Benefits of Adopting End-to-End Digital Lending Processes

Although loan growth was slow in 2023, Deloitte forecasts that interest rates will begin to drop in 2024, prompting bank and credit union lenders to prepare for greater loan volume by proactively positioning their teams and internal systems for competitive success. The lending industry has historically been a paper-intensive business; however, digital lending capabilities have become table stakes to attract customers, remain competitive and unlock new efficiencies.

Adopting a single end-to-end digital lending platform provides an enhanced borrower experience by offering easier loan application processes and faster credit decisions. Lenders also gain improved efficiency, revenue growth, greater loan generation and enhanced risk management capabilities.


Improved Operational Efficiency

Investing in digital tools can streamline the entire lending process and create a more agile organization Bankers no longer need to go through every step of the lending process, physically manage the corresponding paperwork or depend upon underwriters to evaluate borrower information. Digital lending platforms instead expedite these processes using intuitive user experiences, paperless workflows and automated credit decisioning tools.


Community banks and credit unions that transition away from these arduous manual processes can achieve substantial time-saving efficiencies, enabling resources to be redirected towards value-adding activities that positively impact the bottom line. Additionally, providing a seamless digital experience that shortens and simplifies the loan origination process for applicants enhances customer satisfaction and ultimately establishes a stronger competitive advantage for the organization.


Greater operational efficiencies empower financial institutions (FIs) to better maintain their core values and deliver stronger customer service in other areas. Implementing robust technology ensures an innovative reputation while giving bankers the flexibility to dedicate more time to cultivating customer relationships founded on personal knowledge that creates tailored communications and timely information.


Revenue Growth


Digital lending transformation can significantly boost FI revenue growth while creating opportunities for substantial cost savings. According to McKinsey, successful transformation translates to significantly quicker credit decisions, enabling account holders to receive cash up to 80% sooner, along with reduced costs attributed to 30 to 50% less time spent on decision-making. This, in turn, leads to better-quality risk decisions, fostering greater profitability in the long run.


Digital lending platforms empower FI lenders to expedite processing capabilities, thereby reducing the time and costs typically associated with loan origination and portfolio management phases. Centralizing the loan process to a single platform delivers greater expense savings by eliminating costly challenges related to IT support, loan staff training and vendor management.


In addition, simplifying the borrowing and decisioning process results in a higher volume of applications, increased disbursements, and, ultimately, the ability to offer more competitive rates to customers. On average, FIs can increase loan volumes by up to 20% by leveraging a digital lending solution. This means the FI not only achieves greater efficiency and profitability but also gains the team bandwidth necessary for generating new business and expanded revenue growth.


Enhanced Risk Management


While some may believe that incorporating a fully digital lending process creates greater vulnerability to fraud risks, end-to-end platforms introduce an added layer of security. Leveraging digital lending means bankers have access to extensive safety features and a cohesive system that eliminates unnecessary transmission of sensitive data and provides a straightforward way to identify issues, address concerns and demonstrate compliance.


FIs using a secure lending portal can safely store sensitive borrower information, control user access and easily communicate with staff and borrowers through a cloud-based system. Holistic lending platforms come equipped with robust built-in identity verification features that outperform manual ID review and capture to minimize the potential for fraudulent activities. Lending software can also be integrated with suitable solutions to consistently guarantee document regulatory compliance, loan quality, secure document management and reporting, especially considering ongoing regulatory requirement changes.


Looking Forward


As banks and credit unions prepare for 2024, embracing technological innovations will be key to succeeding in the evolving lending landscape. The integration of comprehensive digital lending systems is essential for empowering FIs to maintain high efficiency, profitability, risk management and competitiveness in the market. Community banks and credit unions, armed with a deep understanding of their customers’ and members’ financial needs, can leverage innovative lending technologies to not only flourish in the digital arena but retain their reputation as trusted pillars of local economies as well.

About Author:

Jeff Grobaski is the founder and CEO of Epic River, a lending-as-a-service platform provider that connects banks and credit unions with healthcare providers to streamline patient payments.  Their unique offering allows providers to offload nonpayment risk by partnering with banks and credit unions to create low-interest patient loan agreements. As CEO, Grobaski draws on more than 20 years of experience in software development and product management.

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