One of the critical aspects of running a sustainable banking enterprise is the management’s ability to improve the perceived value to its stakeholders. Most of the banks thus prioritize offering customized services that can enhance the ‘customer journey’.
The ongoing pandemic has further accelerated an undeniable need for enterprise-wide cloud adoption to remain accessible. To consistently serve the customers remotely in real-time and reduce the need for branch visits, banks have redesigned their IT strategies and integrated technology solutions like digital channels, chatbot-based loans, facial recognition software, digital signatures, and more.
The objective of this blog is to share insights into how ‘being cloud smart in lending’ can re-invent the customer experience.
Being customer/colleague journey centric
(Post) pandemic customers and colleagues are bound to have varied expectations for obvious reasons. While customers are looking at minimal touchpoints before a loan is approved, banks need to ensure credit risk is appropriately managed, and all regulations are complied with.
As banks strive to improve the customer journey and survive in the new normal, they must now consider their customers' perspectives and expectations and streamline their lending processes accordingly to offer effective and customized solutions.
Customer’s thoughts and feelings
Expectations from the bank
Why do traditional on-premise lending systems fail to improve customer experience?
Traditional on-premise lending systems cannot improve customer/colleague experience for the following reasons:
Lack of customer journey driven loan processes
- Limited cloud-enabled omnichannel capabilities to analyze customer interactions from multiple channels and provide meaningful and customized suggestions
- Form-based collection of data from customers leads to poor customer journey as each data item needs to be keyed in
- Lack of integration to digital KYC SaaS necessitating customers to visit the branch and complete the KYC process
- Lack of support for analysis and interpretation of information from diverse sources, such as data from the credit bureaus, publicly available data, and information from other banks
- Limited options to scale with increasing regulations/industry-standard initiatives such as open banking
How do cloud-enabled lending systems (Lending as a Service) transform customer experience?
Better analysis of customer interactions
Modern cloud-hosted digital channel platforms with embedded artificial intelligence capabilities can identify the customer based on the various interactions they have had through various channels. Customer interactions through multiple sources can then be analyzed to identify their loan needs and customize product offerings.
With the widespread usage of Open Banking, the cloud-based lending systems could leverage Open APIs to enable information analysis from all the bank accounts of the customer. This could be used for automatically capturing most of the details required to sanction loans thereby improving the customer experience by reducing time to key in the details.
Data-driven credit assessment
Transaction categorization models to calculate expenses/liabilities from bank statements
- Verification of salary credits based on open banking data
- Supervised ML algorithms using historical data
- Clustering the customer using trained ML models and comparison of the income/expenses in the bank statements for identifying discrepancies, if any
This would reduce the back and forth of documentation, creating a differentiated customer experience.
Customer value-based pricing
Analytics-based pricing models deployed on the cloud assimilate information about customers’ product holdings from multiple banks. Leveraging data from multiple sources, the pricing model can recommend the best loan offers for the customer in seconds. This will provide a distinctive experience to the customer as the pricing will be based on their perceived value.
Credit decisioning as a service
Several retailers who offer Buy Now Pay Later (BNPL) loans to their customers do not need sophisticated lending systems. However, there are several solution providers who offer Credit Decisioning as a Service (CDaaS) to suit retailers’ needs. This enables retailers to focus on their core business while cloud-enabled lending solution providers manage the credit risk.
Cloud-based customer onboarding
Leveraging digital solutions hosted and empowered by the cloud, such as KYC as a service, calendaring, video KYC, remote biometric capture, and more, the customer onboarding could be completed in minutes. This will enable the bank to comply with the regulatory guidelines and provide a digital frictionless customer experience.
Digital loan contracts
With the increasing rate of intermittent lockdowns, most banking regulators have allowed digital loan contracts. This provides a significant opportunity to leverage cloud-based document generation tools to manage loan contracts. Digital loan contract also helps in quickening the overall loan approval process as the entire journey is digitally driven.
With the increasing acceptance of digital loan contracts, eSignatures have assumed prominence. Most of the eSignature solution providers, such as DocuSign, offer their solutions on cloud-based models, increasing their acceptance and utilization. With security aspects well taken care of, most of the customers prefer digital-only loans.
Summarizing the key benefits of cloud adoption in lending
‘Truly’ digital and frictionless experience for customers/colleagues
- Instant loan decisions through API-driven architecture
- Cost synergies through the adoption of the OpEx model
- Future-ready model facilitating multi-country rollouts
- Reduced risk of downtime
How HCLTech can help
With 80+ implementations in lending and more than 20 years of experience in Cloud and SaaS offerings, HCLTech is best placed to provide business consulting and IT services to accelerate cloud adoption in the lending landscape.
HCLTech scope of services include the following:
- Cloud consulting for lending solutions
- Domain-driven Design(DDD) for microservices-based cloud implementation
- SaaS implementation of industry-leading lending solutions
- Lending application migration to the target cloud platform
- Legacy modernization, including monolithic to microservices adoption