Revolutionalizing commercial lending in banks with fintech
In an era when technology is rapidly changing, banks will benefit more from pioneering the application of new technologies, particularly by revolutionizing commercial lending in banks with Fintech.
However, banks are struggling to implement digital lending solutions and capitalize on this brisk opportunity due to inefficient manual lending processes, complex data issues, and legacy in-house systems. These legacy systems are not only expensive to maintain, but they also make it difficult for banks to respond quickly to business needs.
As a result, FinTechs collaborated closely with banks as they applied their technological expertise to provide relief to a record number of businesses in a timely manner. FinTechs have completely re-defined commercial lending services with their peer-to-peer lending models, alternative data to establish a more realistic version of creditworthiness, unique financial products, and quick loan processing.
In this article, SmartOSC Fintech will show the fantastic benefits of revolutionizing commercial lending in banks with Fintech.
What is Commercial Lending?
Commercial lending is a debt-based funding arrangement between a company and a financial institution, such as a bank. It is typically used to fund large capital expenditures and/or cover operational costs that the company could not otherwise afford.
Expensive upfront costs and regulatory barriers frequently prevent small businesses from obtaining direct access to the bond and equity markets for financing. Smaller businesses, like individual consumers, must rely on alternative lending products such as lines of credit, unsecured lending, or term lending.
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The benefits of revolutionizing commercial lending in banks with fintech
There is currently an opportunity for banks to better leverage fintech to address these challenges by co-developing and enhancing their offering through the development of products and services that can be plugged into Fintechs. As a result, the lending process will be faster and wiser, with a better customer experience that can help boost revenues.
Let’s take a look at the benefits of revolutionizing commercial lending in banks with fintech:
- Boosting innovation
Fintechs can innovate much more quickly than banks. Fintechs can respond to the market more quickly thanks to cloud-enabled digital platforms, industry-standard data models, open APIs, and product expertise.
Banks should consider collaborating with one or more Fintechs to benefit from their speed of innovation. This will allow banks to focus on their core competencies, such as their customers, rather than worrying about technology.
- Fintechs contribute to a cultural shift
Banks should consider not only leveraging a fintech’s technology platform but also using the partnership as a catalyst to change company culture.
Fintechs can assist banks in becoming more agile, nimble, “fail fast,” and challenging their current ways of working in order to break functional silos – shifting from a platform IT to a product mindset.
- A source of industry knowledge
Fintechs bring learnings from their peers in areas such as technology, operational processes, and business models. If banks are willing to be challenged and learn from the industry experience of fintech, their solutions will be richer, and the digital lending journey will be accelerated.
- Collaboration and co-creation in commercial lending
Although most banks see the fintech proposition as a means to accelerate the delivery of their lending platform, the real benefit is the opportunity to co-create new solutions based on the most pressing business and customer needs.
Most fintech takes an agile approach to development, constantly improving their platforms and collaborating closely with their clients to meet their needs, which explains why their customer base is rapidly expanding.
In conclusion
Commercial lending is ripe for disruption and that’s where Fintech comes in. Commercial lending banks are using new technology to make the process easier, faster, and more transparent for everyone involved. They’re also bringing much-needed competition to the market, which should help drive down interest rates and fees.
If you’re interested in learning more about how Fintech is changing commercial lending or want to explore ways banks can work with this technology, contact SmartOSC Fintech right now to receive a more useful consultant.
