Backbase Tour Johannesburg: Painless digital lending

In an extremely competitive landscape of alternative lenders, bigtech & fintech disruptors, banks and credit unions often struggle to deliver the lending experiences their customers demand. Digital lending being the top priority for banks in 2022


This article is sponsored by Backbase

Lending is the most personal aspect of a customer’s relationship with their bank and banks need to recognise this, according to Bakhtier Pulatov, product director at Backbase. 

“It is important to realise that it is closely linked to our ambitions, our aspirations and our future.” Whether it’s getting an education, a new home or starting a family, being able to rely on one’s financial institution for assistance is critical to customers. However, this can often be a complex process. Lending, Pulatov said, is still one of the financial products that customers find intimidating.

Part of the complexity arises from the need to share private information, the multiplicity of options and the variety of documents and requirements needed to get approval, all of which must be done in-branch. 

Pulatov said studies have shown that even in the best-case scenarios, the simplest loan applications take an hour to complete. Verification of the documents and processing of the application can take four weeks, meaning that a customer has to wait till then to be given an offer by the bank. 

For the more complex loans, it can take up to three months before the customer receives the funds. “All this is happening in an era where Uber, Amazon and Spotify have completely changed customer expectations.” 

The reality, Pulatov said, is that most banks are not building digital lending systems but rather, digitising their existing, disjointed processes which is painful, not just for customers but also employees of the bank as well. 

Again, Africa’s low banking penetration, and income to cost ratios, combine to add to banks’ operational costs and reduce their ability to compete with new and more nimble players. 

Companies that have integrated digital tools into their lending operations, he said, have seen cost savings of over 40%. It is time, he argued, to take advantage of the $1trn lending opportunity in Africa by leveraging digital platforms to supercharge lending. 

Engagement Banking, as Backbase refers to its programme for banks, places the customer at the heart of the lending process and builds the experience around them, enabling the delivery of personalised services that fit the customer’s needs and lifestyle. 

“You can use the platform to service your customers, whether they are applying for a credit card or a loan. With this platform, you can become a trusted partner and be with your partner every step of the way.” 

Fabian Fanton, a Solutions Engineer at Backbase, took the audience through the capabilities of the platform in facilitating the seamless end-to-end processing of loans. The platform offers a comprehensive dashboard with internal communication tools that allow team leaders to set tasks for the marketing team, for example. 

The customer is also able to click through from the advertisement in the app to apply and be approved for a loan. Fanton said that the platform also allows the bank to promote offers to the customer, such as a better interest rate, if they designate that account as their salary account. 

Chipiliro Katundu, Group Chief Product Officer, Letshego, said Backbase has been instrumental in the company’s vision of building a full service financial services and lifestyle brand in Africa, focused on low and middle income earners. 

“It is about putting the customer at the centre and thinking clearly about the segments into which you can place them. The second part is building the differentiators, which Backbase helps you with. Lastly, you need to have consistent journeys with your customers,” he stated.