Effect of Digitization on Small Business Lending
With the explosion of digitalization in each sector, it is not a matter of surprise it will soon replace the way small business financing was done earlier. Digital transformation is not only about computers and devices replacing humans. Talking about banking, it offers beyond full automation and deprived of it banks may find themselves outdated. The transformation is purely about cost control steps, modernizing tools and processes to manage operations increasing cost.
The transformation will make it possible for the small business lenders to be available for the borrowers to discuss how and when they can make financial decisions about the capital irrespective of location. Digitization SMB lending processes can make a huge impact on the difference between growth and being sidelined.
What to keep in mind when you start your journey to digitization, it is important to understand how to digitize the small business lending platform:
It is really important to track down the activities of other financial institutions, how well they are in market via digital platform. Compare it fairly as not every institution will be same nor have similar objectives or target customer base.
Be open to change though it might seem unharmonious in first go but it can bring new opportunities, roles, processes to your institution. Instilling modern tools, processes and outlook will definitely articulate reasons as well as expected outcomes. For instance better customer experience, efficient operations and an increase in profit.
Time for Transformation
Better things do take time in settling down. You cannot revolutionize everything with just one project. The whole process requires time. You won’t realize all goals just with implementation but soon with the time you and your team will understand the transformation has not only improved efficiency but also customer experience.
The whole digitization doesn’t mean moving from paperwork to an online platform. Instead, this transformation will help in improving how you connect and interact with customers. It provides an opportunity to improve the experience as well as operations.
Keep Moving Forward
You, your team and institution will achieve the goal if you stay in the course and keep moving forward. Always map out your next move with every project, each task in your organization’s transformation to stay centered with the vision.
From borrower’s end
Let us understand how digitization has turned the lengthy and burdensome process of lending into a matter of minutes. How the entire transformation enables banks to improve the SMB borrower experience and minimize the costs while keeping abreast top line revenue.
- The traditional process required borrowers to keeping papers arranged and collect the paperwork of loan during the working hours. And collecting underwriting data can be troublesome with drip of requests. And the slower process of verifying documentation can take up a lot of time. But Digitization eliminates all such burden.
- Borrowers who need fund on urgent basis might have to wait for the loan approval and as a result, the owner might have to look for the alternative lender who will provide loans quickly but on a high-interest rate which is why online lenders now attract more than 20% of SMB loan applications.
- When banks or financial institutions will digitize several processes like SMB lending or applying for the loan, they will not only create efficiency which will benefit operations of your venture but will also improve customer’s experience.
It is quite natural to resist change especially in the financial sector and its services. Digitization is a one-way that banks must adopt instead of running away from it as their existence may depend on it in the near future.