Consumer lending is entering a new era of digitization, making the transition from electronically replicating paper-based processes to re-designing experiences end-to-end in order to take full advantage of digital opportunities. Subscribe to The Financial Brand via email for FREE!Digital lending is far from a new idea. Online lenders emerged in the 1990s, virtually as soon as the consumer Internet. The first eMortgage was registered in 2004. There have been numerous waves of digital innovation within the industry, both customer-facing and internal: PDF documentation, paperless underwriting workflows, and borrower portals.

Internal lending processes must be transformed to eliminate friction and unneeded steps, with advanced analytics supporting proactive loan decisions. The biggest opportunity in the marketplace is the ability to continuously evaluate a customer's credit worthiness and need based on artificial intelligence (AI), including a pre-approval loan amount on the front screen of the online and mobile banking app and in alerts. The transformation must look at all current processes, refining what was done to better accommodate a digital consumer, using data, advanced analytics and artificial intelligence to eliminate steps and improve the process. The future of digital lending will reduce the friction associated with the borrowing process, eliminating paper and moving all of the steps of the customer journey to an online and mobile capability.

To be a digital lender, banks and credit unions must do more than provide a digital app. Internal lending processes must be transformed to eliminate friction and unneeded steps, with artificial intelligence (AI) supporting proactive loan decisions. A great deal of discussion has surrounded the importance of building a seamless digital account opening process. As found in the Digital Banking Report, Digital Account Opening and Onboarding, progress is beginning to be made, as more organizations are allowing consumers to open new checking accounts online and on a mobile device. With the exception of a very few progressive banks and forward-thinking fintech firms, however, not nearly as much progress has been made in digital lending.