Digitisation Wave In Lending Leads To High Demand For CDOs: Report

Technology, risk and sales functions in banks and non-bank financial companies (NBFCs) witnessing transformation and hence the need for hiring chief digital officers (CDOs), according to a survey conducted by Venator Search Partners.

More than 60 senior industry professionals from lending institutions including CEOs, business heads, HR heads from large NBFCs, banks and fintechs were part of the survey. Over 38% of the respondents believe that risk management, followed by technology at 20%, will undergo significant transformation.

The survey attributed the transformation to enhanced credit risk assessment capabilities of big data and AI, leading to more accurate risk profiling and better predictions of loan defaults. Respondents mentioned that the method for assessing risk has changed. It now stands at 4 or above on a 6-point scale, indicating that traditional credit assessment is no longer used for loan approvals.

Lenders are now using algorithms and machine learning models to automate the evaluation process based on predefined criteria. This enables organisations to quickly determine which customers meet the requirements for pre-approved offers based on their financial behaviours as well as to identify potential customers who are likely to be interested in specific financial products, thereby increasing their relevance and effectiveness.

Digitalisation has also led to the evolution of a traditional business model to a “phygital” one. Survey respondents revealed that the phygital model is expected to remain here for some time.

Most respondents felt that ‘feet on the street’ is becoming an enabler in closing transactions with every passing day. “While the number of leads get generated online, the dropouts are significantly high resulting in poor conversion ratio often. We believe that ‘feet on the street’ can play a critical role to close sales. We see the sales function transforming to becoming more of facilitators as digitisation catches pace,” Deepraditya Datta, Founder, Venator Search Partners.