Corporate Lending: embracing digital to deliver a more customer-centric approach - Trade Treasury Payments

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Corporate Lending: embracing digital to deliver a more customer-centric approach

Corporates increasingly expect banking services that are personalised, digital, and serve their needs both locally and globally. However, many financial institutions still face hurdles in achieving full digital transformation. Much of the industry’s data remains paper-based, creating operational bottlenecks. 

To address this, banks must prioritise customer-centric digital workflows, implement straight-through processing (STP), and embrace automation to accelerate loan approvals. Technologies like cloud computing, APIs, digital ecosystems, and artificial intelligence (AI) are central to this transformation.

Reducing complexity

Delivering corporate lending services efficiently requires overcoming significant technological hurdles. A major challenge is the reliance on physical documentation, such as lengthy credit agreements, which slows down data integration into banking systems. Additionally, the multitude of platforms and systems that banks use to manage their loan portfolios complicates seamless process integration.

To move forward, banks should focus on digitising loan origination systems and ensuring consistent data flow across all platforms. This approach supports system consolidation, such as unifying bilateral and syndicated loan systems. Modular solutions that allow for the creation of new workflows and services using standardised APIs offer a flexible path forward.

Harnessing the cloud 

Banks are under increasing pressure to modernise and integrate their lending platforms. Growing scrutiny on operational expenditure has made them more aware of the cost implications of maintaining disparate systems, making the case for integrated platforms stronger. Despite a high initial investment for cloud migration, the long-term efficiency and cost benefits are clear.  

Although legacy on-premise systems allow for ad hoc integration between particular systems, cloud-based architectures require more thoughtful design to ensure they work effectively over the open internet. But once delivered, cloud-based platforms enable more seamless collaboration, bringing closer the vision of accurate data flowing end-to-end through corporate lending systems. 

This is also important as regulatory demands increase, requiring banks to share accurate and transparent data with investors, auditors and regulators. 

Digitising the customer journey

System integration not only enables consolidation but also opens the door to adopting technologies that enhance efficiency and improve the customer experience. For instance, using OCR tools to digitise credit agreements can streamline data entry into loan systems, improving accuracy from the outset.

Integrated systems provide banks with a unified view of their loan portfolios, enabling better risk management and regulatory compliance. They also support modernisation efforts by delivering timely, accurate information to customers at reduced costs. Converting paper-based processes into digital workflows helps banks meet customer expectations for faster, more transparent loan servicing and greater self-service capabilities.

Adapting to a changing landscape

Institutional investors, private credit and non-bank financial institutions (NBFIs) increasingly dominate the lending market. Acting alongside these new players, banks remain at the centre of supply chains. But as we reach a critical inflexion point in the market, banks need to be brave with their technology investments and ensure they have the right people and decision-making processes in place that can drive change, while ensuring growth remains sustainable and responsible, based on a strong foundation.

Many of the new players in the loan market are familiar with the workings of the bond market, where transactions generally settle by the next day. In comparison, settlement times for loans can take 35 days or longer in Europe, leaving lots of room for improvement.

For the loan market to continue to grow, and attract and retain customers, settlement times need to be reduced. This means system integration is essential. Technology providers must support interoperability and offer platforms that expose critical data through secure, testable APIs. Banks need assurance that these APIs can be embedded into their systems without requiring major future overhauls. 

Looking ahead, banks should envision how integrated systems can support their strategic goals, rather than simply automating existing processes. The focus should be on reengineering systems to eliminate inefficiencies and build a foundation for innovation and growth.

Delivering on the potential of AI 

When implemented correctly, AI can augment human capabilities by automating routine processes, delivering huge efficiency savings. Institutions can harness AI to speed up loan decision-making and document processing, contract approval times, and better track, report, and fulfil compliance checking and sustainability commitments. 

Large language models (LLMs) can also serve as a valuable resource for information, bridging knowledge gaps and facilitating faster decision-making. This is particularly important in enabling banks to capture the knowledge of experienced workers who may be leaving the industry. 

Corporates value the experience of banks’ lending experts, including their ability to deliver tailored solutions and advise on sustainability goals. Storing such IP in a structured database will be vital in supporting the next generation entering the workforce at a time when industry experience is declining. It’s also an opportune moment to leverage the potential of AI, given its ability to capture and process huge amounts of customer data, understand specific financing needs and propose personalised offerings that team members can oversee, refine and share with customers. 

Clearly, AI models need to be trained and refined to ensure there’s no compromise on quality, but the benefits of automating mundane tasks and removing paper documents, freeing up staff to focus on oversight and delivering value-added services are clear. 

To capitalise on the potential benefits of advanced technologies like AI, the lending industry must prioritise standardisation, data accuracy, and seamless integration. By collaborating closely, software providers and financial institutions can propel the corporate lending sector forward, deliver more tailored services to clients, lower operational costs, and empower decision-makers to lead sustainable, long-term growth.