December 19th, 2024
Driven by technological advancements in the past year, the digital lending landscape is set to evolve rapidly in 2025 and beyond. Changing client and consumer behaviour and shifting regulatory landscapes are set to change how lenders operate, how clients access capital, and how the wider industry adapts to new technology and opportunities.
Here are five key trends we believe will shape digital lending platforms:
AI-powered underwriting and personalised alternative financing products
Many players focus on providing customisable alternative financing products to suit specific customer segments. Utilising AI, digital lending platforms have gained access to the level of data needed for assessing credit risks and tailoring lending decisions. AI boosts the processing power over that of traditional models, resulting in more accurate risk assessment and even the ability for greater personalisation and tailoring for alternative financing products on an individual case-by-case basis. With AI, digital lending platforms can expect to have a faster return on decision-making, speeding up processing and ultimately providing businesses with quicker access to credit as needed.
Embedded finance and seamless lending experiences.
Embedded finance brings integration across the supply chain, giving more seamless access to alternative financing and a smoother experience overall. Where in previous years this was just starting to integrate, businesses and lenders alike have realised the value and convenience of having access to alternative financing within the platforms they already use. The user experience is key, and giving easier access just makes it more likely consumers and business owners alike will be able to get started with the digital lending process.
Fraud prevention to enhance cybersecurity
Already top priorities for digital lending and finance, the challenges of fraud prevention and cybersecurity will only continue to escalate as cyberattacks become more prevalent and sophisticated. Given the value of not just financial transactions but also the data involved, enhanced security measures to protect against fraudsters are sure to see rapid developments over the next few years. AI and machine learning are in a better position to boost security measures, easily identifying fraudulent patterns as they occur in real-time and preventing unauthorised access with support from encryption and multi-factor authentication.
Further improvements to financial inclusion and responsible lending.
Globally, more countries have understood the potential of accessible credit and the need for ethical lending practices for each stage of the supply chain. However, responsible lending practices are not always a given, and so setting the example for more responsible practices is key. This is especially important as financial inclusion improves; in creating digital lending services that are accessible to more people, or those currently excluded from traditional banking systems, responsible lending and regulation are needed to ensure smoother, trustworthy operations. In the coming years, digital lending platforms will need to ensure they remain secure while remaining inclusive, either through improving security, transactional transparency, or interest rate regulations.
Greater emphasis on ESG impact and compliance
As business sustainability initiatives begin to come into proper effect, ways to track ESG impacts across the supply chain will become more necessary to enforce compliance and keep on track with their own goals. Digital lending platforms that embrace sustainability with strong governance will have greater ability to not just foster positive environmental and social impact but also position themselves for longer-term financial success. As ESG continues to become an integral part of business models and strategy, product offerings, and most importantly, supply chain risk management, those platforms that prioritise its visibility and go further in aiding their business clients with their own green initiatives will see greater profitability in the coming years.
As a leading expert in the digital lending landscape, Zvilo keeps up to date on upcoming sector trends and technologies driving rapid business transformation. Over the next five years, we see these trends redefining credit access and management, and hope to continue to create new opportunities for lender and borrower partners.