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Insight Report: Digitization in Lending

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Published Date : Nov 2015

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No. of Pages : 45 Pages

Digitization in Lending' explores the changing landscape of lending industry due to digitization.

It also:

  • Analyzes the drivers of digitization for financial institutions
  • Analyzes the impact of emerging digitally advanced lending financial service providers
  • Discusses the transformation of lending process through digitization
  • Explores challenges and opportunities involved in digitizing the lending process
  • Examines the trends that will shape the industry in the next five years

Digitization in Lending' analyzes the effect of digitization, emerging trends and competitive landscape of the lending industry. The report also discusses in detail the drivers of digitization for financial institutions and how they are using it for improving operational efficiency and customer experience.

With significant adoption of digital channels by customers, financial institutions are compelled to provide the convenience of anywhere, anytime banking to customers. Although digitization has transformed the transactional banking process, it has not been fully adopted in lending process.

Many online lending companies and non-bank lenders have emerged to capitalize on the inefficient lending process of banks. The growth of these companies also demonstrates that customers are looking for more convenience, which digitization can provide. The significant rise of non-bank lenders has led banks to invest more in digital technology, and form partnerships with them to remain leading operators in the lending market.


This report:

  • Provides comparative analysis of the various business models in the lending industry
  • Analyzes the key trends, drivers and impacts of digitization on lending
  • Covers key initiatives by financial institutions in digitizing the lending process
  • Provides case studies of financial institutions which have implemented pioneering technologies to improve their lending business
  • Explores challenges in implementing digitization in the lending process
  • Provides an outlook for financial institutions to utilize digital channels to enhance productivity, efficiency and the customer experience


  • Understand the effect of digitization on the lending industry.
  • Analyze changing dynamics in the lending industry, and gain insights into key technology, competitors and strategies.
  • Understand competitive threats from new market entrants and emerging opportunities.
  • Gain insights into key initiatives by financial institutions to digitize the lending process.
  • Learn how organizations will be affected by the changing industry dynamics.


  • Manual loan and mortgage application processes make the lending system slow and expensive.
  • Digitized loan applications reduce paperwork and manual errors involved in the process.
  • As digital banking grows worldwide, customers require reliable and seamless loan application and disbursal over multiple channels and devices.
  • Digitization of lending is likely to provide the most cost-effective solution for reducing increasing compliance costs due to enhanced regulations.
  • Enhanced adoption of digital channels, and inefficiencies in the traditional bank lending system have led to the launch of online lending platforms.
  • Financial institutions have encountered various challenges in digitizing the lending process. Lack of sophisticated software solutions, concerns over compatibility of new systems with legacy systems, costs of transformation, regulatory compliance, and management and budget restrictions have all deterred banks from digitizing the lending process.
  • With the increasing presence of alternative lenders, banks are investing in technology, forming alliances with emerging financial technology companies, and adopting new credit scoring methodologies.

Table of Content

1 Executive Summary

2 What is Driving Digitization in Lending?

2.1 Growing Need for Enhanced Customer Experience
2.2 The Quest for Operational Efficiency
2.3 Impact of Changing Competitive Landscape
2.3.1 Strategic initiatives by non-banks to gain traction
2.3.2 Banks’ answers to the impending challenge

3 Digital Transformation of Lending in Retail Banks
3.1 Front-End Digitization
3.1.1 Digitized loan application process
3.1.2 Loan servicing
3.2 Back-End Digitization
3.2.1 Application processing and verification
3.2.2 Automated underwriting and credit scoring
3.2.3 Loan closure and disbursal

4 Challenges in Digitization of Lending

5 Case Studies

5.1 Enhanced Efficiency with Paperless Loan Processing by US Bank
5.2 First Internet Bank – the Digital Platform of Lending
5.3 Bank Dhofar – Automation of Loan Origination Improved Efficiency
5.4 Zopa – a Pioneer in Peer to Peer Lending
5.5 HDFC Bank – Banking on Digitized Personal Loan Product

6 The Way Forward for Digitized Lending

7 Appendix
7.1 Methodology
7.2 Definitions
7.3 References
7.4 Contact Timetric
7.5 About Timetric
7.6 Timetric’s Services
7.7 Disclaimer

List of Table

Table 1: Comparative Analysis of Competitors
Table 2: Business Proposition of P2P Lending Companies
Table 3: Business Propositions of Non-Bank Financial Service Providers
Table 4: Initiatives of Digital-Only Banks
Table 5: Banks’ Responses to the Changing Competitive Environment
Table 6: Front-End Digitization Initiatives in Lending
Table 7: Back-End Digitization Initiatives in Lending by Banks
Table 8: Impact on Lending of Changing Regulations
Table 9: Definitions

List of Chart

Figure 1: Drivers of Digitization for Financial Service Providers, 2014
Figure 2: Regional Analysis of Top Three Drivers for Digitization, 2014
Figure 3: Drivers of Digitization Based on Size of Companies, 2014
Figure 4: Increased Productivity Due to Banking Process Automation, 2013
Figure 5: Customer’s Preferred Channels for Banking in the US
Figure 6: Average Transaction Costs of Various Delivery Channels in the US, 2012
Figure 7: Customer Confidence in Transaction through Different Organizations, 2014
Figure 8: Rise of P2P Lending in the US and the UK (US$ Million), 2012–2014
Figure 9: Non-Bank Lending by Country, 2013
Figure 10: Increasing Shares of Non-Banks in FHA Mortgage Lending in the US
Figure 11: Strategies of Non-Bank Lenders
Figure 12: Evolution of Digital Lending in Banks
Figure 13: How Banks are Digitizing their Processes, 2014
Figure 14: Front-End Digitization Initiatives by Financial Service Providers
Figure 15: Increasing Preference for Digital Channels by US Customers, 2014
Figure 16: Back-End Digitization Initiatives by Banks
Figure 17: Preferred Back-End Process Automation by Financial Solution Providers
Figure 18: Benefits of Incorporating Social Media Analytics in Underwriting
Figure 19: Issues in Digitization of Banking Processes, 2014
Figure 20: Regional Analysis of Key Challenges to Digitization, 2014
Figure 21: Fund Allocation for Digitization Across the World by 2016
Figure 22: Share of Digitization in the Overall Investment Budget by 2016

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