15 Latest Statistical Insights in Cloud-Based Lending in 2024
Bob Schulte
Mar 4, 2024
12 mins read
Imagine a bank without walls, accessible from your phone, and built not on granite but data. This is the reality of cloud-based loan and lending platforms, a financial revolution soaring through this digital era. It’s a realm where loans are approved in minutes, not months, and creditworthiness is assessed with AI, not dusty credit reports.
In essence, cloud-based lending transcends traditional banking models’ limitations, offering a virtual space where transactions are conducted seamlessly, devoid of the physical constraints of brick-and-mortar institutions. This metamorphosis empowers financial institutions and democratizes access to capital for a diverse spectrum of individuals and businesses.
The cloud-based lending industry is reaching unprecedented heights and will soar as the digital landscape progresses.
But why take our word for it, right? Here, take a word from LTIMindtree, a subsidiary of Larsen and Toubro, who determined, after thorough research, that tier-1 banks like Wells Fargo, Bank of America, and JP Morgan spend more than $300 million annually on maintenance of their legacy lending applications. Now, here’s the catch: they can save up to 75% of this IT expense if they incorporate cloud software and transfer their data and applications to the cloud [Source]. Huge, right?
That’s not all, though. In this blog, we will discover 15 such staggering statistics that will give us a glimpse into the future of the cloud-based loan and lending industry. Intrigued? Let’s begin!
The financial terrain is experiencing a significant transformation driven by the rapid ascent of cloud-based lending. To help you gauge the urgency of switching to a cloud-based lending platform, here are the key statistics:
Software titans flex their muscles in the loan management software space as they should. Not only are these Fintech giants paving the way for hassle-free loans for consumers, but they also offer cloud hosting for lenders to track their loans from anywhere in the world.
Leading the way in cloud-based loan and lending software are:
About: Encompass by ICE Mortgage Technology provides end-to-end digital mortgage solutions. The platform primarily focuses on mortgage lending, offering origination, servicing, and default management solutions.
Founded: 1997
Acquired by ICE Mortgage Technology: 2020
About: BankPoint is another major contender that creates intuitive cloud-based lending systems to facilitate a range of loan servicing and managing features. It offers features like loan pipeline management, CRM capabilities, loan portfolio management, credit administration, and more.
Founded: 1999
About: BytSoftware specializes in developing loan origination software (LOS) designed to streamline and automate various aspects of the mortgage lending process. The software primarily delivers cloud-based lending solutions to mortgage bankers, credit unions, banks, and brokers.
Founded: 1985
About: Finastra is a financial technology company that provides various software solutions and services for the financial services industry, including flexible cloud lending solutions. Finastra offers commercial lending, consumer lending, mortgage lending, corporate lending, collateral management, and loan origination solutions.
Founded: 2017
About: Temenos offers the broadest range of end-to-end lending solutions. The company has been at the forefront of advocating for and providing cloud-native banking solutions. This approach allows financial institutions to leverage the scalability, flexibility, and cost-effectiveness of cloud computing.
Founded: 1993
As cloud-based lending solutions continue to travel across borders, specific market segments have taken this technology a step further with their software intelligence. Given below are the regions that dominate the loan management software market:
Regions Fuelling the Growth of the Market
Taking a step back from the specificity of cloud-based loan solutions, let’s look at the popularity of cloud adoption across industries and organizations. Cloud-based applications not only simplify accessibility but also allow flexibility in scaling and speeding up productivity. Here are some statistics to support the notion:
Currently, 90% of organizations use cloud computing out of the total surveyed. In this:
| Public Cloud Infrastructure Adoption | Two-third of the organizations |
| Private Cloud Infrastructure Adoption | 45% |
| Traditionally Managed On-premise Systems | 55% |
Out of the total surveyed, organizations planning to move:
| Half of their applications to the cloud within a year | 48% |
| All of their application to the cloud | 20% |
Their strategy:
| Pursuing Cloud-first Strategy | 47% |
| Pursuing Cloud-native Strategy | 30% |
| Intending to be Cloud-native in the Coming Years | 37% |
[Source]
Concerns about Cloud Security:
Financial Impacts:
Data Breaches:
Challenges in Cloud Technology:
Security Threats:
Application Security:
In recent years, the integration of cloud technology with process automation has significantly transformed the landscape of lending operations. As financial institutions continue to embrace digital innovation, leveraging cloud-based solutions for lending activities has become increasingly prevalent. Here are some statistics that tip the scales in its favor:
[Source]
Cloud-based lending has revolutionized the financial industry, enabling more agile, efficient, and innovative lending processes. The latest trends in this domain reflect the continuous advancement of technology and its influence on the lending environment. Check the eight latest trends that will further amplify its importance:
Open Banking will continue its popularity, enabling software developers to collaborate and create innovative fintech solutions. Banks and financial institutions will continue to share their data through APIs with third parties, and we can see major strides in wealth management, investment opportunities, and insurance options.
| In a Nutshell What is Open Banking?When one financial institution opens its data source and shares the data with other financial institutions or third-parties to create innovative banking solutions, that is, in essence, open banking. Example: Your bank securely shares your financial data (after your consent, duh!) with other trusted apps, letting you compare loan options instantly and even negotiate terms in real-time. |
Automation will continue to take center stage, with financial institutions relying heavily on end-to-end process automation. This potent trend is turbocharging cloud-based lending software and revolutionizing the loan journey.
We can expect heavy integration of Robotic Process Automation with various lending tasks designed to accelerate consumers’ loan journeys and help institutions enhance productivity and increase ROI.
Similarly, AI-driven automation will provide lending platforms with innovative solutions such as fraud detection, credit score evaluation, etc.
As cyberattacks and data breaches pose the biggest threat to cloud-based lending solutions, the use of passwords and other authentication methods are being replaced by Biometric systems. We are bound to see an increased adoption of biometric authentication systems, including fingerprint, facial recognition, and voice recognition.
We will also see advanced biometric authentication systems detect fraud and unauthorized access by evaluating physical and cognitive behavior. This will also include tracking mouse patterns, keystrokes, and other metrics.
In recent years, serverless computing has steadily increased as organizations can control the cost of cloud computing through this.
Financial institutions providing backend services will continue adopting serverless computing as they will pay for what they use instead of a predetermined package. Notably, AWS, Azure, and Google Cloud users are embracing serverless computing, and with the fintech market growing, more cloud providers will roll out serverless options for financial institutions.
Cloud-based lending platforms centralize data and store it in a secure, easy to access location. This provides a comprehensive and unified view of borrower information. Due to this, more and more financial institutions will switch to cloud-based lending software.
The need to store all the data related to various stages of a loan life cycle will continue to increase, especially with new options opening up for consumers. This will further facilitate improved decision-making, enhanced risk management, and a holistic understanding of borrower profiles.
Possibly the most expected trend of all, the integration of AI and ML in cloud-based lending software will continue. We will witness more advanced features where AI will analyze and evaluate mountains of financial data to generate in-depth reports and predict risks.
We will also witness more intuitive and human-like chatbots that will engage consumers and provide personalized loan offers based on their credit reports and personal details.
With ML at its core, we will see smarter credit assessments, more accurate fraud detection, dynamic loan pricing, and more.
With climate change on the rise, banks and fintechs have started doing their part to tackle this. So, with Green Finance on the rise, we will see sustainable financial solutions with an increased focus on technology that will cut down emissions.
Current Green Finance solutions such as green bonds and eco-friendly digital currencies will continue to grow in popularity and facilitate ESG decisions for financial institutions. Additionally, banks and financial institutions will develop more green solutions that help consumers and the environment.
Although quantum computing is still in its early stages and practical applications are under development, its potential is huge. Let’s try to put this in perspective. Imagine a world where loans are approved in nanoseconds, fraud is detected with uncanny accuracy, and financial simulations play out in real time – that’s what quantum computing can do for you.
With technology on the rise, we will witness more pilot projects that will test the accuracy and efficiency of quantum computing in our Fintech realm. We will see more accurate risk detection, fraud detection, and profitable investment decisions upon its successful completion.
Hyper automation combines the power of advanced technologies, including artificial intelligence (AI), Robotic Process Automation (RPA), and machine learning (ML), to automate a wide range of tasks and processes. In a cloud-based lending platform, hyper-automation is used to streamline workflows, enhance efficiency, and reduce manual efforts across the lending lifecycle.
The impact?
Accelerated loan processing, reduced operational costs, and improved decision-making through intelligent automation.
Cloud-based lending software can provide advanced solutions due to the availability of big data and the infrastructure to process it. Big Data enhances the capabilities of cloud-based lending platforms by leveraging large volumes of structured and unstructured data to extract valuable insights.
By analyzing vast amounts of financial data, lenders gain deeper insights into borrower behavior, risk profiles, and market trends. This empowers them to personalize loan offers, optimize pricing, and make smarter lending decisions.
AI has already created its mark across every industry and will continue to dominate in the foreseeable future. AI algorithms are used to create more advanced Fintech solutions and provide deeper insights into market trends and risk management.
AI is also helping banks and financial institutions detect fraud more accurately and quickly, personalize loan offers, and assist customers based on their unique needs.
Built on a decentralized network, blockchain acts as a tamper-proof ledger, recording every loan transaction securely and transparently. Blockchain’s decentralized nature ensures that it cannot be altered or tampered with once data is recorded. Cloud-based lending platforms leverage this inherent security feature, enhancing the integrity of borrower information, transaction records, and other critical data.
Blockchain technology revolutionizes cloud-based lending by introducing transparency, security, and efficiency into traditional lending processes. As financial institutions increasingly adopt blockchain solutions, the future of lending is poised for a transformative shift towards decentralized, automated, and secure financial transactions.
Predictive analytics heavily supports cloud-based lending platforms, providing customers and financial institutions with more intuitive solutions. It does so by leveraging historical data and advanced algorithms. This further enables more accurate credit scoring and proactive decision-making.
This technology allows lending platforms to optimize various functions such as loan pricing, tailor personalized lending solutions, and detect fraud in real time, ensuring the security and integrity of lending operations.
Moreover, predictive analytics contributes to improved operational efficiency by streamlining processes and continuously learning from new data inputs, leading to faster loan processing and reduced costs.
The metaverse or as often described as a collective virtual shared space, is becoming increasingly relevant in finance by creating immersive and interactive experiences. Although the metaverse is still gaining momentum, we can see some big strides in the following:
The metaverse in finance has the potential to revolutionize the way cloud-based lending is conducted. As the metaverse continues evolving, its integration with cloud-based lending will likely offer new possibilities for customer engagement, financial education, and the overall lending experience.
The compliance landscape is becoming more stringent and complex. with the increase in fraud, cyber threats, and data breaches But thanks to Regulatory Technology (RegTech), lending institutions can navigate this easily.
RegTech in cloud-based lending involves using automated tools and solutions to ensure compliance with evolving regulatory requirements. These tools streamline the monitoring and implementation of compliance measures, reducing the risk of human error and enhancing overall regulatory adherence.
The integration of RegTech ensures that they can meet compliance requirements effectively while embracing the advantages of cloud-based lending. This synergy contributes to a more resilient, secure, and agile financial ecosystem.
From integrating cutting-edge technologies like AI and blockchain to the transformative power of Big Data and RegTech, financial institutions find themselves at the forefront of innovation.
With the statistical insights provided above, the message is clear: you have to adapt to the new world order where integration of trending technologies with cloud-based lending systems is your key to thriving in a highly competitive industry.
The question is not whether to adapt but how swiftly and effectively. If you are ready to leverage the latest technological advancements to your benefit, look no further than Bryt Software. Book a demo and discover how we propel your success to new heights.
