Future Finance: A Digital Direction for Lending

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Digitalisation is one of the most dominant themes in the financial services industry today, and it will continue to be one for the foreseeable future.

Perhaps as a result, it is also one of the most amorphous, with a wide range of opinions on what digitalisation actually represents. Different commentators have discussed it in terms of its impact on everything from business models through to productivity and the employee experience.

Clearly, there are no right or wrong answers here. Part of digitalisation’s inherent appeal is that it can be whatever we want, be that a path to profitability or simple streamlining – not that the two are mutually exclusive, of course. More than anything, though, I’d argue that the true potential here is that of reinvention. Digitalisation isn’t just about taking previously physical processes online; it’s about fundamentally rethinking those processes, too.

Take onboarding, for example. Typically, this is a multi-stage process that requires a lender to gather a raft of information about a prospective client. That can range from relatively simple verifications, such as those that can be provided by government agencies, through to processes that necessitate a much higher level of scrutiny such as anti-money laundering and anti-fraud checks. Finally, in some cases, the services of a field audit team will be required.

Even for the most proactive organisation, it's a process that could take days – if not weeks - to complete. Naturally, this can lead to frustration for the applicant and expense for the lender – especially if the application is unsuccessful. While several aspects of onboarding are conducted digitally, as mentioned above, digitalisation can bring more steps of the process online and enable its re-evaluation as a whole.


A smarter and more engaging lending experience

At its core, digitalisation empowers competitive advantage. It does this by helping lending organisations achieve greater operational efficiency and deliver better customer experiences.

In the case of the first, digitalisation offers the chance to automate processes wherever possible, thus helping to soften the cost-to-income ratio that the lender is experiencing. From a customer engagement perspective, it engenders the possibility of delivering a frictionless and convenient experience, one that allows borrowers to get what they need faster and more easily.

Chances and possibilities are one thing, of course, and actual capabilities another. There is no “on” switch for digitalisation, no magic button that controls the quality of the customer experience. Realising the dream of digitalisation also means having the right operational infrastructure in place, and that requires focus across five key areas.

These are:

Customer understanding

Whether in regard to onboarding or some other element of a lender’s operations, customer understanding is critical to efficiency and experience alike. This is where the value of open accounting can be so keenly felt, providing rapid and reliable access to the information that a lender needs to understand the health of an applicant’s business.

Technical ability isn’t the only consideration here, however. While attitudes around information sharing may be changing more generally, lenders still need to demonstrate the value that a client receives from providing access to their accounts –namely, an analytical view of their affairs and a more targeted finance recommendation as a result.

Design thinking

Creating a strong digital value proposition means having a heightened understanding of the customer journey and any points of friction along the way. As well as working out how to circumvent those obstacles though, lenders also need to understand how customers feel about the journey as a whole. Empathy, not just efficiency, is critical to successful design thinking.

Agile technologies

Better experiences begin with an acknowledgment that different customers have different needs. What that means for lenders is that they need a modular approach to systems design, one in which components can be added and switched as those needs change. We’ve discussed the advantages of MACH architectures before, and those benefits go hand-in-hand with digitalisation.

Partner networks

In line with the above, the complexities of today’s lending environment means that a monolithic approach to technology is no longer sufficient. Rather than relying on a single vendor to meet their needs, finance providers must instead be able to draw upon the capabilities of a wider ecosystem of service providers. That’s true not just in terms of finding the best “tools” for the job, but the right operational fit, as well.

Detailed analytics & continuous improvement

Just as there’s no “on” switch, there’s no “off” button for digitalisation either. It’s a never-ending process, one which must be in a state of constant evolution and growth. In support of that principle, and to ensure that the direction of travel is one that benefits the end user, comprehensive analytics are essential.  Insight drawn from analysis identifies and enables incremental improvements to products, systems, processes, or services over time. Driving efficiencies, improving experiences, and delivering greater value.


Ultimately, while there may not be any right or wrong answers when it comes to digitalisation, there is at least a right way to approach it. Because whatever your goals, digitalisation isn’t just a way to achieve them – it’s a way to reimagine how you achieve them, too.


Article written by:

Steve Taplin & Iain Gomersall