Digital Lending can help you transform your organization Digital lending is revolutionizing lending processes and offers too many competitive advantages for lenders to ignore

1. How Digital Lending can help
you transform your organization
Digital lending is revolutionizing lending processes and offers too many competitive
advantages for lenders to ignore. Innovation in digital lending is enabling lenders to offer
better products to their customers faster, more cost-efficient and in an engaging way. In
the Amazon era where customers expect service with fast turnaround and efficient
services, traditional lenders have no choice but to adopt digital strategies to remain
relevant and competitive.
Although integrating digital lending practices into the lending process is challenging,
ignoring digital lending process is detrimental. If done correctly, it will help lenders
evolve, scale and be competitive in the marketplace. Customer expectations are
changing rapidly, shaped by use of smartphones, social media and ecommerce.
Lenders develop their own digital lending capability or partner with other organizations
or a combination thereof.
While the ‘correct’ mix of digitisation might vary, adopting a digital lending process offers
several key advantages – lower operating costs, faster turnaround times, improved
understanding of customer behaviour, lower delinquency rates, and enhanced customer
engagement.
What is digital lending?
The lending process broadly refers to a sequence of activities to be performed to
provide a loan. From acquiring customers, onboarding, assessing credit, disbursement
of loan to receiving repayments and managing collections form core steps of a lending
process. Digital lending refers to managing the entire lending process by using the right
technology to enhance customer satisfaction.

2. Key Pillars of Digital lending
Digital lending can mean many different things to different lenders based on their
perspective of their customers and market. However most digital lending processes
incorporate the following 3 key pillars
 Use of digital Channels: Efficient digital channel enables customers to engage with
the lender easily, wherever and whenever they want. Digital lenders use digital
channels to reach new and existing customers to enable them to apply for credit,
receive loan disbursements, access information about their accounts and enable
multi mode payments.
 Consume diverse data: Digital lenders depend on diverse data sets to evaluate their
customers. Bank payments, bill payment history, invoices, credit bureau etc to
assess credit worthiness. Customer data is also leveraged to enhance engagement.

Focus on customer experience: One of the most deterrent process of traditional
lending is onboarding. Filling the several forms consumes time, is expensive and
many times might lead to customers losing interest. Use of digital onboarding, video
KYC and India stack reduces onboarding time to minutes resulting in increase in
consumer experience.
How to enable digital lending
Organizations need to go through an evolution to embrace digital lending fully. Early
stage adopters start with transforming the customer acquisition process. Shifting from
paper based onboarding to app based onboarding.
In the case of ‘touch and tech’ process, the loan agents are equipped with applications
to enable digital onboarding. Use of digital KYC mechanisms such as video KYC and
India Stack for KYC is a common practice. However many of the backend process are
still managed in the traditional sense. Implementing a robust Loan Origination System (
LOS) is key at this stage. A fully-integrated LOS will offer lenders both offline and digital
processes and streamline the lending process.
Organizations who push forward in their transformation journey will enhance their
customer engagement by enabling their customers to manage the majority of the

3. account functionality.
Implementation of a robust digital-ready lending management system ( LMS) offers
customers to completely digitize management of their loan book. An LMS enables a
data driven approach to managing delinquencies, analytics and enhanced collection
management. A robust collection management system enhances collection ratios. A
digital-ready LMS enables a lender to keep real-time track of the entire lending book.
Ability to assess credit is the cornerstone for digital lending. Lenders need to transform
from the current rule based credit engine to credit scorecard system. In order to move to
digital credit assessment, lenders need to organise existing data about their customers
and identify new data points to collect. Using the existing credit history, lenders need to
develop an intermediate credit scorecard approach before moving to a fully automated /
AI & ML based system.
How do you start?
Given the vast scope of digital lending, it can be difficult for lenders to know where to
start and how do you start on this journey. Firstly lenders need to assess and build your
readiness. Least risky mechanism is to first transform your onboarding process.
Adopting digital form filling, KYC and India stack for simplifying customer onboarding
journeys.
Next is to identify product and market segments that can be completely managed via
digital lending. There is no need to incur capital expenditure for digital lending. There
are SaaS based technology providers such as Novopay who offer you an entire digital
lending suite on a pay-as-you-go model. More importantly, it is the organizational
change that is required to embrace digital technology for the lending process.
A particular product / market segment is fully functional on a digital platform, it is
important to define metrics for measurement of success factors. Based on the metrics

4. you need to define success criterias for extending the digital lending ecosystem for all
your products. Such a process carries lesser risk in terms of disruption of your existing
business and significantly less capital expenditure for technology.
Technology landscape is moving very fast. Identifying what is next for digital lending is a
moot exercise. However on-the-ground implementation of digital lending is imperative
for growth. Implementing a digital lending ecosystem is challenging. We have outlined
some common pitfalls and simple but effective methods for lenders embarking on this
journey.
Novopay offers an end-to-end digital lending technology platform both as a SaaS and
an enterprise solution. Contact us for a more detailed discussion to digitally enable your
lending process.