No-code application platforms are revolutionizing business software. It is no surprise, therefore, that it is also helping the financial world. NCAPs are becoming increasingly popular for digital loan processing due to fast implementation, security, cost-effectiveness, and the ability to connect with multiple interfaces.
In this blog, we will discuss the advantages they offer and talk about what makes them the best option to streamline digital loan processing operations at banks and financial institutions.
What is Digital Lending?
Digital lending is the use of technology for loan approval and servicing processes. It simplifies and automates many of the manual steps traditionally associated with traditional banking, such as document processing, customer verification, and risk assessments.
The use of digital lending in recent years has led to a decrease in application processing times and easier access to credit for a lot of people. Digital lending also increases customer convenience by making it possible to do business 24/7, leading to quicker approval times and faster payments. In fact, as per Inc 42 research, the digital lending market size in India has already grown to $270 Bn.
What are the Benefits of Digital Lending?
Streamlining Application Processing
The traditional loan assessment and credit authorization process involves several manual steps, including:
- Customer Application
- Verification and sanity checks at the branch office
- Eligibility checks:
- Policy check
- Requirement Check
- Intent Check
- Applicant Credit History Verification
- Application assessments:
- Risk Assessment
- Legal Assessment
- Technical Assessment
- Field Investigations
- Product checks
- Loan approval
- Account setup and further customer service
While many parts of this chain involve manual verification and processing, there are some that digital lending applications are able to automate.
For example, document verification and sanity checks can be automated. You can also automate certain credit checks using rules-based systems.
Field investigation and field operations require tracking systems, which can easily be done using digital lending applications.
There are several benefits to this. For example:
- Consolidating information in one place improves the borrowers’ experience.
- Automation reduces the turnaround times of a rather lengthy process.
- By providing all documents digitally, the chances of getting incomplete documents which can cause potential delays, are reduced.
- The customer gets visibility on which stage the application processing is pending.
- If any updates are made to the data or documents, all teams in the chain can get the new information instantly.
Bringing Lending Credit Check Information In One Place
Apart from customer data, lending documents are also brought in online, improving transparency and ease of use for the credit team.
For example, loan processing teams are able to collect external financial information using the APIs. Hence, manual processing is reduced, which lets the processing move faster and reduces the risk of mistakes.
Another benefit is the audit trail – the entire credit verification process gets captured step by step online, creating a powerful and verifiable trail for regulatory purposes.
Data Analytics
Lending is at the core of the banking and financial industry. Borrower data is one of the most valued commodities for them. Digitizing the lending process lets data be collected automatically during the process, providing a gold mine for analytics teams later on.
In the past, credit assessment and lending has often had to resort to guesstimates and back-of-the-envelope methods. Discrepancies in these calculations could lead to incorrect reporting. Worse yet, it leads to wrong approvals and denials. In fact, digital lending suites often come with their own set of analysis tools which can form an excellent data support system for teams.
Mobile Lending
New-age customers spend most of their time on their phones. That is where they expect their lending process to happen as well. Visiting a physical branch is often considered a thing of the past.
One of the biggest advantages of digitization is that the entire process can be put on a mobile app. It could be integrated with face recognition and fingerprint scan-based identification along with document e-verification online. This significantly reduces the need for customers to come to the branch.
Why is No Code the Best Option For Digital Lending?
No code technology is steadily becoming a frontrunner in the digital lending sector as it offers many advantages to lenders. Here we explain the advantages that no code tools offer.
Quick and Easy App Development
No-code digital lending solutions are much quicker and easier to create as compared to traditional build-or-buy approaches. You can get an app ready in a matter of days without the need for a big coding team at your disposal. Moreover, no code platforms offer a comprehensive platform for configuration, testing, hosting, and deployment.
Again, it is very easy to create workflows in no-code platforms. They have a GUI and drag-and-drop-based visual solution for application development. This lends beautifully to step-by-step workflow processes such as lending. It is easy for the business team to design the application themselves. They can leverage their experience dealing with loan processing to quickly design the process.
In contrast, traditional software development requires several rounds of requirement gathering and prototyping to get a working solution.
Integration With Multiple Platforms
No-code platforms integrate easily with third-party services such as identity verification, credit information checks, and so on. This is because they have libraries of APIs that are able to connect with external systems quickly and easily. Developing a new system from scratch to do all this will take ages. Low code solutions allow lenders to access useful data points without the implementation effort.
This also makes updating applications easier when regulatory requirements change. For example, if a new form of KYC norm is introduced for lending, the bank can simply ask their no-code vendor to acquire an API to connect with whichever source of information is needed to comply.
Mobile and Cloud Ready
No code platforms have originated in a mobile-first world, and therefore most of them are app-ready. It is very easy to create cloud-native, multiplatform mobile applications using no-code platforms. This helps banks touch new-age customers instantly and easily. It also lends perfectly to customer expectations of digital lending.
Moreover, no-code tools often come with integrated data analytics and dashboarding solutions that let financial institution manage their flow of data easily and effectively.
Wrap Up
The traditional loan industry today is under heavy disruption from new-age fintech startups who offer faster, smoother, and cheaper lending capabilities largely on the back of digital lending. For the banking industry, no code can be the perfect tool to catch up quickly. They can provide a stronger offering when they mix no-code digital lending apps with their traditional strengths of trust and credibility.