The Role of Artificial Intelligence in Digital Lending: How AI is Streamlining the Loan Process and Improving Customer Experience
By Ramkrishna V Raut, Head – Data Science and Technology Happy-A neo fintech platform
From the traditional to the modern era, the finance sector has transformed dramatically by adapting to legislative changes, adjusting to the competitive landscape, and maintaining a focus on the future perspective. Here digital transformation has appeared in the limelight as one of the cornerstones in preparing the business across finance to gain a competitive edge. In fact, this new chapter has unraveled various potentials in the expansion of the Indian fintech industry and has further changed the way of lending and borrowing.
It is undeniably true that obtaining a loan has always been an overwhelming and time-consuming process, with submitting tons of paperwork supported by lengthy follow-up and approval processes and long disposal turnaround times. However, ever since newfangled technologies have gained center stage, the process has now become entirely paperless and efficient in getting money in hours rather than days. This, in turn, paved the way for digital lending business, with firms depending on giving quick financing to borrowers.
According to Experian, with the expedited growth of digital lending companies in India, digital lending marketing is expected to grow and reach $350 billion by 2025. In addition, the emergence of new-age technologies, especially artificial intelligence (AI) has undoubtedly made great strides in the finance industry. As a matter of fact, digital lending (the process of disbursing funds to people or companies using online channels without the use of face-to-face meetings) has become one of the areas where AI has made a significant influence.
Digital Adoption: The Pathway for Good Customers Journey
Over the year, customers have become a key behind the organisation’s growth. And, thanks to smartphones and increased internet access, modern customers have increasingly embraced digital financial services. Furthermore, the onset of the pandemic has also accelerated adoption rates, making India the world’s largest FinTech hub. Banks, NBFCs, and digital lending platforms are equipping themselves with disruptive technologies to keep up with this rapid demand. According to a report by Business Insider, AI-powered lending platforms are expected to provide over $110 billion in loans globally by 2024. Though from the initial stage, there were various challenges in the industry. Thus, in order to solve and identify potential fraud and reduce the risk of lenders, new-age technologies have come into the limelight as a solution.
Role of AI in Digital Lending
Financial services have always had a wealth of consumer data and insights. However, the advent of AI at the fore has enabled the application of advanced analytics and uncovering of hidden patterns to gain essential insights into client behavior and habits. They not only analyse data at remarkable speeds but also with improved accuracy. In addition, AI-powered systems are helpful in analysing loan applications and determining creditworthiness in real time to save lenders time and effort in manually reviewing applications, resulting in faster loan approvals.
Furthermore, AI-powered chatbots and virtual assistants can provide personalised loan recommendations based on a customer’s financial history and credit score. Customers will be able to find the best loan products for their specific needs, which will improve the overall customer experience. AI-powered chatbots and virtual assistants can provide real-time customer support and answer questions. This can improve customer satisfaction and shorten support wait times. Indeed, AI models can analyze customer data to detect patterns and forecast future behavior. This can assist lenders in offering loan products to customers likely to require them in the future. Simply put, the adoption of AI is no longer an option. It has become a necessity for digital lending services trying to establish a D2C business model.
Technology: Influencing Digital Lending Industry
It is not an overstatement to state that artificial intelligence has significantly remodeled the banking and online lending industries and will continue to do so as more applications come into being. It also has streamlined loan processes and improved customer experiences, making the lending process safer and more accessible for lenders and providing a competitive advantage to banks. Thus, as the use of AI is poised to increase in the coming years, we can expect digital lending to become an integral part of the financial landscape in streamlining the loan process and improving the customer experience.
