Digital Transformation in Lending: Should Banks Buy or Build?

Key Takeaways

• Buying into digital lending technology accelerates time to market and offers compliance-ready, tested infrastructure.
• In 2025, strategic partnerships between banks and fintechs are the norm, not the exception.
• A modular approach to bank lending technology helps institutions scale without overhauling legacy systems.

The 2025 Landscape: Banks, Fintechs, and the GenAI Shift

In 2025, the partnership model between fintechs and banks is no longer experimental; it is strategic and expected. According to Barclays’ “Fintech Embraces GenAI” report (2025), over 73% of global banks have now integrated third-party technology providers into core operational workflows. The report reflects a growing trend: financial institutions are moving away from building solutions internally and instead leaning into collaboration to deploy high-performance, AI-powered lending platforms.

Banks today must compete not just with one another, but with consumer-grade digital expectations. From seamless online purchases to real-time service delivery, borrowers expect frictionless lending interactions.

In this environment, the “build or buy” question is less about control and more about speed, compliance, and future-proofing.

Build vs. Buy: Weighing the Tradeoffs

If a bank chooses to build its own lending platform, the challenges go far beyond code. A full-scale initiative means hiring product teams, engineers, legal advisors, and compliance experts, alongside securing infrastructure for development, testing, and deployment.

This leads to:

• Extended time to market
• High upfront capital expenditure
• Risk of obsolescence by the time the system is live

Meanwhile, buying or partnering with a fintech offers rapid deployment, compliance-ready modules, and continuous innovation at a lower cost.

A modern fintech partner can also support embedded capabilities, AI-driven onboarding, and integrations with open finance ecosystems, all mission-critical in 2025.

Lending Software: The Backbone of Digital Lending Transformation

A smart digital lending technology strategy can serve as the backbone of a bank’s digital transformation. With new customer demands, changing regulations, and growing SME financing needs, institutions are investing in platforms that automate workflows, accelerate approvals, and strengthen compliance.

At Ezbob, we provide banks with the lending technology stack to make this transformation a reality, without forcing a complete infrastructure overhaul. Our platform integrates AI-driven decisioning, paperless onboarding, and embedded finance functionality.

Here’s how:

• Modular infrastructure that can be deployed on-premise or in the cloud
• AI-powered credit decisions for faster, fairer underwriting
• Embedded lending at the point of need (POS, ecommerce, B2B platforms)
• Connections to 40+ data sources, from Open Banking to eCommerce platforms

Banks can approve loans in minutes, fund accounts within hours, and manage regulatory audits in real time.

Why Embedded Lending Is Key in 2025

SMEs are the backbone of economic growth, and they demand simple, fast, and embedded access to capital. According to the Barclays 2025 report, embedded lending is expected to surpass traditional SME loan distribution within the next two years.

Through embedded finance, banks can:

• Offer credit within merchant ecosystems
• Conduct real-time affordability checks
• Minimise onboarding friction
• Reach previously underserved segments

The Cost of Inaction

Failing to modernise legacy systems is not just inefficient, it’s risky. Recent global surveys show that up to 65% of SMEs would consider switching banks if digital loan products were slow or difficult to access.

As regulation tightens and as AI becomes central to underwriting and compliance, banks that delay transformation will find it harder to catch up.

ezbob’s Approach to Next-Gen Lending

Founded in 2011, ezbob has helped transform lending for tier-1 banks, telcos, and fintechs. What sets us apart?

• Lender DNA - We’ve built for ourselves before we built for others.
• End-to-end automation - From onboarding through disbursement.
• Real-time credit decisioning - Powered by explainable AI.
• Embedded finance ready - Serve SMEs where they operate.

Our modular solution can be delivered on-premise, as a SaaS deployment, or via a hybrid model, offering the flexibility required by modern financial institutions.

FAQs

How do embedded lending solutions differ from traditional lending?
Embedded lending allows banks to offer credit within third-party ecosystems like ecommerce platforms or accounting tools. Unlike traditional lending, which often requires a separate application process, embedded lending enables real-time, contextual access to financing.

How can banks ensure security and compliance in digital lending?
Banks can ensure compliance by partnering with vendors that integrate regulatory frameworks into their platforms. These systems support KYC, AML, audit trails, and explainable AI to meet evolving regulatory expectations.

How does open banking affect digital lending solutions?
Open banking enables lenders to access live financial data from applicants, improving affordability assessments, reducing fraud, and accelerating approvals. It is a key enabler of real-time, responsible lending.

How can SMEs benefit from digital lending platforms?
SMEs benefit from fast, paperless access to credit, improved approval rates, and more transparent terms. Digital platforms reduce the complexity and wait times typical of legacy lending processes.