The partnership between fintech companies and banks has become a common phenomenon in the present age. Earlier, banks reached their customers through their physical branches and built trust over years of service. On the other hand, fintech companies bring the power of technology to digitize banks and provide flexible and more intelligent banking to customers.
Commercial lending has changed drastically due to the evolution of fintech. For MSMEs, borrowing from traditional banks has never been easy. However, as fintech continued to grow, many lenders disrupted the commercial lending market by applying the latest data analytics and AI technology. Many hire commercial lending solutions to outsource their everyday operations and make lending faster and more straightforward. In 2022, fintech and banks are expected to offer considerable benefits to commercial borrowers. Let’s have a look.
Digitization in Commercial Banking
Commercial banks are the primary sources of finance for MSMEs. However, mainstream banks need to enhance their relevance by matching competition with NBFCs and fintech companies. Since many consumers have adopted digital channels, small businesses have noticed a drop in their sales and cash flow.
Banks must revise their digital channels to capture this opportunity and attract SME owners for borrowing. They might improve their clients’ experiences by improving their conversational technologies, creating personalized campaigns, and assisting in digital marketing. Carbon footprint management, waste management, and mental health support using digital tools are other areas banks may help their customers.
AI Advancements for Faster Processing
Advancements in data analytics and Artificial Intelligence have drastically improved the way lenders assess applicants’ creditworthiness. Besides that, they have accelerated the process of lending capital. Commercial banks can now approve lines of credit and commercial loans within minutes, compared to traditional banks that take weeks to approve.
Therefore, AI advancements will enable startups and entrepreneurs to gain capital at the right time and quickly respond to opportunities and market conditions. They can accelerate their lending process by automatically receiving data and verifying bank accounts while avoiding manual assessments. By eradicating manual approvals and lengthy applications of traditional banks, AI helps banks make streamlined decisions faster.
AI, Cloud, and Digital Technologies
Hiring commercial lending solutions to outsource underwriting, onboarding, back-office, and servicing operations is an excellent way to save time and effort. Service providers provide industry-specific, customized cloud solutions to investment firms, insurance companies, and banks. Based on AI-based data and results, banks may improve their decision-making regarding funds and customers. Personalized communication, targeted marketing, and improved customer support will enhance investment responsibility, superannuation, and wealth management.
Open Data Solutions
Eco-system and open banking systems are expected to evolve exponentially in 2022. Therefore, commercial lenders must customize their services and design innovative products and features to reach other channels and marketplaces. As far as the digital retail market is concerned, service providers must increase the accessibility of their financial services and products with features like personal loans, content insurance, buy-now-pay-later, mortgage, etc. Open data solutions may provide personalized, contextualized services to the customers using data sharing between different financial and non-financial entities.
Innovative Sustainable Financing Products
In 2022, companies providing commercial lending solutions will revamp their drive for ESG offerings and products, like green mortgages, banking accounts, and loans. Insurance companies will implement ESG factors into their underwriting and risk assessment systems to cover new risk types like equipment to generate renewable energy. It is crucial to measure climate risks while meeting obligations to policyholders, depositors, and fund members.
More Fintech Lenders Edging into the Commercial Lending Sphere
Over the last decade, fintech lending has evolved significantly, and these lenders are on the way to replacing traditional commercial banks. A recent survey revealed that 88% of US consumers use fintech to a certain degree. Fintech companies can now offer financial services similar to banks while using innovative technology to streamline lending and borrowing experiences. Consequently, reduced regulatory hurdles can make the overall lending procedure faster, easier, and cheaper.
In 2022, the commercial lending industry is expected to become more intuitive, purposeful, and collaborative. As an increasing number of business owners find borrowing easier and approach lenders for financial support, commercial lenders must hire experts in commercial lending solutions to streamline and accelerate their lending processes. The latest tools and techniques can help banks and borrowers manage finance better and contribute to the economy more significantly.
