Lending Technology Trends to look for in 2022 and beyond
Some analysts have called 2022 an inflection point for the financial industry that will significantly reshape the landscape for the next decade. This year’s trends may become industry hallmarks for years to come. It’s essential for financial institutions to keep up with them. Fulfilling borrower expectations for digital, personalized, fast simple processes becomes more important than ever, and new insights and methodologies will drive business for the next several years.
AI, ML and Data Analytics Driven Advancement Continues
Artificial intelligence, machine learning, and data analytics are at the forefront of innovative lending technology, and their roles will only grow in the coming year. Financial institutions are leveraging these technologies to boost consumer lending process efficiencies for the lender and conveniences for the borrower. 60% of banks use at least one AI capability in areas like predictive analysis, conversational bots for basic service requests and recommendation and decision engines.
The banking industry at large is positioned to leverage AI which will unlock an additional $1 trillion in annual value. Most of the work needed to fully automate these processes is implemented on the back end through complex coding and third-party integrations (APIs), which helps lenders improve operational efficiency by streamlining loan processes, reducing time to close, and minimizing data entry
Realistically speaking, borrowers want free from lender processes that keep them from focusing on the transaction experience and not the transaction itself. Lenders must focus on use cases that minimize friction and reduce time to decision. Institutions are shifting from a transaction or process-delivery model in favor of an experience-delivery model, where the user is shielded from backend nuances and the logistics of completing the loan process. The borrower can enter minimal information during the loan application process, and the institution can automatically approve and generate multiple offers, conduct risk analysis and set up payment plans without human intervention. Lenders will go from being data-driven to data-led; AI will ensure that data-driven leadership and simple, practical use cases will be the front-runners in the modern transformation journey.
An end-to-end digitization platform personalized to each user segment gives the consumer the experience they expect. Lenders should target end-to-end digitization that enables exponential growth with a focus on experience, the paperless journey and AI-driven originations. This strategy not only reduces the workload of your loan officers and underwriters, but also provides the borrower with a painless lending process.
API Driven Lending Ecosystem
Technology has spurred fintechs that specialize in point functions, which can be tied together across providers to quickly deliver simple and secure functionalities that enable an overall seamless experience. Application programing interface (API) technology enables lenders to unlock new opportunities by connecting with third parties in real time. This delivers a flexible, personalized experience to consumers and eliminates the need to build functionality from the ground up, a process that is expensive and risky.
APIs help lenders improve processing speed by automating workflows for onboarding customers, credit checks, fraud detection, validation and verification, document generation, e-signatures and much more. While continuing to maintain ownership of their true differentiators, lenders should focus on orchestrating a rich experience while leveraging widely available data and services through open APIs. While evaluating new platforms/systems, lenders may want to focus on understanding the API architecture of candidate solutions and the network(s) they support.
The Lending Cloud
These trends demand a highly scalable, flexible, secure infrastructure. The cloud has helped lenders bring these technologies together allowing them to scale based on demand over an elastic infrastructure that is secure, cost optimized, fully managed and compliant at all times. Cloud adoption allows lenders to focus on business growth as hosting platforms handle support including maintenance, easy backup and recovery and software patches.
The journey to cloud does not have to be “big bang.” Modest achievements based on business priorities will yield significant benefits. An initial discovery with a cloud specialist organization can help lenders chart their transformation roadmap and subsequent cloud innovations.
Bringing it all together
Financial institutions must be willing to make bold moves to keep up with the constant demand for automation, end-to-end digitization and AI and ML utilization to push boundaries and provide their consumer base a modern lending experience. To compete with the challenges of 2022 and beyond, institutions need a consumer lending technology solution partner with a diverse enough platform to scale and grow with them, making constant improvements to enhance the customer experience while improving automation and advancing back-end processing.
Everest Group Consumer Loan Origination System Products PEAK Matrix Assessment 2022 positions Wipro as a Leader. View the full report here.
Contact the Wipro Gallagher Solutions team of experts to schedule a demo of how NetOxygen can be the innovative lending solution your institution has been looking for.
Head of Sales, Wipro Gallagher Solutions
Sandeep is a seasoned lending professional specializing in insight-based, consultative solutions selling to the lending industry. He has been instrumental in nurturing the growth of Wipro’s NetOxygen Loan Origination System and advising lenders on its adoption across mortgage, consumer and commercial lending.