Partnerships between fintech companies and banks are now common. Previously, banks reached their customers through physical branches and built trust over years of service. Fintech companies, on the other hand, bring the power of technology to digitalise banks and provide flexible and more intelligent banking to customers. The arrangement is a win-win situation.
Commercial lending has changed significantly due to the evolution of fintech. For MSMEs, borrowing from traditional banks has never been easy. However, as fintech continued to grow, many lenders disrupted the commercial lending market by applying the latest data analytics and AI technology. Many outsource their everyday operations to commercial lending solution providers to make the lending process faster and more straightforward. Fintech firms and banks are expected to offer considerable benefits to commercial borrowers in 2022.
Digitalisation of commercial banking
Commercial banks are the primary source of finance for MSMEs. However, mainstream banks need to enhance their relevance by matching the services offered by NBFCs and fintech companies. Since many consumers have adopted digital channels, small businesses have noticed a drop in their sales and cash flow.
Banks must revise their digital channels to capture this opportunity and attract SME owners for borrowing. They could improve the customer experience by enhancing their communication technologies, creating personalised campaigns and assisting in digital marketing. Carbon footprint management, waste management and mental health support using digital tools are other areas in which banks could help their customers.
Advancements in AI lead to faster processing
Advancements in data analytics and AI have significantly improved the way lenders assess applicants’ creditworthiness. They have also accelerated the process of lending capital. Commercial banks can now approve lines of credit and commercial loans in minutes, compared to traditional banks that take weeks to do so.
Advancements in AI would, therefore, enable startups and entrepreneurs to gain capital at the right time and quickly respond to opportunities and market conditions. They could accelerate their lending processes by automatically receiving data and verifying bank accounts while avoiding manual assessment. By eliminating the need for manual approval and circumventing the lengthy application process of traditional banks, AI helps banks make streamlined decisions faster.
AI, cloud and digital technologies
Outsourcing underwriting, onboarding, back-office and servicing operations to commercial lending solution providers is an excellent way to save time and effort. Service providers offer industry-specific, customised cloud solutions to investment firms, insurance companies and banks. Based on AI-based data and results, banks could improve their decisions relating to funds and customers. Personalised communication, targeted marketing and improved customer support would enhance investment responsibility, superannuation and wealth management.
Open data solutions
Ecosystems and open banking systems are expected to evolve exponentially in 2022. Commercial lenders must, therefore, customise their services and design innovative products and features to reach other channels and marketplaces. As far as the digital retail market is concerned, service providers must increase the accessibility of their financial services and products with features such as personal loans, content insurance, buy-now-pay-later products and mortgages. Open data solutions could provide personalised, contextualised services to customers using data sharing between financial and non-financial entities.
Innovative, sustainable financing products
Companies providing commercial lending solutions will likely revamp their drive for ESG offerings and products such as green mortgages, banking accounts and loans in 2022. Insurance companies would incorporate ESG factors in their underwriting and risk assessment systems to cover new risk types such as equipment to generate renewable energy. It is crucial to measure climate risks while meeting obligations to policyholders, depositors and fund members.
More fintech lenders edging into the commercial lending space
Fintech lending has evolved significantly over the past decade, and fintech lenders are on their way to replace traditional commercial banks. A recent survey revealed that 88% of US consumers use fintech to some degree. Fintech companies can now offer financial services similar to banks while using innovative technology to streamline lending and borrowing experiences. Consequently, lower regulatory hurdles could make the overall lending procedure faster, easier and cheaper.
The commercial lending industry is expected to become more intuitive, purposeful and collaborative in 2022. As an increasing number of business owners find borrowing easier and approach lenders for financial support, commercial lenders must hire experts in providing commercial lending solutions to streamline and accelerate their lending processes. The latest tools and techniques can help banks and borrowers manage finances better and contribute to the economy more significantly.
