Main Incentives for Digitalizing the Corporate Lending Process
Christopher Hansert, Product Manager for Credit Risk Solutions at ACTICO, identifies three main incentives for banks to digitalize their lending processes: benefits in terms of revenue assurance, risk reduction, and operating costs. No financial institution should take these fundamental business aspects lightly.
Digitalization of credit risk management contributes to revenue assurance by making financial institutions more attractive. “Customer expectations are rising. They are accustomed to digital services in other areas of their personal lives,” says Christopher Hansert in a expert talk on Commercial Lending Automation. “Therefore, they also expect automated document uploads, self-service functions, and real-time decisions in the lending business.” If financial institutions neglect this, they risk losing revenue as they could lose customers to FinTech’s with shorter processing times and faster approvals.
Modern technologies for more comprehensive data analyses benefit risk reduction in lending. “New machine learning capabilities favor better models with significantly higher predictive quality. They can also evaluate additional external data sources and existing bank-internal data pools much more thoroughly,” explains Christopher Hansert. “This facilitates much better decisions and thus reduces the default risk.”
Banks can lower their operating costs by significantly increasing efficiency. “The more subprocesses of lending a financial institution automates, the more cost-efficient the business becomes,” emphasizes Christopher Hansert. “Moreover, this gives the credit analysis team more freedom to devote themselves to truly value-adding services.”
Human experts remain indispensable when large and complex inquiries require judicious decisions. Creating more resources for interpersonal exchange with significant clients also plays an important role in customer retention and, thus, revenue assurance, even in the age of AI.
