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Digital Transformation in Lending: The Value Co-Creation Approach

Learn about new age benefits of value co-creation in digital lending, Explore the potential to reshape interaction with borrowers



New age digital banking demands that lenders adopt a customer-centric approach. Moreover, value is evaluated differently today. Community engagement is preferred, and personalized services are now a necessity.


For digital transformation, recognizing such trends helps Businesses adopt key solutions to stay at the forefront of innovation. In current times, a unique consumer trend that’s running the show is ‘Value Co-creation'.


Value Co-creation: A Shift in Value for Modern Customers

Value Co-creation is a collaborative activity where consumers have the freedom to avail self-customization for products and services on digital platforms. The trend promotes active participation in different product or service propositions through apps and websites.


Ultimately, this helps businesses develop 'co-created' marketing strategies, and aids in activation of customer-centric initiatives and offerings. If done right, a well-developed feedback loop helps businesses to delve deeper into customer prioritization.


It is safe to say that ‘value creation’ that was the core of good business strategy has transformed into 'co-creation of value between customers and businesses'.


The same goes for Banks and other Financial entities in Lending. Swift adoption of the right digital systems is key for banks and FIs to build a collaborative approach and utilize this trend to its benefit.


Two Approaches for Value Co-creation in Lending



Studies explore the various new-age benefits of value co-creation, especially its potential to reshape interaction with internal and external stakeholders. As banks become more customer-oriented for newer innovations and gain stronger competitive positions, customer involvement and satisfaction have become tenets for the process of digital transformation.


In digital lending, access to new functionalities, concern and a caring attitude, prompt customer service, error-free bank services, and transparency are important factors of experience contributing to the co-creation process.


Provide Self-Customizations and Study Customer Decisions


The internet has changed the process of lending. Before applying for a loan, Banks are being scrutinized as much as their loan offers. To eliminate customer hassles, dependable online aggregators help customers zero in on the cheapest loans.


Where aggregators are not involved, banks are able to engage customers through online portals and customize their loan offerings to meet specific needs.


In choosing either one, a customer allows lenders to understand his/her requirements while customizing their loan for themselves. Value co-creation-prioritizing delivery models can be built into chatbots, loan disbursal interaction models, or banks can plainly use software that lets customers choose the loans that fit their demands.


Apart from offering choices, Banks’ marketing teams can hugely benefit from the data coming in from interactions with the apps and websites. Scores of data can be used to build new product offerings, and to better understand customer segments.

Interact Empathetically to Build Value-based Relationships

Customer information analytics and comprehensive report generation help in radically rethinking business models and changing the markets Banks serve.


A shift towards adopting the value co-creation approach requires Finance providers to maximize positive interactions with customers and reconsider an optimal mix of communication channels. Here, analytics assists in reassigning staff to the borrowers who are positively influenced by a phone call, email, SMS, or letter from collections teams.

Interaction with aftersales and collection teams is transforming into a process that considers customers’ hardships. As a result, customers in collections are no longer seen as irredeemably bad credits and greater incentives are being introduced to maintain brand loyalty.


The approach promotes the idea that when a customer is in better financial health, they will consider continuing with the lender. The Data that helps with this forward outlook is —

  • Understanding Reasons for hardship: Unemployed, furlough/reduced income, medical, quarantined and more.

  • Offering Monetary relief: Payment holiday, reduced installments, foreclosure, and more.

  • Understanding borrowers' industries and developing customized strategies for new repayment modes.

This process is dynamic and banks implementing the right systems simplify strategy building. Since two-way communication is key in understanding customers' circumstances, those falling into delinquency also opt for one-time settlements, to avoid hassles.

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