Digital lending involves automated and remote lending and borrowing processes through online platforms. This digital lending is made possible by digital transformation in the financial industry and the rise of FinTech. The digital lending landscape is also continuously evolving as technology constantly changes. Here are the latest digital lending trends in 2023.
1. Expanded use of AI
Artificial Intelligence (AI) makes credit risk assessment processes more coherent and fast. For instance, if you are applying for express loans, the AI will conduct fast data analysis to ensure the development of data-backed lending decisions. In addition to credit risk assessment, lenders leverage AI solutions to provide real-time responses to customers, conduct risk forecasting, and ensure regulatory compliance.
In 2023, most digital lenders are adopting techniques, like Video Customer Identification Processes and digital onboarding, to streamline processes. Therefore, the expanded use of artificial intelligence facilitates accurate data analysis and streamlined processes in digital lending.
2. Enhanced mobile payment technologies
Digital lending institutions in 2023 have their own mobile apps. Most of these digital lenders currently embed the best mobile loan payment technologies in these mobile apps. Therefore, borrowers and lenders should expect streamlined payment gateways and payment processing.
3. Increased green financing trends
Green financing can be an investment or a loan that lenders give individuals in order to promote environmentally-positive acts, like constructing a green infrastructure or buying ecological services or goods. This green financing benefits both the environment and the economy. It ensures that digital lenders also play an essential role in developing a green economy. Green lending is only for sustainable use.
4. Increased investment in blockchain
Blockchain technologies are the future of finance, where individuals in 2023 are rapidly accepting the potential of blockchain in digital lending. It opens up the possibilities of complex programmed loans and peer-to-peer loans. The primary benefits of blockchain in lending are the increased traceability of shared data across business networks, transparency, security, and trust. Blockchain also speeds up transaction processes and eliminates the need for paperwork.
5. Enhanced end-to-end automation
Enhanced end-to-end automation ensures that digital lenders do not have to undertake manually repetitive tasks, which can be taxing. This automation facilitates the pre-filling of loan application forms with existing borrower information. The automation also allows for flagging inaccurate or missing data; this reduces bottlenecks and facilitates streamlined processes.
6. Increased adoption of Application Programming Interface (API)
API enables digital lenders to make fast decisions on a loan application, where it facilitates the sourcing of data from third parties, including non-government and government agencies. Therefore, API allows borrowers to get loan approval at a fast rate. Another incredible thing about API use is that it does not store any data; thus, it is 100% safe and secure.
7. Imposition of more regulations
With the significant growth of digital lending institutions, most governments in 2023 are focusing on protecting customer experience. They ensure that digital lending only takes place through regulated entities. The focus on regulated entities only facilitates the removal of unscrupulous players from the digital lending sector.
Endnote
The current digital lending trends focus on digital transformation and government regulations. Digital transformations facilitate secure, safe, streamlined, and fast lending processes. On the other hand, government regulations ensure that the digital lending sector has regulated entities only.
