Why Data is the New Gold in Digital Lending Era



In this digital era, every financial institution is adopting digital solutions to stay ahead of the competition and meet customers’ new expectations. In this scenario, the COVID-19 outbreak has sped up digitization for the banking sector, leaving many financial institutions with only one possible way: leveraging the latest financial technology in their everyday operations.

Undoubtedly, those financial institutions who adopt digitization, tend to thrive in this journey while those who don’t, get left behind. Though today many traditional banks and alternative lenders are transforming their business, they don’t know how to improve their digital interactions to streamline their operations and positively change their borrowers’ lives.

So in a world where digitization is the only way to survive and where there is cut-throat competition, the key to market differentiation is data. Data is the new gold and can hugely benefit the financial and lending sectors.

The Power of Data



Data is one of the most essential things for digital lending because lenders process enormous quantities of data every day while serving their customers. This data lets lenders engage the right customers with the right lending solutions at the right time.

Earlier, this data was used for analytics and traditional reporting for lenders. However, thanks to innovative financial technology, lenders can use financial data to:

●       Collect robust, real-time, and accurate financial, accounting and banking data for quick decision making.

●       Generate intelligence in the form of cash flow predictive models

●       Check the creditworthiness of a borrower

●       Offer customized lending products

●       Improve quality, transparency, and security

●       Get a 360-degree view of customers and the lending operation

Today, this financial data is collected through multiple resources through an organization and analyzed and used to generate actionable insights for desired outcomes. Artificial intelligence and machine learning are used to assist with the process. Data can help lenders know their borrowers better, understand their needs, and ultimately drive increased loan activity, profitability and efficiency.

Quality of Data



To get the best results, financial institutions need to develop their data model and keep an eye on the quality of data. Today, there is a plethora of single financial data APIs are available for lenders but not all offer quality data. That’s why lenders need to research and compare a variety of APIs before choosing one.

Having quality financial data is a must to get a better understanding of the borrowers and their businesses. The better the understanding of the business, the better operations, and services of lenders. Financial institutions can find opportunities to improve underwriting processes, identify bottlenecks in internal processes, and offer fast and easy funding.

Quality of data means accuracy, precision, validity, and reliability that has the power to give the right information to lenders. It implies a great knowledge of borrowers’ funding needs and also their preferences and goals. By leveraging AI and using predictive cash flow data or predict future events, a financial institution lets a borrower or business know if their borrowers could repay the loan amount in the near future. By doing so, lenders can better determine the creditworthiness of their borrowers, reduce the credit risk, boost profit and position themselves as trusted financial advisors. 

Comments

Post a Comment

Popular posts from this blog

How To Compare And Choose the Best Small Business Loan Offers?

Image
Ready to start your dream business? Want to relocate your booming business? Need cash to buy new business’ equipment? Or want to boost cash flow to manage day-to-day business operations? A small business loan may be able to help you in such situations.    Today, many innovative and intuitive online lending marketplaces are a preferred choice for both young and veteran entrepreneurs to secure a business loan. These innovative and intuitive online lending platforms that showcased a variety of loan offers from multiple lenders made it easier for you to apply and secure the best small business loan that best fits your budget and needs.    Though there hundred of alternative lenders and a variety of offers to choose from, it’s always challenging to compare the loans to figure out which one is perfect for your small business. Here are some of the many important factors to help you find the right financing for your current financial circumstances.    Int...
Read more

More Robust and Real-Time Data: Essential Ingredient for Financial Institutions' Success

Image
The future of any financial institution depends on what quality of products and services it offers to its customers today. This quality is fueled by its underlying data. With accurate and real-time financial data properly accessed, lenders can create new and innovative solutions to meet and satisfy their customers’ unique needs - just like Netflix and Amazon do today. Because there are different sources of data and several data attributes can affect lending decisions, how can you make the most of the data? Merely collecting your customers’ data is not sufficient, you need to convert it into meaningful information. Fortunately, you can achieve that through data standardization and normalization. Today, FinTech innovators leverage ground-breaking technologies such as artificial intelligence and machine learning to provide lenders with the most robust and real-time financial data. You can access and use this data to serve your customers better and take your financial institution forward. ...
Read more

How Open Accounting Can Help Lenders Offer Great Small Business Loans

Image
Small and medium-sized businesses play a vital role in the economic development of a country. They often require funds to successfully run their operations and take their venture to the next level. SMEs need funds for a variety of purposes in their businesses, from buying real estate to paying off debt, boosting cash flow, purchasing equipment, hiring employees, and covering day-to-day business expenses. What are the Challenges SMEs Face When Accessing Funds? SMEs face numerous challenges when accessing loans. First, the application process for SMEs is still a complex manual. Moreover, the paper-based processes and endless documentation requirements of traditional lenders make it difficult for SMEs to get the desired loans Because most small and medium-sized businesses have no or limited credit history, banks are usually reluctant to provide loans to them. How Open Accounting Can Help Financial Institutions Provider Greater Access to SME Lending? Since SMEs represent a major fu...
Read more