Traditional banking is no longer the only option customers can rely on when they need funds. In fact, after the pandemic, a lot of banks and financial institutions have started offering a full range of services online without the need for clients to visit physical branches. This opened up new opportunities for neobanks to emerge - digital banking systems that exist exclusively online and don't have to pay for renting spaces and hiring staff to keep the company going. This, in turn, resulted in lower interest rates and better customer service, which has become the main focus for many financial companies this year.
Right now, clients are expecting high-quality service 24/7, and that's where online lending can truly deliver. With the rise of Gen AI, more and more companies automate their operations while streamlining repetitive tasks. This relieves human customer service teams from a huge bulk of work and allows them to focus on dealing with other issues and improving their service even more. Chatbots and AI financial advisors are becoming increasingly popular, raising the bar for traditional banking systems to provide the same level of fast, customer-centric services.
Apart from Gen AI tools and automation, we're expecting to see more embedded finance options. Non-financial businesses are striving to provide more credit access during purchases, making it easier for clients to get loans hassle-free. Mobile lending is also becoming a thing, incorporating smartphones to speed up the loan application process. Mobile lending platforms allow clients to apply for loans quickly and easily while receiving funds using their smartphones only. Let’s delve deeper into some of the biggest digital lending trends that will shape the financial industry in 2025.
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1. Real-Time Lending
As we're moving towards more automation, reviewing loan applications becomes a much faster process compared to traditional banking systems which can take weeks to deliver the funds. Thanks to Gen AI, loan approvals are becoming almost immediate. People who need instant loans for unexpected spending or business opportunities now can get the funds on the same day or faster, depending on the borrower's credit history and the amount of money they want to borrow. To reap the benefits of digital lending systems, you can try LendUp or a variety of other companies like SoFi, Avant, LendingClub, Upstart, and others.
2. Hyper-Personalization
Right now, many companies are developing strategies aiming to make hyper-personalized offers to their clients based on their financial history and spending patterns. This approach involves ditching generic loan products that may seem too vague to the majority of customers and creating services that fit their exact needs and preferences. Furthermore, lenders use machine learning and go through huge amounts of data to offer personalized loans with customizable features to provide high-quality banking services that cater to different groups of customers.
3. Embedded Finances
Now, the majority of non-financial platforms are working on providing lending options without leaving their website. We're talking about healthcare apps, shopping sites, and even software services making it easier for customers to get loans fast and easy. This trend is growing so quickly that by the end of 2027, companies are expected to get the majority of clients via embedded lending, leaving direct loan applications far behind. With loans becoming more and more accessible, financial businesses need to develop strong embedded lending strategies to keep up with the growing customer demand.
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4. Open Banking
One of the biggest setbacks of traditional lending is the time it takes banks to review applications and deliver the funds. Open banking allows businesses to get quick access to the financial information of their clients to make data-based decisions much faster. As a result, lenders can have a better grip on the borrowers' financial situation, their assets and income, and assess the risk much better. Open banking frameworks are becoming more and more popular and are expected to connect lending with payment services, insurance, and investment in the future. We're moving toward all-in-one financial solutions tailored to the specific needs of a given customer.
5. AI and Loan Underwriting
Artificial Intelligence tools are boosting the services provided by financial institutions as we speak. Now, business owners can use alternative credit scoring methods that give them a bigger picture of the customer's personal financial behavior and spending patterns. AI systems can analyze cash flow and income to predict repayments and be more inclusive of the borrowers with a good financial base that could have been overlooked before. We're expecting AI loan underwriting to continue developing, making more detailed assessments based on the borrower's behavior. In the future, these AI tools might be able to monitor the client's financial activity and offer them better deals and conditions in real time.
Conclusion
The financial landscape is changing rapidly due to a growing demand for tailored services that can be available 24/7. Digital lending is currently on the rise, providing high-quality customer support that can be accessed at any time of the day. Financial businesses are focusing on automating their operations using AI tools and chatbots to streamline their workflow and reduce loan application review time. Artificial Intelligence and open banking systems allow companies to analyze the financial behavior of their clients and offer them products that are tailored to their needs. Non-financial platforms are currently looking for embedded finance solutions to give their customers even more options without leaving the website.
