Top Digital Lending Trends To Watch Out For In 2024

As a digital lender, you may be interested to know that the global demand for digital lending platforms is predicted to increase at a CAGR of 17.6% by 2034. But it’s more than just lending platforms as now, the demands and preferences of customers are evolving. Thus, scaling up your services by implementing new technologies can help you gain a competitive advantage and satisfy your customers.

Due to changing market conditions, you may ponder the question on how you can achieve all that. Look no further as this blog will cover some of the latest digital lending trends of 2024 you can look out for and implement in your lending services.

Latest Advancements in Digital Lending 2024 

Here are some of the latest digital lending advancements to look out for in 2024:

Personalization at Scale

Borrowers today have unique needs and preferences, which is why digital lenders leverage advanced technologies to help fulfill their expectations. For example, lenders can use customer data and behavioral insights to provide tailored services such as customization of loan terms, interest rates, and repayment schedules. With more flexibility and personalized services, customers can be more satisfied, improving loyalty and overall lending landscape on a broader perspective. 

Embedded Finance – Integration of lending services into non-financial platforms

Due to rising demand for personal and convenient banking services without customers having to be redirected to third-party financial institutions, Embedded finance rises as one of the top fintech trends of 2024. It refers to the integration of financial services into non-financial platforms, enabling customers to access financial products without leaving their preferred platforms. For example, a retail platform could integrate lending services into their shopping app, allowing customers to apply for loans directly through the app.

The global embedded finance market is expected to grow annually by a whopping 35.5% between 2023 and 2028 and as it continues to evolve, it could reshape the lending landscape by enhancing overall customer loyalty and opening up new monetization opportunities for businesses. 

Open Banking and API Integration

Open Banking refers to a system where financial service providers can securely access financial data of customers from other banks or financial institutions through the use of APIs (Application Programming Interfaces). API Integration, on the other hand, integrates various software applications to ensure they work well together. Through open banking, digital lenders have the opportunity to offer personalized and data-driven services which can lead to quicker credit assessments, improved risk management, and open up more tailored loan offers. 

API Integration allows lenders to offer embedded finance solutions that can be integrated with a wide range of services, such as e-commerce and real estate. Together, open banking and API Integration provide customers with varied options to manage their money and more control over their financial data with enhanced security and data privacy. 

Expansion of ESG Lending

Environmental, Social, and Governance (ESG) factors are becoming increasingly important in lending due to the growing concerns over environmental and ethical issues within financial institutions. According to the World Economic Forum, most customers, especially Gen Zers, show more preference to purchase from organizations that stand up for environmental and social issues.

In the lending landscape, investing in ESG-friendly technology, offering sustainability-linked loans, and being more transparent about environmental and social efforts can help lenders gain a competitive advantage in the market. With more businesses developing strong ESG practices, this is expected to be a trend for years to come. 

Technological Advancements in Digital Lending 2024

As technology continues to evolve, the scope for innovation has risen in the banking sector where lenders and other financial institutions leverage various technologies to streamline loan application processes and satisfy their customers. Here are some of the latest technological trends in digital lending that can be seen in 2024:

Automation & No-Code Configuration

Thanks to automation and no-code configuration, developing custom lending solutions has become easier as lenders can adapt to changing markets, launch new lending products, and optimize lending workflows without extensive IT support. Lending professionals now have the opportunity to offer tailored services to customers and speed up application assessment and underwriting processes with minimal downtime. For example, automation and no-code can help banks create and run dashboards that are highly functional, visually appealing, and personalized for every user, maximizing customer satisfaction and loyalty.

Together, automation and no-code configuration have the power to drive innovation, reduce costs, and create more flexible lending solutions that will help boost customer satisfaction and retention. 

AI-powered Lending Platforms

Artificial intelligence is making waves in the digital lending market and its integration into lending platforms has been able to streamline almost every aspect of the lending process, from customer acquisition, to credit scoring, risk assessment, and fraud detection. The global market size for AI-powered lending platforms in 2024 is estimated at $107.68 billion, which is expected to cross $1.64 trillion by the end of 2036, indicating the rapid adoption of AI-powered lending platforms. 

Through these AI-driven platforms, lenders can target the right customers and enhance their experiences by providing holistic lending decisions swiftly. Additionally, AI can also help detect and prevent frauds in the loan origination process, protecting the lender from potential losses.

Evolving eKYC Processes

Most customers do not wish to wait in long queues for loan applications. Which is why eKYC processes eliminate the need for filling lengthy forms and submitting various copies of physical documents to the bank. A recent statistic has shown that the global eKYC market is expected to reach a valuation of $2445.65 million by 2030, making it a game-changer in the digital lending landscape.

Below are some of the eKYC trends that are expected to revolutionize digital lending processes that can enhance customer onboarding experiences:

• AI and Automation: AI and automation are expected to remove all obstacles associated with manual KYC processes, speeding up and simplifying verification processes such as data extraction, risk assessment, and document verification.
• OTP-based verification: OTP verifications are considered to be a more secure and trusted method that protects customers from data breaches and ensures verification is done online instantly. eKYC authentication is done to ensure customer verification meets industry standards. 
• Real-time eKYC verification and monitoring: Manual KYC processes can be time-consuming and frustrating when done one-by-one in a physical location. Modern eKYC providers offer an API solution that allows lenders to conduct real-time verification with an OTP. This method reduces the chances of frauds.

Here are some of the latest digital lending advancements to look out for in 2024: Digital  lending trends are not restricted to only the ones that have been mentioned above as more technological advancements are on the way to help streamline the loan application process and ensure safe and secure banking experiences for customers. If you’re looking to lead the race in efficient lending, look no further as CloudBankin’s Loan Origination System and Loan Management System can be integrated with your platform to manage the loan application, approval, and disbursement processes.