The onset of Covid-19 pushed the mortgage industry into a new digital age where automated underwriting and appraisals are the new craze. Digital lending platforms became highly popular, especially among micro, small, and medium enterprises. The demand drove digital lending market growth to new levels.
The global digital lending platform market size was valued at $5.58 billion in 2019 and is projected to reach $20.31 billion by 2027, growing at a Compound Annual Growth Rate (CAGR) of 16.7% from 2020 to 2027.
Technology advancements, such as AI integration in digital lending platforms and an increase in cloud-based platforms usage will likely allow significant opportunities in digital lending platforms to flourish.
The primary driver for growth in the digital lending market is government backing for digital lending platforms and the implementation of tight regulations to ensure smooth operational flow.
Digital lending provides banks smooth monitoring and increased profitability. It also makes the borrowing process simpler for clients and provides them transparency and significant time savings. The automation behind digital lending allows lenders and borrowers to supply funding solutions with greater precision, increasing the likelihood of successful loan approval. All these advantages are expected to bring continued growth to the digital lending market.
Digital lending also uses Analytics to aid in customer onboarding efficiency and speed as well as improve the overall customer experience. Professionals can reach out to the right customers and secure customer acquisition with lending analytics. Lenders can keep their most profitable customers by enhancing the loan life-cycle value.
Essentially, digital lending replaces human judgement with decision rules to ensure the process is consistent. The applicant is analyzed based on acceptable risk limits and best loan conditions made available to the customer.
The loan origination segment in digital lending is expected to be the most lucrative, due to the necessity of loan process automation – including loan collecting, processing, and evaluation – the origination segment is likely to grow a considerable share.
Various FinTech firms have increased their investment in this solution to minimize certain risks such as credit and fraud risk, operational risks, and compliance risks. The risk and compliance management is expected to grow at the fastest rate during the forecast period.
Major players in the digital lending industry include Black Knight, Inc, Ellie Mae, Inc. (Acquired By Intercontinental Exchange, Inc.), Finastra, Fis, Fiserv, Inc, Intellect Design Arena Ltd, Nucleus Software Exports Ltd, Tavant, Temenos, Wipro Limited, and others.
