Financial institutions facing a crisis, as a result of the gap, between new era digital transformation and traditional models and solutions.
"3-1-0 Rule in Lending as a New Normal
There will always be unpredictable events and unexpected phenomena. What is extremely important is the ability to quickly adapt to a changing world. The pandemic accelerated the digital road-map, with the result that the lending sector is rapidly revising business models and restructuring processes. In April and May for example HES Fintech saw a 35% increase in lending software demonstration requests. Lenders either wanted to launch first and fast or needed to replace their current systems with more advanced ones.
COVID-19 forced the acceleration of digital transformation. Lenders now are actively seeking to implement a 3-1-0 lending approach: 3 minutes to apply, 1 second to approve, 0 humans involved. The framework was first introduced by Ant Financial in 2018.
Digital lending platforms with automated workflows, flexible calculations, product engines, and faster decision-making highlight a far broader range of possibilities for lenders. Furthermore, the use of AI and machine learning can easily correlate hidden dependencies among the vast reams of data. Thus, a digital approach can save hundreds of hours of manual work for risk officers and data analysts, build high-performing scoring, churn, and propensity models; and improve loan portfolio return.
In summation, digital lending software in conjunction with automation and AI makes lending today much more convenient for both borrowers and lenders. Given that many banks and fintechs are already moving towards digitization, it is just a matter of time before digital becomes a “new normal.” Indeed, lenders without digital capabilities are likely to be outcompeted by their high-tech counterparts."
Source: Finextra/ HES/ Natalie Pavlovskaya
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