retail

The Retail global digital transformation market stood at 143.55 billion USD in the year 2020. It is expected to touch 388.51 billion USD by the year 2026 (source – Mordor Intelligence report).

In the retail industry, digital transformation covers three major aspects –

• Customer- Experience
• Supply-Chain
• Enterprise-Agility

As per PWC’s study, just one bad experience would cause  32% of customers to stop interacting with a brand. According to  Business Insider, due to a shift in consumer behavior and several other challenges, the retail industry saw  70% failure of digital transformation projects in the year 2017. On the other hand, Gartner says that  77% of retailers would like to consider adopting AI while 87% indicated that Robotics for warehouses will be the top use case by 2021.

2. Education

COVID-19 has changed the face of the education industry. The learning and development have taken a complete digital makeover. However, the digital transformation process has not been a smoother and easy one for the industry. Widespread virtual mode of learning, teaching with no access to real-life libraries, have created a frustration-led environment for teachers, educators, students, staff, and the entire industry. In fact, students are unwilling to pay the whole fees, and higher education seeing partial refunding of fees, too. This is just an example of several challenges in the sector where digital transformation is facing tough to take-off.

As per GPE report–

• Due to the pandemic effect, 126 million children have been cut-off from their schools in lower-income countries.
• GPE supporting partner countries by US$500million on the sector as a response to the pandemic crisis. Digital means remain the viable options, too!

3. Healthcare

This year, a significant revelation in healthcare has been about consumers’ priorities –better and convenient access to all the healthcare services, and, more price transparency.

One notable impact of technology in the healthcare sector is the scope of digital transformation as follows-

• Telemedicine
• AI-enabled medical devices
• Blockchain-Electronic health records
• Web and mobile apps and solutions
• Streamlining physicians’ jobs
• Improvement of patients’ outcomes
• Optimization of systems
• Reduced cost operations
• Low human-error

Medtech firms having specific consumer-focused products & services are likely to create a foothold post-pandemic. Moreover, as per the recent 9^th annual Industry Pulse survey, the valuable insights from 185 healthcare leaders for  2021, 32.2% said that retail companies, the big tech will greatly impact the current business models deployed by the healthcare industry.AI and ML were the preferred choices of the healthcare industry respondents while  RPA was the highest chorus among them for ‘NO’. Once the pandemic effect abates, it’s expected that there’d be a greater level of demand for testing equipment as well as online pharmacy use. Contrarily, the demand for elective procedures that are hospital-based and shifting to outpatient settings, will see a permanent lower side. As per Digital Authority Partners insights, the US healthcare market is going to see $5.7 trillion in national health spending by the year 2026.

How Fintech is Shaping Other Industries

The Healthcare industry is though undergoing a slow pace of digital transformation, the role of fintech within its business models is unparalleled. Fintech serves this industry by revitalizing and modernizing healthcare networks as it brings some improved, digitally oriented, financial service-models into the very sector! Several fintech solutions such as digital payments, do simplify varied payment processes for patients, as well as processing volumes of healthcare-related data on a much faster scale and speed. The retail industry is equally impacted by fintech, viz. role of digital capabilities like websites and mobile applications are mostly catering to the payment stream because customers are preferring digital payment modes and carry digital wallets in their mobiles 24*7. So, we can see the ubiquity of fintech in almost every industry as finance as a service plays a major integrated role.

Why Fintech is leading in Digital Transformation?

• High Investment from all businesses
• Fastest digital adoption
• Diversified projects at pilot and advanced level in Innovation

As per a recent IBM study, engaging unique customers with smarter experiences anytime and anywhere is the need of the hour. A massive 84% of customers consider the overall experience provided by a company is as valuable as its products and services. Hence, to meet this kind of rising customer-expectations, a company needs to digitally transform all the lines of customer services for delivering a better-unified experience. Not just customer-centric approaches but companies need to intensify approaches towards smooth relations between business partners and employees.

Conclusion

Fintech is impacting industries such as retail, education, and healthcare where consumers want convenient transaction solutions in every financial interaction within the structured systems. As per the Global Fintech Adoption Index, before the pandemic, fintech was doubling every two years. The industry grew from 16 percent in 2015 to a striking 64 percent in 2019. The reason behind this growth is not just the fintech’s agility but it has become an essential survival tool for businesses across the industries , especially from 2020 onward. Acting as a core enabler for the fast migration to digital payment, it has become a mandatory part of everyone’s life – consumers and businesses, alike. While 2020 was merely about survival, 2021 and beyond will see convenience, structured inclusion as well as sustainability factors leading to the adoption of financial technologies.

Whether you belong to FinTech or any other Industry, digital transformation is here to stay and evolve into new dimensions. Connect us to explore the new possibilities for your Industry.

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Robotic Process Automation (RPA) is a kind of productivity tool, a business process automation technology, that automates various repetitive tasks without any human intervention. RPA in the banking sector means the use of software robots that understand user actions at the very user-interface levels, automating repetitive, routine tasks that are usually done by knowledge workers in banks. It allows users to configure scripts  (bots) to activate certain specific keystrokes in an automated manner that leads these bots to do mimicking and simulating the tasks selected.

The inherent benefits of RPA in the banking sector are three-fold

1. Creates, tests, deploys newer schemes in few hours rather than days or months
2. It reduces human error by virtually eliminating mistakes of entering the same data into multiple systems
3. Instant output by completing automated tasks in seconds thus delivering high values to customers

 Let’s discuss various real-time use cases of RPA being leveraged by the Banking sector across places!

RPA USES IN THE  BANKING SECTOR

Robotic Process Automation (RPA) has massive benefits in the banking sector as it reduces gaps between various applications by processing and integrating tasks at micro-levels. For instance, RPA, in general, does the following jobs-

• Helps in Accounts Payable (AP)
• Helps in Accounts receivable (AR)
• Helps during financial closing & reporting
• Helps in accounting data reconciliation
• Helps in bank statement reconciliation
• Routine or daily  P&L preparation

Besides the above-mentioned uses of RPA, specific use cases are there within the banking domain. What are they?

1. REPORT GENERATION AUTOMATION

Suspicious Activity Reports or SARS are a general phenomenon in the banking segment. SARS are the general compliance reports that are prepared to check the fraudulent transactions and suspicious activities that happen to be a routine cadence in the work domain. In a conventional method, compliance officers manually do this job, read the reports, fill in the detail in the SARS, and so on. The reports would be generally prone to having errors and redoing them would follow thereafter.

             Robotic Process Automation (RPA)technology has the capabilities to sort out this issue. By using its natural language generation capability, RPA does the rigorous regimen of reading all the documents, the lengthy compliance documents, and then eventually extracting the information required to fill up the SARS.

2. ONBOARDING OF CUSTOMERS IN BANKS

Once again, the manual verification of a large number of documents to decide the credibility factor of customers, for onboarding purposes, is an uphill task. RPA makes this task very easy, accurate, and convenient. The Optical Character Recognition (OCR)technique is the keyword. RPA uses its OCR capability to capture the required data from Customers’ KYC documents and verifying the very same. Thus, the OCR technique capability of RPA helps match the data extracted with those provided by customers. This leads to identifying the loopholes and the verification process becomes a very simple and trusted one.

3. DATA-CENTRIC KYC & AML

As compared with the traditional model of banking solutions, RPA  implementation proves to be a very cost-effective and time-saving model in the process mentioned. Normally, Know-Your-Customer (KYC) and Anti-Money Laundering (AML), are very rich data-centric, and a traditional banking solution cannot handle this job efficiently. RPA due to its inherent capabilities does the automation for the entire manual process and extracts all suspicious transactions in seconds if any.

4. RPA FOR OPENING AN ACCOUNT

RPA efficiently removes any scope of data transcription errors that had existed once between the core banking system and account opening requests. The automation process automatically eliminates all kinds of transcription errors and customers have a smooth account opening experience ultimately.

5. RPA FOR LOAN PROCESSING

Loan processing has always been a tedious, slow process . It used to be completely manual work and involved several stages to get the loans approved and sanctioned. RPA technology has accelerated the loan processing segment, too, in a banking system. RPI implementation means the integration of some front-end application onto the ongoing IT system without causing any disturbance in the current flow of  IT structure. 

Banks form the core of the economy of a country and the role of Robotic processing Automation (RPA) technology is manifold. RPA technology helps increase productivity and ensures the accuracy and efficacy of the entire banking system. Integrating RPA into the banking system is actually a part of the digitalization process involved in the very system.

Want to know more about how RPA can integrate into your business model?

Connect to us at www.fusioninformatics.com

Read Also – Top Mobile App Development Companies in India

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The present global crisis or the pandemic, has brought about one major revelation in the financial sector. All those banks that had adopted Information Technology inherently in their operations much before the start of crisis, came out to be absolute resilient when the crisis hit. Although these banks are having a fewer Non-Performing loans (NPLs), they are issuing loans at these times of crisis, too! Fin Tech Lending has become a new norm today and is being considered as an accelerator for financial stability in the market. The crux is, how technology is driving Fin Tech lending? In one word, it is digitalization! It is the Digital Lending that is transforming the financial set-up and enhancing customers’ experience.  

Lots of questions cropping up in mind now? Let’s walk through!

Digital Lending as a Concept

With the onset of Fin Tech in Loan segment, the lending process has changed drastically and for better only. No more cumbersome paper-work.  Loan-disbursement is possible now in a span of mere few minutes. How? Because of Digital Lending platform! The entire process is done through the electronic means.

If you want to buy a car, you apply for a car loan. If your friend wants to buy a property, he will go for a home loan. When your children go for higher studies abroad, education loan is the right choice. Even a personal loan can serve your purpose!

Not only you, your friend, your children but banks & financial institutions lend money to corporates and enterprises so that they (the borrowers) can execute projects and build products. Here, banks & financial institutions are the lenders while all others are borrowers. When the lending process involves information technology, it becomes a Digital Lending.

How IT Is Helping Loan Segment – The Very Digital Lending

We live in the era of Millennial and Generation Z, communication is in their fingertips. When they were born, mobile phone was already there. If they could click memories, share thoughts right from their birth, how could they lag behind in the lending process? Their expectation is naturally high! Let’s navigate the technology that are helping them in the digital lending segment-

RPA 

Robotic Process Automation or RPAis not a cutting-edge technology but increasingly gaining momentum in the Digital Lending process. Lending Management Automation is the RPA being widely used in the segment. As per SSON Analytics, Banking industry, along with Financial Services & Insurance industries, forms the topmost layer for using RPA solutions due to their inherent benefits.

Documentation Automation helps lenders to automatically extract customers’ data from their documents. Enterprise Automation allows customers to fill electronic forms for applying loans. Dedicated portal is available where this form exists. Once the form is submitted, an automated workflow will start operating in lender’s place. Everything in a flash of seconds. Moreover, customers can view status of the process anytime.

Electronic Signature allows customers to sign the documents online. No need of handwritten signature on a paper form. The system allows auditors to examine loan files in a most digital manner.

AI Credit Scoring Models

AI is helping banks to make an effective credit decisions. AI- Credit-Scoring models help banks become a competent estimator to figure out who will repay and who will default. Thus, banks have track records of loan repayment of customers in the granular form. The data are aptly valuable to understand the market dynamics as well.

How AI & ML determine Credit worthiness

As mentioned earlier, banks and other lending companies use AI models for risk assessment. In the past, lenders used to make assessment based on just FICO score & income. Now, they are assessing the entire life of an individual, their vast digital footprints, in order to determine if he can be a defaulter in future. This process is also referred as “Alternative Data” of the future borrowers. It helps to determine the credit worthiness of potential borrowers even without having any credit history.

Shift from 3-6-3 formula to 3-1-0 System

Heard about ANT Financial? It’s all about Digital Lending.

Digital lenders such as banks and Fin Tech companies are allowing customers to have exceptional digital borrowing experience. Digital lenders have to keep pace with customer’s demand and maintaining trust and loyalty is the core of any transaction or business. The ChatBots, using various analytics, are capable of giving relevant insights to customers while AI and ML help banks to know the earning and spending pattern of customers and analyze risks involved. Technologies like biometric-led authentication, e-mandates, e-signatures, AI, ML, Blockchain are using the ‘zero- human- touch’ lending & monitoring process.

According to a recent Boston Consulting Group (BCG) report, Digital Lending is going to become around $ 1 trillion opportunity in the coming five years. Indeed a good news for the Financial Lending Segment. So digital lending is just going to be a smarter, convenient and fastest mode to avail loan in modern ecosystem. Are you a bank, financial institution, Fintech or a startup engaged into loans sector?

Connect with us to uncover the possibilities in digital lending.

Read Also – Top Mobile App Development Companies in India

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During the COVID-19 pandemic, banks’ clients have changed their behavior overnight reflecting adaptations to restrictions and health and safety requirements. As a result, a rapid surge is been observed in the digital opening of new relationships, registration & usage of mobile payment applications, and usage of contactless payments accompanied by the reduction in physical client meetings. This has also urged the banks to evolve and transform their digital business models rapidly, with new circumstances. Now the banks are required to make the provision for a large number of credit facilities, adapt offerings in support of clients’ needs, introduce fast, flexible, and effective measures to keep operations and services stable.

The experience has helped organizations in identifying the transformational capabilities of digital channels and operational setups, as well as the need for new value creation from data and analytics. Let’s explore some of the digital innovations that can lead the banks through the current crisis.

1. Fraud Prevention

COVID-19 pandemic caused an increase in cyber frauds; however, with the help of powerful technologies, it can be minimized. Artificial intelligence (AI) with its real-time data analytics, can act as an early warning system to prevent credit card frauds. It has the capability to evaluate the probability of fraud, and upon the suspicion, enables to take immediate request for client feedback to clarify the legitimacy. Not just that to minimize the loss from fraud cases, Adaptive analytics through machine learning can be applied by continuously reintroducing client feedback into the data model.

2. Core Banking Services

Banks invest heavily to add value for clients, by applying advanced analytics to their portfolios and offering related tailored products, investments, and advisory services. To ensure better customer service, banks can evaluate a client’s feedback with the help of digital solutions. On top of that, digital solutions and data analytics can also be used to increase the relevance and efficiency of client communications and personalize financial services as per the clients’ needs.

3. Operational Efficiency

The surge in new relationships and the use of contactless payments during the pandemic had also increased the need for operational efficiency. In banking a large number of documentation packages are prepared for client meetings, so with the blend of the distinct data element and robotics process automation, the client documentation can be generated from management tools and archives at a high frequency. The operational efficiency can also be enhanced with the help of Optical Character Recognition (OCR) which allows intelligent classification of incoming emails along with embedded meta-data and delivery to a digital mailbox.

4. Regulatory Compliance

The rising frauds during pandemic had made it difficult for banks to comply with regulations. However, when it comes to compliance with legal and regulatory requirements, data analysis can be very helpful. Machine learning can detect deviations in client and transaction profiles. Additionally, when the needs of the client are large and complex, it involves a high level of operational risk like Anti-Money Laundering (AML)/Know Your Customer (KYC) checks, in such cases ML tools can be applied to identify issues and enhanced interactivity/visualization to translate data into insights. It also helps an organization in reducing risks and ensuring compliance with the regulations.

Apart from helping the banking system in serving customers efficiently, preventing fraud, and driving operational efficiency, digital innovation is essential to address the issue of remote working too. The pandemic has forced the banks to set up themselves to be digitally amended to reflect remote working, communication, and client service, which is leading to an increase in the number of remote working arrangements. Technology no doubt will assist the banks in the best possible way.

Banking is a metaphor for trust in society, now is the time for banks to demonstrate its stewardship, digital innovation can lead the banks efficiently though this unexpected disruption of a pandemic and post-pandemic economy. You can also reach out to us for exploring digital applications that can help in your banking business.

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With the current situation, the Fintech domain is gaining significant traction from the market. The crisis created by the pandemic has affected a lot of companies, but they are adapting well by enabling trending technologies like Artificial Intelligence and Machine Learning into their systems. 

Since most of the systems are now moving towards more app-based processes, these technologies are opening gates to numerous opportunities for people interested in this domain. From SMEs to large-scaled Fintech companies- all are adopting these technologies into their systems. 

How can these AI and Machine Learning help Fintech Industries?

We know that early adopters of mainframe computers and relational databases have been Fintech companies. They were always keen to understand how technology can smoothly solve human problems, thus increasing the companies’ efficiency.

These companies started adopting methods that included AI and Machine learning that was derived from various aspects of human intelligence. Varied, deep, and diverse datasets can be crunched easily by using these technologies. 

In the olden days, bankers used to assist customers better with their connections, but with digitalization, this personal touch has been lost. So, the main question here is, can technology bring back this personal touch?

The answer to this is quite evident with the current advancements in AI and Machine Learning. These technologies can process large pieces of information about the customers that are practically impossible to do manually.

This data that is retrieved can be used to provide better and more suitable services or products to the customers. This will ensure that companies find what’s right for their customers and gain customer loyalty. 

Also Read:

Top 6 Use cases of AI and Machine Learning in the Fintech Industry

We conducted in-depth research and jotted down the best five use cases of AI and Machine Learning in the Fintech Industry. 

1. Accurate and Improved Decision Making

As our world is quickly growing in the new technological ecosystem, it also becomes prone to several financial cyber crimes. So how do we deal with this? Thanks to AI and Machine Learning, companies can now secure their accounts and provide their users with a safe environment.

When we talk about cybersecurity in Finance, we often come across cryptocurrency and blockchain concepts. However, we expect to incorporate Artificial Intelligence and Machine Learning into digital security. 

These algorithms enable us to detect any suspicious activity and also notify users regarding the same. They help us to monitor all sorts of patterns continuously and notify us whenever there is anything unusual.

This way, users can keep track of all the aspects, even if they aren’t available. These technologies also help us to identify any kind of illegal activity like money laundering or detect any corruption network in any institution. 

2. Fraud Detection and Security Management

Several analytics tools help us to collect and analyze data that is necessary for conviction. After this, AI tools learn and monitor a user’s behavior and pattern to identify any warning signs of fraud attempts.

Machine Learning concepts can be adopted in different stages of the claims management system. Artificial Intelligence can be used to handle a massive pile of data in a short time. Thus it reduces the overall processing time.

This results in a better customer experience for the users. 

3. Automated Customer Care/Support

Chatbots are one of the most popular AI applications. They have started to receive considerable attention due to the involvement of Machine Learning.

These chatbots can interact with customers at any given time and hence are quite handy. Fintech Industries use these bots to solve a significant number of customer complaints at the minimum expenditures.

Since COVID-19 has given us the new normal of social distancing, Finance companies may soon adopt more of this technology to solve their customer problems. 

4. Insurance Management

Artificial Intelligence will automate the underwriting process and thus use more crude information to enhance customer decision making. This technology can help insurance management by providing automated agents that can help customers online and guide them with all the requirements.

Usually, people opt for insurance when they have suffered a loss, and for a faster process, automatic underwriting can be used.

For example, if you feel some treatments may be expensive for insurance, it is better to detect these risks for better prevention. These risks can be calculated by using a Machine learning algorithm that will consider historical data.

5. Predictive Analysis of Stocks

Predictive analysis can serve as a game-changer in various financial services that most affect the business strategy, revenue collection, sales, and resource optimization of a finance company. It will help in enhancing different operations and refining internal processes, thus transcending all the competitors.

This analysis can help in the calculation of credit scores and hence help in the prevention of bad loans.

Final Thoughts

The current situation has given us the opportunity to explore what technology is capable of. It is time that the Fintech Industry adopts these technologies and makes the best use of them in the near future. 

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Advanced technologies are playing an important role in all industries and helping businesses and users to get their services done with simple clicks and saves money & time as well. The world has become more competitive with the latest technologies that come with customers’ expectations. In the recent revamp in the fintech technologies are regulating financial sectors such as banks, insurance, payment providers. Etc. as it changing the financial ecosystem and digitally transforms the core process of payment methods.

Nowadays everyone is aware that digital transformation has changed the way of services providers in the financial industry targeting the customers with mobile apps without any challenges. There had been a consistent perception of technology-driven mobile apps in almost every section of Financial Services. The crossing of finance and technology had managed to a sensation development that has begun to expedite the speed of development and has transformed the financial industry’s situation.

What is FinTech?

Fintech is a term referred to describe financial technologies such as blockchain, mobile apps, IoT and Artificial Intelligence to provide hassle-free financial services from users to businesses. This essentially uses digital technologies to get work done that is centered on start-ups and new business players starting to innovate products and services.

As per CBI insights, globally as on the date of the report, there are more than 45 fintech companies with a total value of $187 billion in the United States. And the report says the fintech ecosystem has risen too fast growth over recent years. Global advances in the financial sector diminished almost $45 billion in 2018, which was a large leap compared to the past year.

According to EY’s Report, Fintech companies have earned significant value from the market. Markets with the highest adoption rates: China (69%), India (52%) compared with 62% in 2015

Fintech Challenges in 2020

Fintech companies have moved rapidly with a primary modest offering in a process into areas such as banking, insurance, trading, and investment and funding services, these direct companies are adopting in the industry.

Though the fintech change has been in a complete motion for the last some years, there are many complicated difficulties that fintech businesses are yet to decide:

Data Protection

Every financial business is trying to keep their data safe when it comes to sharing over the internet from cybercrime, as many fintech industries help to financial companies to protect their data with blockchain technologies that can help to control the issue. As modern enterprises are arising each day, Blockchain technology has to look for the most suitable solutions.

Attracting New Customers

Fintech companies are highly successful in raising investments but there are facing challenges in getting new customers because every new bank is establishing own fintech app for their operations and reducing the dependence of others. To make attractive new customers financial companies need to get their fintech technologies such as a mobile app.

Insufficient knowledge

Since the fintech companies do not obey those crystal-clear instructions that were mentioned to follow, there’s a lot of difference in the specific methods which must be served in the fintech industry. Moreover, global society has its theory about relying on fintech companies rather than conventional series. The fintech change has the potential to interrupt the financial entrepreneurs, but until more users become trained about fintech, some of the errors will restrict businesses in the fintech enterprise from achieving their full potential.

 Blockchain Alliance

 Blockchain is a key technology that helps to keep data safe and fight against in cybercrime. But when we discuss financial sector data security is the not only application keeps blockchain safe and also used to provide trust among users to make a variety of investments.

They work on possible measures like an advance in banks and more reliable payment activities. However, it is assumed that the industry-wide selection of the Blockchain is completely difficult. To get complete adoption of blockchain experts can help you to get in the origin.

Artificial Intelligence 

Many industry analysts are working with the confidence that AI will soon change nearly every part of the financial services industry.

According to them, providers of AI systems should be able to provide resources for automated wealth management, open banking and customer authentication.

Powerful advances in deep learning technology pave the way for AI.

Also if you’ve been notified by the suspicious activities of your bank, you’ll get ample benefits from the AI. And how does that really pose a challenge?

It’s because most financial institutions say it’s impossible to take advantage of AI without being a real part of it.

Conclusion

All the above challenges are researched in different ways to get solutions for those issues. Many financial businesses are facing different issues

When someone will able to recognize the business events, develop differentiated marketing standards, and incite these in the bigger timeliness, they will be able to take advantage of it.

Fusion Informatics is a leading mobile app Development Company operating on various locations for various industries like fintech, logistics, eCommerce, Education, and Manufacturing. We hold dedicated developers to build strong applications for your business that helps to reach a wider audience.

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