Why Modernisation, Not Just Digitalisation, Is Driving the Next Wave of Consumer Lending

Over the months the articles that I have come across start with a leading sentence: “Transformation is here to stay.” And the banking industry has not been immune like any other industry, though some have been slower to transform and adapt than others. But all have been in that same orbit of change. And the race for transformation is not just about going digital but modernise.

Today’s consumers have been quick like a flash to adapt and adopt digital technologies in their everyday lives, which means businesses across every industry need to keep pace. The COVID-19 pandemic also became a factor to accelerate this trend. It became the new norm to work with more agility and flexibility as work and life grew increasingly remote and dispersed. Simply put; to keep business moving, companies must adopt modernisation nurturing from transformation and innovation.

Now what this entire story leads to for consumer lending? It’s time to simplify the loan servicing process and provide the experiences customers now expect. Let’s explore how all types of lenders, from auto to home to student to personal lending, can make the shift to modernised consumer lending.

What Do You Mean by Consumer Lending?

We all are Humans, and we all have our specific needs and wants from life. To meet those needs or wants, we sometimes need a financial push. And that push is given by Consumer loans.

For example, I am an employee, and I need finance to buy a new air-conditioner or a new refrigerator or to go on a vacation to Maldives. To turn this need into a reality, I would need a consumer loan provided by my bank or another financial institution.

Long tale short. Consumer lending deals with the financing of personal loans. It refers to loan services primarily meant for the personal needs of individuals. These loans are long-term or short-term in nature and unlike business lending it does not require collateral.

The Categorisation of Consumer Loans into 2 Groups:

The shift: From going in person to using digital tools

From time iception, getting a consumer loan meant visiting a bank branch and talking to a loan officer.

You’d discuss your needs and gather the necessary financial documents. The process was mostly done manually on papers and was time intensive. In recent years, there is a shift, more people have started using digital first options for their loans. Here are the benefits of moving to modern consumer lending:

• Better customer experience: Digital tools offer easy, convenient access to loans anytime, anywhere with real-time updates, flexible repayment options, and personalised support, leading to greater customer satisfaction and loyalty.
• Faster loan processing and approvals: End-to-End Agnostic lending platforms help speed up the loan process, moving from days to minutes.This speed builds trust and helps lenders stay competitive.
• More efficient operations: Adopting agile platforms with configurable loan management system reduces manual tasks, paperwork, and delays, helping institutions save up to 60% in man-hours, allowing staff to focus on more important work.
• Scalable and flexible solutions: Modern systems can adapt to new products and customer demands without replacing old systems. This allowsninstitutions to grow and offer customised services.
• Better risk management and compliance: Digital tools help comply with regulations and manage risks automatically, making it easier to stay within legal boundaries.
• 24/7 service availability: Digital platforms offer support at any time, even outside regular business hours, which improves convenience and customer trust.
• Configurable origination and servicing policies: Flexible policy frameworks enable lenders to launch new products quickly, adapt servicing models, and respond faster to changing customer and market needs.
• Higher conversion rates and customer retention: A smoother and faster loan process makes it more likely customers will stick with a lender, building long-term relationships.
• Competitive advantage: Offering modern, customer-focused services helps institutions stand out in the market, making them more relevant and credible.

How banks and financial institutions should prepare?

We are moving from a state of low demand and low supply to a situation with growing demand while the supply side struggles to keep up.

Today banks and financial institutions of all sizes face challenges from changing consumer behavior and the need to offer the right products and experiences.

To meet this new demand and reach new customers, banks must leverage data and technology in their loan processes.

Here’s what they should do:

• Understand and adapt to new consumer behavior: Banks, NBFCs and other financial institutions should use modern lending platforms and tech like AI to better understand customers’ situations and needs. Initiatives like video-based service and AI agents can help build trust and stronger relationships.
• Adopt AI-Driven Underwriting: AI Agents can support underwriters by analysing customer data, highlighting risk flags, and generating predictive scores. This ensures stronger credit underwriting, helping institutions build high-quality, manageable portfolios.
• Cross-Sell Opportunities: Consumer lending opens doors for additional products such as insurance, extended warranties, credit cards, or wallet protection. By collaborating with insurers, fintechs, and ecosystem partners, banks and NBFCs can cross-sell effectively. Digital channels and loan management systems should be agnostic to manage such transactions. With AI Agents, lenders can personalise these offers, creating new revenue streams.
• Digital-First Compliance & Integration: Digital channels and Loan Management Systems for consumer loans should seamlessly integrate with service providers for e-KYC, AML checks, and e-Signing. This not only increases efficiency and reduces TAT but also ensures compliance with regulatory requirements such as KYC norms, CIC reporting, and audit trails.
• Provide products that match changing consumer needs: Banks must be flexible and create products that can adapt to evolving customer needs without major changes in operations.

The Solution: Platform-Agnostic, Low-Code / No-Code / Pro-Code Lending Models

In today’s fast-paced digital lending environment, banks and financial institutions must be equipped with the agility to quickly adapt to shifting customer expectations. Whether it’s launching new loan products, expanding into new channels, or delivering personalised experiences, staying responsive requires a technology foundation that is as flexible as the market itself.

A platform-agnostic, low-code/no-code/pro-code approach offers the ideal lending model to meet these challenges. By decoupling the technology from underlying infrastructure and enabling rapid development, banks can build, test, and deploy solutions that respond to customer needs in real time without being locked into rigid systems.

Such platforms empower banks to transform how they manage data, enabling seamless data exchange, faster analytics, and actionable insights for customers and sales teams alike. With built-in AI, machine learning, and advanced analytics, enterprises can not only enhance operational efficiency but also offer enriched, omnichannel customer experiences while proactively managing fraud risks.

Leading banks and financial institutions are already leveraging comprehensive, modular platforms that support multiple development modes allowing teams to build simple workflows with no-code tools, design complex business logic using low-code interfaces, or extend functionalities with pro-code customisation where needed.

This approach helps reduce costs, streamline operations, and improve engagement across touchpoints ultimately driving growth and customer satisfaction.

Looking ahead:

The consumer lending sector will continue to evolve as lenders adopt cloud, AI, data, and analytics for better outcomes. By combining AI-driven underwriting, a customer-first service model, and personalised cross-sell strategies, lenders can build quality portfolios, enhance customer experiences, and drive sustainable growth.

To know more, talk to an expert at Pennant Technologies.