The digital transformation of business lending: 3-1-0 GO!

March 31, 2021 - 5 min read

Digital business lending 3-1-0 GO!

If digital transformation is a race, then Ant Group and its online lending model of “3-1-0” is a pacesetter. A service standard characterised by a 3-minute application process, 1-second loan granting, and all with 0 manual intervention sets a benchmark for those who promise an end-to-end lending solution. Not satisfied with leading the pack Ant Financial has now changed its name to Ant Group emphasising it is now more a tech, than financial services business. 

Forces driving digitisation in business lending

A variety of forces are driving the strategic imperative for banks to automate business lending. The more dominant of these forces include:
  • Increasing customer expectations informed by their experience with digital platforms in the ecommerce and retail lending space.
  • Industry 4.0 and digital technologies such as mobile devices, cloud computing, internet of things (IoT) platforms, artificial intelligence (AI), and distributed ledger technology (DLT). 
  • Big data analytics drawing upon internal and external data as a prerequisite for successful automated decision making within the credit underwriting process. 
  • Open banking and the introduction of regulations such as PSD2 within the European Union will erode the monopoly banks have traditionally held over customer account information. 
Non-bank lenders with new operating models are not only challenging incumbent banks within their existing customer base and product portfolio but are also expanding the market to include non-standard credit profiles informed by alternative information sources. 

Navigating the challenges to digital lending

Significant advances have been made in the digitisation of both personal lending, as well as small medium-sized enterprise lending (SME lending). While banks offer a more automated lending experience characterised by shorter application, underwriting and disbursement times, the journey is still far from complete.  An evolving competitive landscape presents several challenges to a bank in the business lending space: 
  • Manual lending processes reliant upon the widespread use of paper documents remain slow, subject to human error, and inefficient. 
  • Legacy systems that have not kept pace with new digital technologies are unable to leverage the vast amounts of new, alternate, and unstructured information required to support the loan application process, hindering the ability of a bank to respond to change. 
  • Fintechs are delivering a fundamental step-change in customer experience, with faster approval times, all at a lower cost. 
  • Customer churn and the willingness of customers to switch for a better customer experience is fuelled by a combination of increasing customer expectations and intense competition from the fintechs. 
Is legacy the barrier to digital transformation of business lending?​

Is legacy the barrier to digital transformation of business lending?

Are your core legacy systems still dictating your IT spend? Legacy technology has the potential to become a barrier to digital transformation. If a significant proportion of the IT budget is spent operating and maintaining legacy systems, there will be little left of the budget to innovate and  achieve the full potential of end-to-end digitization.

Legacy systems impede performance in many ways:

Operating and maintenance costs increase exponentially as technology ages, diverting funds from much needed investment in new technologies.

Skill sets required to operate and support legacy technologies become more scarce and difficult to find.

Increased security risks resulting from the incompatibility of legacy systems with current security innovations and authentication methods.

Speed to market is compromised as new product strategies fall foul of an inflexible architecture, poorly or undocumented customisations, and manual delivery processes.

Development of ecosystems fundamental to creating new products and services are constrained by legacy systems that lack the connectivity to external partners required for the development of innovative new products


The business lending sphere is evolving, being driven by customer expectations, regulations and non-bank players. This trend is set to continue. Moreover, there are still considerable challenges to banks in the sector. Whatever the approach adopted by an organisation to the decommissioning of legacy systems, a tipping point would appear to have been reached as the cost of digital technologies inevitably decreases, as adoption increase, and the cost benefit evaluation becomes more obvious in the choice that must be made. Lagging behind in technology is not an option.


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