AI and Automation in Commercial Lending: Trends to Watch in 2026

Global commercial lending is changing at a rapid rate. The Indian lenders are also experiencing this change. The demand for speed, accuracy, and regulatory readiness is increasing, due to which lenders are facing a lot of pressure. Commercial lending software and loan origination systems (LOS) are becoming the backbone of this current lending market. This modern AI-powered lending software is deemed vital by financial institutions for managing risks and improving decision-making. Indian banks and NBFCs are streamlining their loan processing across various geographies.

The Indian lending ecosystem is changing and developing according to the rising expectations of the borrowers. The credit assessment requirements are also rising with heightened scrutiny from regulators. The traditional lending process used to be dependent on manual data entry and paper-based workflows. These legacy systems are no longer able to keep up with the current complex credit market. Lenders are asking for the technology that can provide them with scalability, automation, and AI-powered tools. Financial institutions are also looking for real-time insights on loan applications, underwriting quality, and loan lifecycle performance so that they can come up with strategies to improve them.

The global commercial loan software market was valued at USD 7.6 billion in 2024 and is projected to grow at a CAGR of 9.7% between 2025 and 2034.

This is why lenders are choosing to go for AI and automation as they are becoming the central pillars of digital transformation across Indian banking and the NBFCs sector in this complex credit market. 

The State of Commercial Lending in India

The Indian lending landscape is entering a new phase of digitalisation. The demand for business loans, commercial credit, working capital finance, and long-term project loans is increasing across MSMEs.  Lenders are facing operational challenges such as inconsistent borrower data, slow approval cycles, and limitations in legacy systems, even as demand continues to rise.

Nowadays, every Indian NBFC is expected to adopt this modern commercial lending software. AI-based underwriting is being used in modern commercial lending software to help lenders in cutting down the assessment of risk and loan approval times significantly. More than half of commercial loan applications in India will now go through a digital LOS before they can reach any manual underwriter. This will help lenders by minimising the risks. Modern commercial lending software uses predictive analytics and automated risk alerts that will help lenders by increasing loan portfolio visibility. This gives lenders clearer visibility into portfolio level risks.

These trends show that AI and automation are not only improving the lending process but also reinventing lending operations. Lenders are trusting in commercial lending software so that they can deliver a seamless end-to-end loan lifecycle and provide real-time portfolio monitoring to the borrowers. Modern commercial lending software is also helping lenders provide faster onboarding and loan disbursement to borrowers, thus creating trust between them.

Lenders are deploying this modern commercial lending software because this modern software is providing financial institutions with stronger credit control with smooth API integration. This way, these institutions can easily make AI-based decisions and score borrowers’ portfolios. This is done by using scoring models. Commercial credit is becoming competitive, and to deal with it, financial institutions are adopting AI-powered LOS platforms. Modern commercial loan software will lead India into the next phase of financial growth with increasing profitability.

What Is Commercial Lending Software?

Commercial lending software is a digital platform that integrates with existing lending software so that it can help lenders by managing their entire commercial loan lifecycle. Every process, from onboarding and loan origination to underwriting, is being managed by this lending software. Commercial lending software is acting as a lending operational hub for Indian banks and NBFCs. These financial institutions are helping lenders by centralising their datasets and automating lending workflows. This is how lenders can provide real-time collaboration across various teams to borrowers.

Traditional systems rely on standalone functionalities. These solutions make lending operations slower as they used to provide a paper-driven credit environment. Modern commercial lending software uses AI and automation to support commercial loan origination, credit policy enforcement, and risk scoring. This lending software has built-in document management and portfolio analysis tools. These tools are providing better loan servicing and credit risk decisioning to lenders. These help in improving the customer experience.

Commercial lending software has separate tools so that it can help in making sure that compliance is properly maintained throughout the lending operations. Lenders are using automated workflows and real-time dashboards to improve their loan management. Banks and NBFCs are shifting from manual processes to an AI-powered LOS. Modern lending solutions are also helping lenders by providing borrowers with better operational efficiency and risk management tools.

Key Features of AI-Powered Commercial Lending Software

• AI-powered underwriting

  Commercial lending software uses machine learning models so that it can analyse financial and behavioural data for borrowers. These analyses provide accurate business loan decision-making to lenders so that they can make better plans.

• End-to-end automation

  Modern commercial lending software is automating loan origination, underwriting, documentation and loan servicing to borrowers.

• Real-time decisioning

  Borrowers are now getting instant loan approvals that are using rule-based credit engines. These modern software systems are also helping lenders in reducing manual objections in such complex functionality.

• Advanced Workflow Automation

  Commercial lending software is streamlining every internal and external workflow of lending operations. This also helps the lenders in improving the borrowers’ experience.

• Portfolio risk analytics

  These modern platforms are offering Early Warning System (EWS) alerts to borrowers with credit risk signals and portfolio-level insights. This way, borrowers can easily manage their credit portfolio accounts.

• Cloud scalability

  Financial institutions are using commercial lending software so that they can support large volumes of datasets with zero downtime. These platforms are providing high system performance for lenders.

• Compliance automation

  These modern platforms are helping lenders in making sure that adherence to RBI norms with audit trails is properly maintained throughout the system. This is achieved by using automated reports and rule engines.

Benefits of AI and Automation in Commercial Lending

• Faster Loan Approvals

  Commercial lending software comes with AI tools that help financial institutions by accelerating underwriting and reducing approval times from days to mere minutes.

• Improved Credit Risk Accuracy

  Lenders are using machine learning so that they can help by making sure that they can provide borrowers with a precise assessment. This helps in lowering the NPAs.

• Reduced Operational Costs

  These modern platforms use automation so that they can easily minimise their operational costs by reducing back-office workload.

• Better Borrower Experience

  These platforms are also providing seamless onboarding, faster decisions, and real-time updates to improve the borrowers’ satisfaction.

• Stronger Regulatory Compliance

  Modern commercial lending software uses automated checks and rule enforcement. This is helping them by reducing the compliance risks.

• Higher Productivity and Profitability

  Commercial lending platforms are optimising lending workflows with increasing efficiency per loan product. This increases operational productivity and improves profitability for lenders.

Conclusion

AI and automation are reshaping every aspect of commercial lending in India. Indian banks and NBFCs that are still relying on old manual processes are struggling to keep up with rising operational costs and slower turnaround times. These old platforms are also responsible for the poor risk of visibility. Lenders are adopting modern commercial lending software so that they can easily optimise their lending operations. These modern platforms are using AI-driven LOS systems that help lenders stay connected to commercial loan solutions. This helps them gain a decisive competitive edge.

Financial institutions are using automated underwriting and real-time portfolio tools. They are also investing in scalable cloud infrastructure and regulatory compliance workflows. Commercial lending solutions are helping providers by improving their profitability while using software solutions.

Commercial loan origination systems are digital lending platforms that help lenders by improving their lending decisions and lending business. These platforms are also strengthening risk management using various metrics.

FAQs About Commercial Lending Software

• What is commercial lending software?

  Commercial lending software is a digital platform that integrates with existing lending software, so that it can help lenders manage their entire commercial loan lifecycle. Every process, from onboarding and loan origination to underwriting, is being managed by this lending software. These platforms are helping to create a better environment for the borrowers.

• How does AI help with commercial lending?

  AI in commercial lending software is changing the lending ecosystem. These platforms are improving the underwriting accuracy and predicting risk. Commercial lending software is also speeding up the process of loan approvals by automating repetitive lending processes.

• What is a commercial loan solution for banks?

  A commercial loan solution for banks is an end-to-end digital lending platform that is specifically designed for banks and NBFCs to streamline their lending workflows. These solutions are also helping banks by managing their loan products through integrating APIs. A commercial loan solution makes sure that compliance is properly maintained throughout the system.

• How does automation improve the lending operation?

  Commercial lending software uses automation that provides them with a way of eliminating manual data entry significantly. Automation is also helping lenders in accelerating and increasing the approval rates. Lenders rely on automation to minimise high risk errors and identify areas where they need stronger controls.

• Are AI-based LOS platforms secure for financial institutions?

  The modern AI-based LOS platforms are highly secure for financial institutions because these systems provide lenders with data encryption, secure access controls, and tools for analysing audit logs. These platforms also provide lenders with regulatory frameworks to ensure that security is properly maintained.