By Lalit Mehta
Artificial intelligence (AI) has become a critical disruptor in almost every industry, and businesses are adapting to its benefits by leaps and bounds. Organizations are leveraging it for finding market trends, easing tedious processes, enhancing operational efficiency, and improving customer experience. For the BFSI (Banking, financial services, and insurance) industry, the digitalization process is already happening at a rapid pace, and its implementation has already enhanced operational insights, lowered costs, and streamlined workflows.
This efficiently proves that technology, when adopted at the right time, can provide lucrative benefits for organizations. Similarly, AI in this regard has the potential to transform the business processes for BFSI companies, especially digital lending, which is growing exponentially. Reports by Experian and Praxis Global Alliance stated that India’s digital lending market in 2022 stood at USD 270 billion, with a surge in disbursements of 11%. Amid these growing markets and surging numbers of borrowers, BFSI companies can leverage AI for lucrative benefits.
Identifying creditworthiness
Financial organizations offer loans based on the creditworthiness of potential borrowers as determined by their CIBIL Score, yet frequently a sizable portion of those candidates are denied loans because of their weak or lacklustre credit histories. In this regard, artificial intelligence platforms have the ability to recognize risk profiles and determine a person’s potential to pay using criteria other than merely their credit score. It has the capability of generating a credit score for a customer based on their online transactions and activities. AI-powered lending technologies carefully review all the information in the documents, compare it to the loan requirements, and offer insightful data that will enable the lender to make a more informed decision regarding the borrower’s trustworthiness. After all these AI-led processes, if the borrower is creditworthy, the lenders can disburse the amount with speed.
Quicker customer onboarding
The first step in creating a positive first impression is a smooth client onboarding procedure. The process begins when a prospective customer contacts the sales team. From there, many steps are taken to gather important data and perform the necessary regulatory, legal, and due diligence procedures. The incumbent lending systems relied in great part on human networking. The reliance on human intervention affects not only speed but also accuracy and, collectively, the outcomes. However, AI-led platforms can help ease the KYC (Know Your Customer) processes for BFSI companies. Furthermore, quick customer onboarding is ensured by using an intelligent data extraction engine, such as OCR, and performing auto-filling of KYC forms with AI. Collectively, it can simplify the process of regulation and compliance, eliminate human errors, automate repetitive operations, and help save time and money.
Lending cycle time reduction
The traditional loan approval and disbursal processes were exhaustive and resource-consuming. Everything was manual, and the whole process would take days or even weeks for final approval and disbursement. This usually increased the turnaround time for the loan cycle, and the companies had to miss out on significant market opportunities. However, by implementing AI technology, lenders can cut the time it takes to process a loan. All phases of loan processing require a significant amount of monotonous work, which consumes a lot of time. However, AI in loan processing minimizes the overall time spent on tedious job processes by enabling automation across the lending cycle. Naturally, with the use of AI, lenders can streamline their operations and significantly reduce lending cycle time.
The significance of no-code platforms
As the digital transformation takes over the industry, the requirement for a digitally enabled BFSI sector is higher than ever before. However, the demand has also exploited the pain points for the companies as they look forward to digitalizing themselves but do not have stellar professionals or the time to take over core IT requirements. In this regard, no-code platforms can help BFSI companies create AI-driven and API-led applications that could provide end-to-end loan origination solutions for credit institutions. Eliminating the hassle of coding, the no-code platforms can facilitate drag-and-drop options and a visual interface, which could aid in creating enterprise-grade applications that would cater to the needs of BFSI companies.
Organisations could instill a myriad of features, including lead generation and onboarding, KYC profiling and eligibility assessment, credit decisioning, and risk assessment. These features could take care of the necessities such as lead capture, digital onboarding, integrating with Bureau or eligibility checks, and aggregation and analysis of various financial data. Moreover, the application could be tweaked for ease of uploading documents, viewing dashboards, reports, and audit trails. Overall, the underlying difficulties of UX, security, and integration are all taken care of by no-code platforms, which enable the rapid development of applications and enhance productivity for BFSI companies.
All things considered
The potential impact of artificial intelligence on the BFSI sector and online lending cannot be overstated. It has the ability to improve consumer experiences by streamlining KYC procedures, speed up loan processes by considerably reducing TAT, and make the lending process safer and easier for lenders. A survey by IIFL FinTech predicts that India’s market for digital loans will reach a staggering USD 515 billion by the end of 2023. Therefore, the outlook of the market seems positive in the near future.
In order to gain a competitive edge in this growing market, digital lenders require the help of no-code platforms. These platforms could help businesses provide even better services by fusing the best human and machine capabilities into their work, making it an even more alluring opportunity for their clients. It eliminates the need for coding and makes it easier for the BFSI companies to develop applications that could cater to their operational needs. With its rapid implementation, organizations are likely to experience significant improvements in productivity and streamlined workflows.
The author is co-founder and CEO, Decimal Technologies