Banks Digitizing Credit Lending Reduce Settlement Time by 80%

Banks using technology that helps digitize the lending process have reported 80% reduction in settlement time and a 50% gain in cost savings and streamlined operations, according to Software Group.

"The bank credit market in Romania has slowly recovered from the problems caused by the pandemic, thanks to greater flexibility towards customers and investment support programs that have boosted this field. Banks play a very important role in supporting economic activity and facilitating the structural changes triggered by the pandemic, but they, in turn, need to maintain their profitability and growth. However, especially in the case of loans for SMEs and businesses, lending decisions remain a lengthy process, as most of the information is collected manually and evaluated over several weeks, sometimes even months” the company reports.

For banks that cover higher credit impairment costs elsewhere, these low processing costs are a valuable contribution to profitability.

This detailed data also allows banks to manage their global loan portfolio in a more complex way, with a deeper understanding of their concentration and exposure, plus the ability to segment data for more efficient analysis. Thus, the banking industry has new opportunities to attract viable customers for lending.

"This trend can turn into a real opportunity for banks, both to streamline the flow of information and analysis, and to strengthen the relationship with their customers," said George Robev, Software Group's Europe and Central Asia business development director.

According to him, the pandemic context has accelerated the need for a more digitalized relationship between banks and customers, including in the corporate area. 

"Shareholders need an increase in the number of loans from banks in order to restore the level of return on their shares, and the economy needs the same for a post-Covid return. Because, although trends suggest that many banks would have taken refuge by increasing the number of government securities held, in order to reduce risks and achieve better returns, this type of product usually ensures lower profits than private sector lending.

Moreover, the current or capital expenditures of the government cannot lead to the growth of the GDP nor to the economic recovery if the private sector suffers from the lack of financing through loans ”, according to the Software Group company.