McKinsey&Company | By Gerald Chappell, Holger Harreis + | Aug 2018

Faster credit decisions, vastly improved customer experience, 40 percent lower costs, and a more secure risk profile. Here’s how to get there.

Today in traditional banks, the average “time to decision” for small business and corporate lending is between three and five weeks.¹ Average “time to cash” is nearly three months. In our view, these times will soon seem as antiquated and unacceptable as the three weeks it once took to cross the Atlantic. Leading banks have embraced the digital-lending revolution, bringing “time to yes” down to five minutes, and time to cash to less than 24 hours.

That’s the profound result of a top priority for banks around the world: the digital transformation of end-to-end credit journeys, including the customer experience and supporting credit processes. Credit is at the heart of most customer relationships, and digitizing it offers significant advantages to banks and customers alike. For the bank, successful transformations enhance revenue growth and achieve significant cost savings. One large European bank increased win rates by a third and average margins by over 50 percent as a result of slashing its time to yes on small- and medium-enterprise (SME) lending from 20 days to less than ten minutes, far outpacing the competition. Our analysis suggests that a bank with a balance sheet of $250 billion could capture as much as $230 million in annual profit, of which just over half derives from cost efficiencies (such as less “touch time” and lower cost of risk), and the remainder comes from revenue gains (increased applications, higher win rates, and better pricing). In this article, we will look at the six design principles that successful banks have used to build digital-lending capabilities and transform their institutions.

See:  Peer-to-peer lending will help small businesses stay afloat

The variety of digital ambition

As digitization proceeds apace, the dimensions of banks’ digital ambitions vary among segments and products. Digitization is becoming the norm for retail credit processes. Personal-loan applications can now be submitted with a few swipes on a mobile phone, and time to cash can be as short as a few minutes. Mortgage lending is more complex due to regulatory constraints, yet banks in many developed markets have managed to digitize large parts of the mortgage journey. More than one bank has set an aspiration to automate 95 percent of retail underwriting decisions.

Banks are now treating SME lending as a digital priority. The reasons are clear: costs are high, and the opportunities to improve customer experience are significant. Furthermore, both traditional banks and fintechs already offer compelling digital propositions in SME lending, featuring dramatically shorter approval and disbursement times—a key factor for customers when choosing a lender.

Digital is also advancing in corporate lending, though naturally corporate banks are moving with greater caution and less urgency (given the relatively lower transaction volumes in this segment). Rather than reworking the entire customer experience, banks are enhancing common processes—for example, digitizing credit proposal papers and automating annual reviews to improve both time to yes and “quality of yes.”

Some banks’ digital strategies let corporate-transaction approvers focus their time on those clients and deals that matter the most. Low-risk credit-line renewals, for example, can be automated, while valuable human review time is focused on more complex or riskier deals. And data aggregation can be automated so that relationship managers (RMs) have the most relevant data and risk-monitoring scores at their fingertips—including financial performance, industry performance, market and sentiment data, and pertinent news and external risk factors.

Avoiding slow starts and piecemeal results

While most banks are digitizing parts of their business and operations, many are dissatisfied with progress, especially in credit. A few familiar frustrations include legacy IT systems; a general lack of trust in automated decision making; insufficient cooperation between businesses and risk, IT, and operations functions; limited data access; and scarce digital talent. Moreover, there is no single “owner” of the credit process with the discretion to drive change at scale. A number of stakeholders need to align and remain constantly aligned over a prolonged period (two to three years in banks that have executed ambitious programs successfully).

See:  Square partners with eBay to expand lending for ‘underserved’ small businesses

These barriers have caused more than one bank to delay or sidetrack digitization efforts. Programs launched with great executive attention and focus lose momentum as the initial excitement of chief risk and lending officers evaporate. Investments needed to sustain programs are partly or wholly withheld. Incremental changes are sometimes substituted for planned end-to-end transformations.

However, numerous banks successfully digitized the credit journey. In the following pages, we offer the practical lessons that have emerged from these experiences, with special emphasis on SME lending, the area that is currently getting the most attention and investment.

Designing a successful digital lending transformation

Experience has shown that successful transformations rely on some basic principles.

An end-to-end journey but with limited scope

Many banks have found that an end-to-end view of the entire customer journey, including a target state set according to the customer experience, was crucial to success. For example, a Benelux bank redesigned its business-lending process from end to end, allowing it to eliminate numerous handovers. The result was about 30 percent greater efficiency. Without an end-to-end orientation, on the other hand, banks have seen disappointing results. Attempts to improve the credit process piece by piece tend to become incremental, lose customer focus, and miss the big-picture opportunity to deliver a fundamental step change in performance and approach. One Northern European bank found such an opportunity by shifting its focus for SME customers from selling products to fulfilling customer needs. As a result it radically rationalized its lending-product range down to just three simple products, massively reducing complexity. This would not have happened with a piecemeal approach.

While taking an end-to-end view, however, successful banks have learned that it pays to limit the scope of the first wave of the transformation and focus on a minimum viable product (MVP). The MVP is scoped to be substantial enough to drive real value, momentous enough to create excitement within the organization, and simple enough to be designed and implemented rapidly. Improvements can then be made progressively in waves of rapid subsequent releases.

See:  Technology is the ‘most profound force bearing down’ on big banks, ex-Barclays boss says

At one Scandinavian bank, as many as half of all credit decisions concerned SME customers with existing loans seeking additional credit. The bank decided to focus on improving their experience, since the cost to serve them was significant, but the decisions involved were less complex, as most of the necessary data were already available in the systems. Over an intense 20-week period, the bank designed a new end-to-end digital journey, including an online application process, a framework for making new credit decisions, a revised credit process with automated decision making and fast-track handling for simple cases, as well as radically simplified credit-paper and collateral-review processes. Certain features of the new journey were not included in the MVP but scheduled for later releases. This kind of approach avoids too much early-stage complexity so that a transformative solution can be implemented more quickly, establishing momentum for future change.

Building momentum for full automation

With good reason, risk managers can be wary of a fully automated approval process for business loans. Long-standing policies and decision processes often depend on manual reviews and cross-checks. Years of root-cause analysis of defaults and assessments of soft factors have proved reliable but would be missed in an automated approach.

At one bank in central Europe, the long-standing business-lending process features a decision checklist incorporating thousands of criteria and covenants for contracting and disbursement. While time consuming and costly, the process does achieve the desired risk outcome. In fact, risk functions at many banks successfully use experience-based subjective assessments to achieve low default rates. While the accuracy of data-driven model-based decision making continues to improve, risk managers are correct in taking a cautious approach to automation.

Leading banks express this caution in two ways when introducing automation. First, to establish accuracy, many banks test models on past decisions. A bank in Scandinavia ran its newly developed decision engine on all applications from the past five years. The tests proved that the automated engine based on data-driven assessments and a structured credit “decisioning” framework was better at predicting default risk than the subjective human assessments had been—and far more consistent, which was a key factor in approving the model for use on new cases.

Second, banks start small, at first directing only a few cases to the fully automated straight-through digital process flow (sometimes called the “swim lane”). One Northern European bank recently opened the swim lane for fewer than 15 percent of applications, mainly the less complex cases. As the engine proves itself, the bank will gradually increase the flow.

In the most sophisticated examples, about 70 to 80 percent of SME-lending decisions are fully automated, with the remainder referred for credit review, allowing valuable expert time to be focused on complex or marginal cases.

Embrace relationship managers

RMs play an important role in SME lending. Digitization doesn’t replace this. While for some segments it makes sense to steer customers into a mostly self-service approach, successful banks have typically opted for a “multichannel, single application” route for SME lending, where customers can complete digital applications on a shared screen with their RMs. This allows the RM to guide the customer through the process, explain results of automated risk assessments, and quickly ask any follow-up questions required.

See:  How Fintech Is Transforming Microfinance

A Scandinavian bank went this route, for four reasons:

• in customer testing, it was clear this is what SMEs in the region wanted
• it allowed the strengthening of RM–customer relationships, and greater cross-selling
• it allowed the new digital journey to be introduced alongside legacy processes, giving RMs the option of using the old process to give them reassurance (and manage the small number of cases that could not be treated with the new process)
• the digital solution set the right incentives to discourage discounts and lowered the pressure on RMs (by delivering offers in near real time through the digital process, RMs and the bank could gain market share and margin)

Ultimately, RMs were able to provide loan approval in five to ten minutes about three-quarters of the time; more complex cases are decided in an average of 90 minutes (and not more than 24 hours) following a manual review.

Big data—but not too big

To develop models, many banks have expressed interest in using external data (when legally permissible), including novel sources such as social media. While creative use has been made of unusual data sets, it is usually best to begin with readily available data. Transactional data have proved especially powerful. A number of banks and fintechs have developed tools to process transactions from primary operating accounts line by line, classifying them into detailed revenue and expense items. Advanced analytics can use these rich risk data to generate simplified financial statements, affordability ratios, customer- and supplier-concentration analyses, and so on, in real time. These transactional data offer substantially richer and more up-to-date insights about company performance than out-of-date annual accounts. With the second Payment Services Directive (PSD2) and other open-banking initiatives now coming into force, similar analyses can now also be performed on new customers.

Pragmatic data solutions can create real impact quickly, building momentum for subsequent, gradual data-management improvements.

Ambitious data-aggregation plans or multiyear data-lake projects are rarely good bases for digital-lending transformations. Such plans are frequently abandoned before completion. Successful transformations generally rely on existing data sources, sometimes using imperfect, robotics-based data integration (such as screen scraping) to get started. Recently, a major bank in Southern Europe successfully completed the early stages of its transformation using readily available demographic and behavioral data. That experience shows how pragmatic data solutions can create real impact quickly, building momentum for subsequent, gradual data-management improvements.

More:  Swiss watchdog to propose looser anti-money laundering rules for fintechs

By incorporating regulatory models in their new credit-decision engines, banks can satisfy regulatory requirements in less time and start reaping the benefits of digitization more quickly. A Northern European bank did just this, after applying the existing internal ratings-based system for business lending and building new automated analyses for affordability and cash flow.

The need for an agile approach

The divergent interests of business and risk management—not to mention operations and IT—will create inherent tensions for banks in redesigning credit processes. One Eastern European bank found that its months-long project to simplify the corporate-lending process had made little headway, ultimately due to legitimate but conflicting internal interests. The project became bogged down with individual silos optimizing for their own interests rather than collaborating on optimizing the customer’s experience. It lacked an agile approach.

Agile project delivery is essential for successful credit digitization. The starting point is a set of colocated, cross-functional, full-time, dedicated teams empowered with decision-making authority and tasked to deliver products on deadline in intense bursts of effort called “sprints.”

However, while most executives are actively talking about agile, not many are actually doing it. Worse, we see many firms adopting “cosmetic agile,” where traditional project-management approaches are peppered with agile lingo and walls filled with Post-it notes, but necessary fundamental changes in ways of working are not adopted and organizational commitments are not made.

A common failure is the inability to overcome organizational silos. A cross-functional team with business, risk, IT, and operations is simply essential, for several reasons:

• collaborating across all functions helps strike the balance of customer-journey and business objectives with robust credit decision making and risk control
• bringing critical-path IT-development work into the control of the agile team allows rapid iteration and testing of journeys, data integrations, and results
• maintaining agile’s customer and “time to market” focus helps quickly assess trade-offs and work-arounds for IT and process bottlenecks as well as design solutions that allow rapid value delivery to customers

The agile redesign process is sometimes referred to as a “zero-based” approach. Teams begin with a blank sheet rather than thinking about marginal improvements to the existing process and the restrictions of existing policies. They define the essential mission, often working from the customer backward. This mode of operating can initiate deep changes that exceed incremental process adjustments and see beyond the constraints of legacy systems.

See:  The forces of change are trumping banks and regulators

A further powerful aspect of agile is the iterative, sprint-based approach to developing solutions. Emerging prototypes are continually tested with RMs and usually clients as well. Teams gather their feedback early on, so that less compelling ideas can be quickly discarded and attention focused on experientially successful ideas—which are also revised as needed. The working relationships fostered in agile teams create enormous engagement among colleagues from all areas of the organization, which ultimately translates into better ideas and faster results.

In a best-practice agile example, a leading European bank built a “digital lab” to enhance its credit processes systematically. Business, IT, and risk came together to align on objectives and incentives, while a dedicated organizational unit (the “digital factory”) was empowered to make decisions with quick cross-functional escalation mechanisms. The teams developed a safe IT environment to test changes before reshaping processes on a wider scale.

Continue to the full article --> here

The National Crowdfunding & Fintech Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with fintech, alternative finance, blockchain, cryptocurrency, crowdfunding and online investing stakeholders globally. NCFA Canada provides education, research, industry stewardship, services, and networking opportunities to thousands of members and subscribers and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding and fintech industry. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: ncfacanada.org

Buying a Canadian MSB and Reviewing FINTRAC RPAA and Financial Due Diligence

November 12, 2026

Nov 12, 2026 Buying a Canadian money services business starts with identifying what the buyer will acquire: a legal entity, a registration history, contracts, records and possibly an active operation. The value of that package depends on whether it supports the services the new owner intends to provide. A FINTRAC registration entry is an important starting point. It does not establish the company’s financial condition, the quality of its compliance programme or the availability of banking relationships after an acquisition. A payment business may also need a separate assessment under the Retail Payment Activities Act, or RPAA. For investors evaluating a Canadian MSB company for sale, due diligence should connect registration status, actual activities, transaction structure and financial evidence before the parties agree a completion timetable. Verify the Canadian MSB registration and legal entity Begin with the target’s exact legal name, incorporation details, registration number and current status. Match the entity in the corporate documents to the entity in FINTRAC’s Money Services Business Registry. FINTRAC explicitly states that registration does not mean it endorses or licenses a business. It also states that it does not issue licences or certificates of registration. A sales presentation using the phrase “FINTRAC licence” should ...

Read More

Why MSCI Is Removing Strategy From Its Indexes

November 12, 2026

November 12, 2026 | NCFA Fintech Market Insight | Digital Assets Blockchain And Tokenization, Capital Markets Infrastructure And Funding, Wealthtech Investing And Trading Strategy still runs a software business, but Bitcoin now dominates its assets and capital raising. MSCI no longer treats that balance as an index eligible operating company. November 11, 2026, MSCI confirmed Strategy’s removal from the MSCI USA and MSCI World indexes after the November 30 close under its new methodology for non operating companies. MSCI is one of the world’s largest index providers, and its benchmarks are followed by funds investing across global equity markets. Japan’s Metaplanet is also being removed from an MSCI index. MSCI has decided that Strategy no longer qualifies for its equity indexes because Bitcoin now dominates its assets and much of its capital raising. Strategy still sells software and reports operating revenue, but MSCI is drawing a line between a business that holds investment assets and one where those assets have become the main financial story. Why Is MSCI Removing Strategy From Its Indexes? MSCI first looked at a rule aimed specifically at digital asset treasury companies. It later dropped that proposal and change it's methodology to cover companies whose finances ...

Read More

How Is Crypto Market Cap Calculated? What a Change in the Top Coins Really Tells You

November 12, 2026

Nov 12, 2026 Crypto market cap is calculated by multiplying an asset's reference price by its circulating supply. A token priced at $2 with 50 million units circulating has a market cap of $100 million. The calculation estimates the value of that supply at the reference price; it does not total the money investors deposited. To understand a change in the ranking, examine both inputs and the provider's definitions. A larger number can result from price changes, supply changes, or revised reporting. Establish what the two inputs represent The arithmetic is simple, but neither input is self-explanatory. “Price” may be a reference assembled from selected trading pairs and venues, rather than the last transaction on the exchange you use. A provider may exclude observations or convert quote currencies. Two services can publish different estimates because their source selection and methods differ. Circulating supply is an estimate of units treated as available in the market under a provider's rules. It may differ from the number minted, the total recorded by a contract, or the maximum permitted under a protocol's current design. Locked balances, treasury allocations, burns, and scheduled releases require interpretation. A transparent methodology matters because identical arithmetic can still use ...

Read More

What Happens When AI Agents Start Trading Together?

November 12, 2026

November 11, 2026 | NCFA Fintech Market Insight | Artificial Intelligence And Data, Capital Markets Infrastructure And Funding, Risk Compliance And Regtech Financial firms are putting AI agents into production well before giving them broad financial authority. That creates time to set identity, permissions and transaction controls before autonomous execution becomes common. On November 11, 2026, Bank of England Financial Policy Committee external member Jonathan Hall used his final FPC speech to examine what happens when AI agents get more authority inside financial firms. A Bank of England and FCA survey of 196 firms found that 80% already deploy AI agents and another 14% plan to within 12 months. Only 2% reported agents with broad autonomy, and none of those were in trading and payments. Finance is adopting agents quickly, but firms are still keeping people and hard limits around the decisions that can change money, positions or customer outcomes. AI Agents Are In Finance But They Are Not Trading Alone The 2026 Bank of England and FCA survey separates four levels of authority: Decision support lets an agent recommend an action while a person decides and executes it. Constrained execution lets the agent act inside preset rules. Conditional autonomy ...

Read More

Canada’s VC Totals Are Reliant On Mega Deals

November 11, 2026

November 10, 2026 | NCFA Fintech Market Insight | Capital Markets Infrastructure And Funding, Entrepreneurs Startups Small Businesses, Equity Crowdfunding And Alternative Funding A small group of large rounds is carrying Canadian venture totals while deal count and growth stage financing remain well below recent norms. On November 10, 2026, the Canadian Venture Capital and Private Equity Association published its Q3 2026 venture capital report. Canadian companies raised $4.3 billion across 397 deals through September, only 1% less capital than a year earlier. But 23 rounds of $50 million or more represented just 6% of disclosed deals and absorbed 58% of all venture capital invested. Deal count has also fallen every year since 2021. The national total is holding up far better than the number of companies getting financed. Six Big Rounds Carried 59% Of Q3 Venture Capital Q3 produced $1.35 billion across 129 deals. Capital was 1% higher than Q2, but deal count fell 15%. Six rounds above $50 million accounted for $793 million, or 59% of the quarter’s capital. That's a decent quarter for the companies that closed those rounds, but a weak quarter for everyone else. Mega rounds above $50 million totalled $2.5 billion across 23 transactions ...

Read More

Why Canada Is Making It Cheaper to Leave Your Bank

November 11, 2026

November 11, 2026 | NCFA Story Intelligence | Competition And Market Structure, Wealthtech Investing And Trading, Regulation And Policy Canada is cutting bank fees and switching barriers after years of weak competition, high concentration and poor productivity. On November 7, 2026, the federal government proposed something Canadian investors have complained about for years. Banks would no longer be allowed to charge most investment account transfer fees, which typically cost about $150 per account. Ottawa also wants clearer transfer information and tighter timelines for moving investments to another financial institution. The fee matters because leaving can already be slow and frustrating. Receiving firms often reimburse the outgoing charge to win the account. That means a fee collected by the institution losing the customer can become part of the acquisition cost for the institution trying to win that customer. Canada's six largest banks hold roughly 93% of banking assets. The Competition Bureau was warning about barriers facing fintech competitors in 2017. Ottawa began reviewing open banking in 2018. A federal advisory committee later recommended an operating system by January 2023 and warned that government should not delay. January 2023 came and went. Real Time Rail also slipped years beyond its first expected ...

Read More

CSA Tokenization Report Shows Where Canada May Scale First

November 11, 2026

November 10, 2026 | NCFA Fintech Market Insight | Digital Assets Blockchain And Tokenization, Capital Markets Infrastructure And Funding, Regulation And Policy Funds, Collateral And Settlement Lead Canada’s Near Term Tokenization Opportunity On November 10, 2026, the Canadian Securities Administrators published its Project Tokenization Phase 1 findings, setting out where Canadian market participants see the strongest commercial opportunities for tokenization and what regulators plan to test next. The report draws on 233 organizations, 21 bilateral meetings and 80 survey responses, along with workshops attended by 281 people in Calgary and 491 in Toronto. Participants put investment funds, private assets, collateral, treasury and settlement infrastructure ahead of public stocks as the strongest near term opportunities. The report also cuts through one of tokenization’s biggest sales pitches. Blockchain can change how an asset is recorded, transferred or settled, but it doesn't automatically create liquidity, investor demand, broader eligibility or stronger ownership rights. Those outcomes still depend on the product, market, legal structure and infrastructure around it. The CSA now plans to take specific projects into Phase 2 through a 120 day public call for proposals. Firms may be able to use existing regulatory processes, tailored regulatory treatment or bounded testing in a ...

Read More

Creative Ways to Boost Team Morale

November 11, 2026

Nov 11, 2026 A positive work environment is key for any team that wants to succeed. Team morale is crucial for productivity, motivation, and job satisfaction. Engaging in activities that lift spirits and strengthen connections can lead to great results. Creating a positive team environment requires creativity, engagement, and some fun. Each activity can strengthen connections, boost motivation, and improve workplace dynamics. When teams focus on strategies to boost morale, they work toward shared success. These activities can lead to lasting memories and help build a stronger team culture. Here are some fun strategies to help improve your team's morale and make the workplace livelier. Fun at the Arcade Visiting an arcade spot is a great way to enjoy time together and build teamwork. Imagine your team facing challenges with various games. Whether it's racing or playing team games, the arcade encourages friendly competition and bonding. These fun experiences can help reduce stress and improve relationships among coworkers. Arcades offer many options to suit diverse interests and skill levels. The lively atmosphere invites everyone to relax and take a break from their daily tasks. Shared laughter and enjoyment can lead to better communication and teamwork when you return to the ...

Read More

Webull Adds Free Data as Canadian Brokers Compete Beyond Fees

November 10, 2026

November 10, 2026 | Market Activity | Fundraising, Investing, Trading, Leadership, Competition, Human Capital, Health A Brokerage Race Beyond $0 Commissions On November 10, 2026, Webull Canada added Nasdaq Basic Canada, giving clients free real time Level 1 quote and trade data across Canadian listed equities. The feed provides best bid, best offer and last sale information for stocks listed on the TSX, TSX Venture, CSE and Cboe Canada. Nasdaq says its consolidated feed can reduce Level 1 market data costs by more than 60% compared with traditional Canadian data packages. Webull isn't first to give Canadian investors free real time information. The more interesting story is how quickly another paid feature is becoming part of the basic brokerage account. Wealthsimple helped normalize $0 trading in 2019, Questrade followed in 2025 and Webull dropped its own commissions in April 2026. With the headline trading fee largely gone, brokers now need other reasons for investors to move money and keep it on the platform. Who Led Canada’s Race To $0 Trading And Free Market Data Wealthsimple Trade launched nationally on March 13, 2019 with $0 commissions on Canadian and U.S. stocks and ETFs. Questrade removed commissions on listed stocks and ETFs ...

Read More

BBVA Deploys Canadian AI for Derivatives Pricing

November 10, 2026

November 10, 2026 | Market Activity | Artificial Intelligence And Data, Capital Markets Infrastructure And Funding A Toronto Fintech Riskfuel Analytics Brings AI Pricing Into BBVA’s Global Markets Workflow On November 10, 2026, BBVA deployed Riskfuel Analytics' neural pricing technology inside the pre-trade structuring workflow for autocallable products on its ePricer platform. Riskfuel is a Toronto fintech founded in 2019 that builds AI models for derivatives pricing. BBVA is a global bank with a large corporate and investment banking business. The deployment puts Canadian built AI directly into the calculations used to design complex structured products at a major global bank. Riskfuel's model is trained on BBVA's own pricing engine and uses more than 4,000 market and product inputs. The company says the surrogate was tested against more than 100,000 trades and can evaluate thousands of candidate structures in under a minute. BBVA had already added AI generated investment ideas to ePricer in September. Riskfuel goes further into the workflow by speeding up the numerical pricing work while BBVA's own model remains the reference. How Riskfuel Speeds Up BBVA's Autocallable Pricing Autocallables can depend on volatility, interest rates, dividends, maturity, coupon levels and several barrier conditions. Autocallables are structured investments ...

Read More