HomeBlog – Insights by CredAbleBlogHow FinTechs are Leveraging Cloud Technology to Redefine the Competitive Lending Ecosystem

How FinTechs are Leveraging Cloud Technology to Redefine the Competitive Lending Ecosystem

Published on 04 Oct,2022

Cloud technology is changing the world. There probably isn’t a single area of human society or industry that the cloud doesn’t touch or impact. One such industry is banking and financial services.

Innovative and future focused FinTech firms are capitalising on the potential benefits of the cloud to transform the industry. The cloud offers the agile and flexible infrastructure FinTechs need to scale up and accelerate their pace of innovation. With the right cloud-based tools, they can effectively leverage data to guide decision-making, secure business-critical assets from cyber adversaries, and enhance their resilience to challenges.

One particular area where the cloud and FinTechs are making a visible and tangible impact in financial services is lending. Cloud-based lending is completely redefining the competitive lending ecosystem and forcing traditional lenders to re-evaluate their service models and value chains.

Lending: Out with the Old, In with the New

Traditional lenders like banks have been around for a long time in some form or another. For centuries, they were the crucial cogs that kept the wheels of commerce and industry running. But in recent years, banks have struggled to adjust to the realities of the modern world and the needs of modern borrowers. For example, they have not been able to satisfy borrowers’ growing appetites for funding. The International Chamber of Commerce estimates that the gap in SME trade funding has ballooned to a massive $5 trillion – a gap that banks are just not able to fill.

Additionally, these lenders usually have paper-heavy, resource-intensive, and time-consuming processes for credit assessments and loan underwriting. As a result, they are unable to process loan applications quickly or make quick lending decisions, both of which are essential to keep the lending machinery moving and profitable.

Another challenge is that they rely on legacy infrastructure comprising of core banking solutions (CBS). This infrastructure is so “monolithic” that changing even one of its parts can cause a catastrophic effect, such as a breakdown, on the entire ecosystem. Moreover, many CBS are adequate only for basic services like deposits, transfers, and bill payments, but far from enough for more advanced lending offerings that today’s borrowers demand.

Cloud-based lending platforms can eliminate all these challenges. Whether it’s mortgages or personal lending, payments or investments, these platforms are simplifying traditional lending models and creating greater value in the entire lending ecosystem. Here’s how.

How Cloud Lending is Transforming Lending

A cloud lending platform is a FinTech innovation incorporating advanced automation and digitisation to expedite lending processes and loan disbursals. It automates several parts of the approval process, including:

  • Borrower assessments, e.g., credit-worthiness
  • Documentation verification
  • Loan underwriting, and

Crucial KYC and AML procedures

Replacing old-fashioned manual processes with automation brings all these benefits into lending ecosystems:

  • Increased process efficiencies
  • More consistent and predictable workflows
  • Fewer manual errors
  • Reduced operational costs

Furthermore, cloud-based lending systems use advanced technologies like machine learning, natural language processing (NLP), augmented reality (AR), and predictive data models. These cutting-edge innovations enable traditional lenders to:

  • Process more applications faster and accurately
  • Serve more borrowers
  • Close more deals
  • Grow their customer base

and ultimately,

  • Increase revenues and strengthen bottom lines

And that’s not all.

Cloud lending systems prioritise both security and performance to eliminate problems like downtime due to demand spikes that are common with legacy systems. They incorporate the latest access control and safety features so lenders can provide uninterrupted service and also stay protected from catastrophic cyberattacks and data breaches.

And last but definitely not least, cloud lending enhances borrower experiences in ways that traditional lending cannot. This is due to:

  • Digitised processes available in “anytime/anywhere” avatars
  • User-friendly “self-service” systems
  • Lower-cost loans, and
  • Faster loan origination and approvals

All these benefits go a long way towards satisfying customers’ credit needs and meeting their expectations for fast, agile, and personalised service.

Cloud Lending is the Future of Lending

Simplified data management, new security features, self-service applications, and a “user-first approach” – cloud lending brings all these benefits into the vast global lending landscape. Cloud lending platforms and innovative FinTech companies like CredAble are facilitating the digital transformation of the financial services sector. And the best is yet to come!

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