India’s third-largest lender Bank of Baroda is set to completely digitize it’s lending operations including home, agriculture, MSME, personal, and auto loans. The bank which is looking to completely do away with paper-based lending has reached out to the big four and some white shoe consultants like McKinsey and Boston Consulting Group to help set up a “digital lending department”.
The validation and disbursal of fresh loans will happen via this digital platform while past loans will also be digitized to cut costs and improve profitability. The bank is planning to digitize a large proportion of its retail and MSME processes in the next six months.
“Yes, the bank has set up a new vertical at the corporate office – the Digital Lending Department which will have substantial overlap with various credit verticals – Retail, MSME, Agri as well as service verticals like Analytics center, Risk Management, Marketing,” said Akhil Handa, Head – Fintech, Partnerships, and Mobile Banking, Bank of Baroda. “The branch led journeys, of course, would need manual intervention. Ultimately we have to offer the choice to the customers how they would like to engage with us.”
As per an 18-month action plan laid out by the bank, it’s aiming to set-up and operationalize the digital lending department within two months. A later leg of the plan includes consolidating the bank’s ongoing digital initiatives within this new set up. After which the department will be integrated across the bank’s systems.
While the digital interface has been in the works, people in the know said that the spread of the pandemic and it’s fallout has hastened the process.
“COVID has thrown up the need for a fully digital interface where loan validation, pre-approvals, disbursals all happen digitally, this will take a few months to implement but once active it would help the bank substantially scale up its lending operations,” an official in the know said on the condition of anonymity.
