Lending systems have long been commonplace in the financing industry, where lenders have spent years moving hard-copy documentation and underwriting practices to proprietary legacy software. However, as technology has evolved, conventional software is becoming obsolete, less efficient, and generally ineffective relative to recent innovation. Financial institutions are now considering cloud lending systems to make up ground and meet increasing customer demand for enhanced digital services.

This article discusses the advantages of cloud lending and why financial institutions should consider their implementation in place of maintaining on-premises, legacy systems.

What is Cloud Lending?

Cloud lending is a digital platform that enables financial institutions to expedite the financing process and streamline the borrower experience via automation and configuration. Lenders can increase installment loan application volume at the point-of-sale (POS) and decrease operating inefficiencies.

Top Five Cloud Lending Benefits

The advantages of cloud lending for financial institutions are relatively straightforward. These systems boost productivity, provide remote capabilities, and promote internal and external collaboration. It is one of the most significant advancements in the fintech sector to date and is quickly becoming a crucial component of any lender's financing arsenal.

More specifically, five of the most crucial benefits are as follows:

1. Streamlined Authentication and Verification Process

Cloud-based lending systems are more agile than their conventional predecessors. Rolling out upgrades is quick and requires minimal downtime, which is vital in systems that employ artificial intelligence and machine learning to boost the efficiency of the underwriting process.

More specifically, financial institutions can use cloud lending tools to:

• Automate the entire approval process
• Check the applicant's documentation against multiple data sources, reducing the risk of non-performance
• Verify that the financial institution is meeting minimum document criteria

Whether partial or total, underwriting automation frees up many resources for lenders, decreases manual errors, and minimizes operational expenses. It allows banks to grab a substantial market share and establish a considerable presence in a competitive industry.

Here are some automated underwriting features that a loan origination software can provide:

• Identifying and expediting approval of low-risk instances
• Reducing underwriting time
• Generating error-free workflows

2. Ability to Scale as the Business Grows

As already mentioned, legacy lending systems cannot keep pace with modern, dynamic developments in the tech industry. A surge in loan demand, for example, might easily cause an older system to crash, rendering it unreachable to the consumers it was currently serving.

An expanding market necessitates software that quickly expands to meet its demands. As regulatory bodies require, it should also safeguard data against breaches by employing up-to-date compliance rules and practices.

Cloud lending capabilities are accessible to lenders of all sizes, covering a variety of markets – including buy now, pay later (BNPL) – with minimal downtime. Cloud-based solutions can make rolling out new product categories easier by allowing for faster deployment of modules.

3. Safer, Faster Document Management

Cloud lending systems store documents remotely and securely in an encrypted centralized server system. They do not save information on the lender's hard drive. Data and documents can be shared and modified in real-time with other authorized users on the network. As a result, both internal employees and borrowers benefit from faster service.

4. Controlled User Access

That secured server system also minimizes the risk of unauthorized access to a lender's on-premises server and theft of confidential borrower information.

Lenders planning to move to cloud lending should look for the following features while selecting their provider:

•  Cyber-threat prevention protocols
• Privacy
• Management of identity and access
• Capabilities in application development
• Operational security
• Cyber-threat resiliency
• Observance of regulations

Because of the high level of transparency, both borrowers and lenders can track cases in real-time and from any location. They can also access crucial information regardless of location, so they do not have to be on the same network to access data.

5. Reduced Turnaround Time

Automation at various approval stages, such as faster verification and underwriting using machine-learning-based predictive models, reduces turnaround time and enables lenders to process more applications quickly and accurately. An expedited process means additional improved income, a more extensive borrower base, and a broader market reach.

Let Skeps Lead Your Cloud Lending Initiative

The financing market is competitive, and fintech companies are ramping up their cloud lending services. Financial institutions must take the next step in digital lending solutions to keep pace and provide end-users with the lending solutions they now expect in a tech-heavy environment.

These steps include moving away from legacy systems and finding a cloud lending partner who can assist you in tailoring a platform that meets borrower needs throughout the financing process.