Digital Lending – A Must to Survive

For all intents and purposes, the administration of credit products through digital channels like Oracle Flexcube is what is meant by “digital lending. It is now possible, thanks to technological advancements and the availability of more data, for target-state digital lending architecture to make it easier for customers to submit credit applications via the device of their choice, to process all of the associated identity and credit checks automatically, to disburse the funds, and even to manage collection efforts.

Banking activities revolve around the concept of credit. With digital credit, lenders and borrowers profit greatly. Financial institutions may reduce costs while improving risk management, revenue protection and growth. Borrowers benefit from on-demand assistance, quicker decision-making, and more affordable pricing. If you want to thrive in today’s constantly linked world, you need a compelling digital offer.

The urgent case for digital transformation

As a result of their interactions with internet giants and Fintechs, customers’ expectations have shifted considerably in the last several years. As a result, lenders must have the ability to deliver 24/7 service and swift judgments, with low time-to-cash intervals and a smooth user experience, to meet customers’ expectations.

Even small and medium-sized businesses (SMEs) are starting to see the advantages of engaging FinTech innovators instead of conventional lenders. As the number of Open Banking APIs grows, users will be able to more readily share their financial data, making it more straightforward for service providers to provide relevant products and services and, as a result, helping their businesses flourish.

The digital lending sector is expected to grow significantly in the near future. Automated financial products and procedures are becoming more popular with customers and small enterprises. The COVID-19 epidemic has increased the need for digital and contactless solutions from lenders and consumers. A digital crisis was considerably simpler to manage for companies with advanced digital skills since consumers could self-serve and goods could be quickly added or modified.

Peer-to-peer lending is a burgeoning industry that is beginning to attract the attention of conventional banks, even before the epidemic. Other technology-enabled companies have joined the credit landscape and are nibbling at the periphery.

Personalized interest rates, application completion, and money in your account within an hour are all possible with these simplified FinTech systems, which are still a faraway dream for many banks.

Rather than just capturing incremental process improvements, banks should aim to provide a really enhanced client experience via digital lending changes.

What progress has been made across the industry?

For good reasons, certain parts have taken off faster than others.

The sheer amount of client data, standardized experiences, and huge volumes made retail an obvious choice to lead the drive. Credit card and personal loan applications using the Oracle Flexcube universal banking may already be processed online by a significant number of institutions. Using a smartphone app, its clients may now apply for a loan and get their money in only a few minutes.

As a result of the absence of legacy infrastructure and the related migration difficulties, challenger banks blazed the road. As a result, huge incumbents have created new brands in certain circumstances. This enables them to employ the latest technology stacks, bypass corporate bureaucracy, and function like the agile start-ups they are attempting to fight off.

SME financing has received a steady stream of investment in recent years. Even though small and medium-sized enterprises (SMEs) comprise 99.9% of private firms in the United States, they remain an underserved market.

These problems can be solved by utilizing digital lending solutions. Open Banking, for example, enables all prospective lenders to see transaction histories from other providers, increasing the number of options accessible to small and medium-sized enterprises (SMEs). However, the lender may get a more comprehensive and up-to-date picture of the company’s financial health by using this transaction data.

Lending to medium-sized and big corporations has traditionally been considered less priority. However, progress is being made in this area as well. As a consequence of the lower transaction volumes and higher transaction values, there is less need for digital transformation and more caution. Human touch is still needed to deal with the myriad nuances and interdependencies surrounding corporations, and detailed sector knowledge and expert judgment can play a significant role here.

Some banks use a risk-based automation strategy (enhanced by strong internal and external data) to save precious Relationship Manager time from dealing with relatively simple choices; nevertheless, corporate solutions are being created that address the standardized sections of the process flow.

What challenges are firms facing?

It’s essential for banks considering a credit digitization strategy to be aware of the following three frequent roadblocks.

The first step is to deal with the issues that arise during the implementation. When it comes to EUCs and manual processes, there has traditionally been a heavy dependence on EUCs and manual processes with fragmented legacy systems feeding into various phases through disconnected, clunky handovers. Due to this, customers’ trips have been negatively impacted, and the firm has been put under undue strain. It is impossible to rapidly adapt to changing customer demand or integrate with APIs to enrich data in legacy monolithic structures.

In the second place, there are issues related to data. Despite data warehousing attempts, many companies nevertheless have a tough time obtaining the data they need to construct rapid rating models, which is a significant problem. Due to outdated batch processing techniques, the current infrastructure is unable to support real-time loan transactions.

Third, there are issues with the organization’s structure. Close collaboration across the business, risk, and technology is necessary for a digital transformation to be effective. Diverging interests among various parties might make it difficult for them to work together, leading to a solution in which individual components work well, but not as a whole.

How can we help?

When it comes to large-scale business and technological transformation, we draw on our in-depth expertise in the financial services industry to assist our customers. All of us in the digital lending team are experts in digital transformation for banks. We bring together our credit risk and technical know-how in this effort.

Other places where we may assist include:

  • Analyzing the whole loan process from beginning to finish can help us find places for automation and streamline procedures to eliminate the uncomfortable handoffs that cause so much trouble. Design considerations should put customers first. We assist clients in developing solutions that benefit both the bank and its customers when we combine our expertise in credit risk with a customer-centric approach to digital transformation.
  • Improving the quality of the data: A lack of timely availability and conflicting data standards are all hurdles to a successful digital transition for functions. An effective data strategy may be developed with the assistance of JMR using practical methods to data architecture, platforming, quality, and governance to achieve business goals.
  • It is possible for us to assist in the creation of a clear vision and cross-functional sponsorship to keep the change moving forward. Successful risk and technology teams generally operate in complicated and geographically distributed contexts where effective stakeholder involvement is essential. It is JMR’s job to devise communication strategies that make a case for the change, minimizing opposition and ensuring that all parties affected to support the transition and actively participate in its implementation.


Traditional financial institutions are starting to realize that embedding financial products (such as Oracle Flexcube 14.x) within non-financial platforms can jeopardize their existing customer relationships. However, by creating their own banking-as-a-service platforms, they can provide more financial transparency options by opening up their application programming interfaces to let third-party organizations develop new services.

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