Five reasons why cloud-based technology is important for lending loans

By, Rachit Chawla, Founder & CEO, Finway

A Juniper Research emphasized that up to 53 per cent of adults across the globe will be using smartphones, tablets, PC or smartwatches to avail financial services by the year 2021. It means the financial organizations must go digital using the latest technology to serve the clients in a better, convenient manner. Cloud-based technology is already used by banks and NBFCs to make their financial services such as loan status, loan payments and basic account information available to the customers across the globe. Many are leveraging the opportunity to offer digital lending services expanding their customer base. With the IoT and cloud computing revolution, it becomes important to redefine loan processes in order to meet customer expectations using digital lending technology. Here are five reasons why and how cloud-based technology can become an integral founding stone for the lending industry.

Simplified Online Processes

Rachit Chawla, Founder & CEO, Finway

A digital loan origination platform can be a boon to both the lenders and the borrowers. From online application to e-signature, the borrowers can complete the entire process speedily and conveniently. An online form can be filled to initially discover the rate options instead of hard credit pull. Uploading necessary documents for ID verification and desired loan type is all it takes with an online cloud-based loan origination platform. The loan decision can be made within 24 hours of application; the lender can provide the borrower with final rates, terms and policies through encrypted electronic communications. Through e-signing a promissory note, the borrower can give consent to the terms and policies and avail loan. This is convenient for borrowers as well as lenders in terms of time, costs, and resources as everything is managed through a secured trusted online platform.

Transparency and Precision

If lending and borrowing processes are regulated on the Blockchain, time and resource-taxing businesses processes will be managed by algorithms. With Blockchain, the date’s authenticity and security cannot be doubted as the all the facts and figures are transparent for both the lender and borrower. Every transaction history for a borrower can be accessed by the lender—from request submission to final fulfilment of the loan.

Identity Authentication & Verification

A member identification system can be built using Blockchain networks for effective and efficient communication between the lender and the borrower. A borrower can create his digital ID and submit all his details and information to the system, including income, mortgage history, balances, credit score, etc. When applying for a loan to multiple lenders, the same digital unique ID can be used. With this, the credit agencies and lenders can cross-check the borrower’s previous loan history.

Time Management

Having a wide range of loan products and offerings increases the chances of long-lasting customer relationships. Using digital loan origination channels modelled on cloud-computing, the manual processes such as underwriting loans and verifying the borrower can be automated saving lenders or banks a good lot of time. They will have adequate time to offer more loan products. Moreover, the borrowers can simply request for a loan online and get loan approval faster and quicker.

Customer On-boarding

Traditional banks who have not gone digital with their services often lose a wide portion of their customer base to other banks & NBFCs. While digital lending technology might be expensive for the banks, the right option for them can be to partner with Fintech firms and digitize the basic processes. Small business loans can be digitized, cost per loan reduced, loan volume decreased, attracting more customers, and creating better customer experiences are some of the perks of incorporating technology in the lending ecosystem.