It is no secret that 2020 will be the onset of a decade where the economy will primarily center around the SMEs. And this SME economy, in turn, will be heavily influenced by the alternative lending sector, which itself sees a prosperous growth through Fintech developments. In short, Fintech led alternative lending shall bring about a colossal hope for all SMEs that need accessible cash flow for refueling and business growth. Let’s delve further into this.
Understanding Key Areas
Before discussing automation, let us first understand the key operational areas for all types of lending. These include credit risk evaluation, underwriting, approval decision making, collection, servicing, documentation, etc.
These credit process elements will witness a high level of automation over the next decade. Thus, impacting the cash flow positively. Alternative lenders like Mantis Funding are already facilitating easily accessible cash flow through faster credit disbursals for small businesses.
Fintech Led Automation
Here’s how the lending process elements will see automation in 2020 and fuel the growth of the alternative lending sector.
•1 – Online application system
This is already in place. By the next decade, almost every alternative lender will have an online financing application system to allow users to submit a funding request. Application forms would be customized to specific products detailing the essential documents to be uploaded. The entire process would be automated to the maximum extent possible.
•2 – Risk evaluation
Traditionally, credit scores are used to evaluate the risks. But more and more alternative lenders like Mantis Funding reviews each application without weighing in credit scores. This element would witness advanced automation through artificial intelligence-led machine learning. Deep neural networks would be heavily used to collect data on applicants through non-traditional sources like accessing networks, social standing, utility bills, etc.
•3 – Underwriting and decision making
The major objective of underwriting is to reduce, evaluate, and mitigate risk. With high automation, alternative lenders will be able to rely on a robust credit scoring model outside of the traditional credit scores. The seeds have already been sown. Alternative lenders like Mantis Funding review every application on the basis of their own scoring system without needing any collateral or traditional high credit scores. The system would also help loan officers make faster decisions by providing them detailed analytics and insights.
•4 – Communication
The traditional method for an applicant to get in touch regarding the status of their application is to either call/email the credit officer or walk into their office. But with high automation, applicants would be able to log in to the customizable online credit processing portal and get a real-time update on the status of their application. Presently, alternative lenders like Mantis Funding are well known for their fast disbursals and active client support.
Payment alerts, credit servicing, credit updates, and digital statements are some more key areas that would get automated. With the high demand put upon the alternative lending sector, enhanced automation is undoubtedly the only way for the industry to keep growing and provide continuous customer satisfaction.