Intelligent Decisioning Engines Use Multiple Alternative Data Sources for Advanced Profiling
Lending is witnessing a paradigm shift with digitalization. Across the globe, consumers’ demands are metamorphosing to embrace end-to-end digitalization. These systems help boost customer-centricity enabling quicker, automated, and streamlined journeys.
According to a BCG report published in 2020, over $1 trillion in retail loans will be disbursed digitally in the next 5 years, and the digital footprint of consumers will increase to 75 percent from 50 percent by 2023 in India. According to TransUnion CIBIL Market insights, Indian fin-tech players loaned more than twice as much to millennials and Gen Z consumers under the age of 30 in 2020 as compared to traditional banks.
But, progress doesn’t come without problems. Fintech has helped digitalize major processes, but it has struggled with underwriting. Traditionally, manual underwriting was the only way to disburse loans, but Fintech services help source borrowers’ information to simplify credit decisions.
Today, digital lending solutions run advanced statistical analyses to derive the loanable amount.
Borrower Data Simplifies Credit Underwriting
Underwriting is a complicated process, but the inclusion of modern data analytics techniques has revamped the entire process. Reduction in turnaround time and accuracy in decision-making are two notable benefits.
Credit scores were considered the basis to underwrite the creditworthiness of a user, here Fintech has changed the trend by including other sources such as FOIR, CIBIL score, loans taken, alternative consumer data, etc., which helps generate deeper insights and improves the accuracy in decision making.
Why must System generated Underwriting be implemented?
Digital lending business models are increasingly proving to be more than just cost-effective, it saves time too. Lenders are able to execute real-time data assessments for application approval or rejection. It enables quicker loan decisions and better customer acquisition.
Lending companies that use digital underwriting processes can improve customer engagement. As the entire process is run on apps and websites, lenders can shift their focus to offering value-adding services with a better understanding of pre-qualification journeys.
Data sourced by digital lending solutions help with a 360° view of a borrower’s financials, credit functioning current market standing, risk scores, outstanding loans, etc. This enables AI/ML-powered systems to run calculations, considering broader parameters.
Get in touch with D2K Banking Fintech Consultancy Experts for more information on roadmaps for comprehensive data analytics in digital lending.