Integrating Digital Loans into a Comprehensive Digital Banking Strategy

Yudistira Ardhi Prastono, Chief Digital Business Officer, PT Bank MNC Internasional Tbk, In a conversation with Asia Business Outlook, shared his views and thoughts on how banks can leverage technology to enhance customer experience in digital loan applications. He has more than 19 years of experience in Business & Product Development, Strategic partnerships, and a demonstrated history of working in the banking industry. Yudistira is also skilled in Digital Banking, Open Banking, Embedded Finance, Bank as a Service (BaaS), Mobile Banking & eChannel, Digital Payments, Credit Card, Management, Business Development, Digital Marketing Communication, Data Analytics, and Digital Operation.

Digital loans have transformed the lending landscape by streamlining the application process. How can banks leverage technology to enhance customer experience in digital loan applications?

Nowdays, customers prefer real-time, personalized, and tailored product-services which address to their convenience needs. Furthermore, the invasion of non-banking companies that utilize technological advances with an agile business model and less regulatory process has changed banks' old business models. In context of all these advancements, banks preserve a competitive edge because banking is driven by trustworthiness. Banks have an obvious edge over non-banking companies in terms of obtaining customer trust.

Banks have to reconsider their operational business approach. Especially in the conventional loan authorization experience, which relies on old fashioned methods and complicated procedures.Lending system compatibility on web application or a mobile application is needed, considering the rapidly evolving demands of customer in today's dynamic era. The adoption of digital capabilities are expected to do more than just provide the simple process, offer better insights and control over the loan proceedings, but also pivot the bank to offer differentiated value propositions and strengthen their customer trust.

How can banks effectively integrate digital loan systems with their legacy infrastructure, considering the challenges of compatibility and the need for potential technology upgrades?

By integrating digital loan systems in business process, banks might not just increase their operational efficiency yet enhance their customer experience. The integration will come out in more effective loan processing and better service delivery.

For integrating digital loans, banks should consider the following aspects:

Mobile App Optimization: Ensuring the loan applications are properly optimized for mobile devices, allowing consumers to apply on the go using their smartphone's banking application. This includes simple navigation, form completion, and document uploading from mobile devices. User-Friendly Interfaces: provide the intuitive and responsive applications that guide customers through the loan application process smoothly. Clear instructions and a simple layout could minimize their confusion. Cross Selling and seamless Integration with other services: Connect digital loan applications with other banking services in order to fulfill customer needs in financial services to provide a more holistic experience. Enhanced Security Measures: Prioritize secure IT infrastructure to safeguard customer data and ensure business resilience. Implement biometric authentication and multi-factor authentication to ensure customers feel safe when submitting their confidential information.

How can banks enhance their security measures, such as identity verification and transaction monitoring, to mitigate the risks of fraud and cyber threats associated with the digital nature of loans?

To avoid and reduce that kind of threads as well as related risks, Banks have to implement a robust security measures as follow:

Multi Factor – Authentication (MFA) Providing Multi-Factor Authentication (MFA) enhances bank data security by mandating users to provide multiple verification methods before gaining access to their accounts. Encyption Encrypting sensitive data in transit and at rest protects it from unauthorized access. Robust encryption algorithms ensure that even if data is intercepted, it remains unreadable to unauthorized parties. Monitoring Bank should utilize robust monitoring systems to identify and address cyber threats promptly in real time. Automated alerts can help identify suspicious activities and mitigate potential breaches before they escalate. Cyber security Audit Security audits and penetration testing are conducted on frequently to assist identify weaknesses in banking IT systems. Addressing these weaknesses improves the bank's overall cybersecurity stance.

How can we create a user-friendly interface for applying and managing digital loans to ensure a smooth and intuitive experience, preventing potential borrowers from being deterred by complicated processes?

The loan process is naturally complex and resource-intensive. Whether in retail or commercial lending, each customer's situation is unique and requires its own set documents to demonstrate their creditworthiness. As a result, traditional loan application and assessment are bottlenecks in the digital experience. Banks have to streamline complicated paper-based processes to simplify and accelerate complex loan operations. This requires a platform-driven strategy that integrates five automation capabilities to provide an end-to-end digital consumer experience:

• Achieve strategic agility to unlock simplicity and innovate with new business models.
• Automate digital banking journeys, such as onboarding, loan origination, and customer service, to deliver great customer experience.
• Streamline the flow of information across front, middle, and back office
• Integrate internally as well as externally to create a connected banking ecosystem for customers, employees, and partners.
• Achieve strategic agility to unlock simplicity and innovate with new business models.

How can banks ensure that their technology infrastructure is scalable to meet the growing demand for digital loans and handle increased volumes in the future?

Banks could utilize the Bank as a Service (BAAS) concept which integrates the IT infrastructure owned by the Bank with other parties.BAAS represents a remarkable technological advancement, allowing non-bank companies to offer financial services to the customers without build an entire banking infrastructure from scratch.

This concept emerged due to the growing demand for accessible and innovative financial solutions. Through this approach, a non-bank companies, such as fintech startups and e-commerce, gain access to essential banking function like digital payments, loan application, and account services.This model empowers businesses to offer tailored customer experiences by choosing specific banking services to integrate into their platforms. On the other side, BAAS promotes financial inclusion by enabling easier access to financial services for underserved populations.