The domain of finance has witnessed massive changes over the years and the rapid momentum of change has only remained constant. With significant regulatory changes, rise in digital payments and expansion in the volume of digital transactions, the future of the NBFC sector is ripe with several opportunities.
In recent years, digital lending was at the forefront of the evolving landscape of Fintech companies. A report estimates that Digital Lending will be more than $1 trillion opportunity in the next five years. Rapid digitisation will pave the way for access to easier, convenient and cheaper credit driven by digital lending companies, the majority of which currently borrow from informal credit sources.
Your NBFC Needs A Dynamic Loan Management System. Here’s Why:
NBFCs can seek to leverage untapped markets with the competitive advantage of digitisation in the lending industry. Here’s how a dynamic loan management system will accelerate the digitisation wheel and help NBFCs capture a significant share in the lending market:
1. Instant Pre-Approval and Application Processing
With a digital loan origination system, it becomes easier to acquire new customers and tap into wider customer segments with unique product propositions, distribution channels and geographical locations for operations. Processing of loan applications can happen in a matter of time with pre-approvals of the credit limit, thus enabling customers faster access to credit in turbulent times.
2. Paperless Documentation
Customers no longer need to visit the lending institution and submit documentation, proofs, et al. They can easily upload all the necessary documentation from the comfort of their home and access all the documents related to the loan on the cloud from anywhere and anytime. Moreover, an eKYC or Know Your Customer procedure can be done in seconds now, thus shrinking your onus of submitting the documents in person.
For instance, the launch of India Stack, a set of open APIs, by the Indian government has given the lending segment an edge by allowing NBFCs to perform QR or XML-based KYC verification. It also facilitates digital signatures and document submission for applicants.
As a result, the entire lending process is quick, seamless, and paperless for customers, when credit-seekers and lenders connect through such digital marketplaces.
3. Seamless Workflow Engine
A dynamic loan management system caters to a seamless workflow that handles all key transactions and processes related to the loan lifecycle. It helps with digitally onboarding customers, ascertaining their creditworthiness, automates loan disbursal and manages loan payments up until it expires or is terminated.
As it travels through each stage, the system has the administrative capability to assign roles and responsibilities with relevant user access so that workflow is devoid of confusion, unaccountability and is prone to zero errors/frauds.
4. Diversify on the Go
A dynamic loan management system as implied by its name should enable flexibility of NBFCs to cater to evolving customer demands and create new markets without compromising existing operations and current growth. While the enterprises devise the right strategies to course correct or change direction to tap into the right market opportunities, the digital channels should augment the execution without any hindrances.
The core of the NBFC needs to be strong for it to diversify and explore new avenues and a good loan management system is part of that key core of the NBFC business.
5. Monitor Operations Effectively
As manual repetitive tasks are replaced with agile digital workflows and processes, it leads to greater transparency in the NBFC business. Subsequently, once can retrieve and access the complete status of an application in a few minutes without going through multiple records of data.
In contrast to a legacy system that is plagued with data silos and fragmented view, a dynamic loan management system is characterised by a comprehensive view within a singular suite and a pragmatic modular approach.
6. Omni-channel Approach
Customer experience, as well as internal staff user experience, requires an omnichannel approach and requisite set of tools, thanks to the proliferation of mobile technology. With this in mind, the loan management system should be easy to set up in any digital interface, verified mobile devices and should also be accessible to customers through all devices.
7. Analytical Insights
Analytics should be the fundamental engine that drives smart decisions in the lending lifecycle. From using unstructured alternate data points to ascertaining the creditworthiness of the individual to predicting loan default behaviour of customers, the various analytical reports generated by the system should provide dynamic insights to improve the bottom line of the business.
8. Effortless Compliance
Regulatory compliance is critical, but it is also a cumbersome, stressful, and time-consuming process if you don’t have an effective loan management system. In the event of non-compliance, your institution is liable to pay hefty fines and also subject to disciplinary action. In such cases, automated lending solutions can help you assess data and identify errors across all stages of the pipeline and help you adhere to standards. You can rest assured that all data entered is accurate and extract compliance reports on demand within minutes.
9. Enhanced Customer Experience
With the growing demands of customers that include personalised, 24/7 interaction across multiple touchpoints, NBFCs have to embrace techniques to deliver meaningful experiences to winning the customer and stand out from the competition. From deriving unique customer insights such as customer personas, credit behaviour to mapping the entire journey of the customer from start to finish of the loan lifecycle, loan management systems should offer a high level of customer experience using high-end technology.
10. Rapid Integrations
The mobile and cloud technology today has grown by leaps and bounds enabling NBFCs to quickly implement new technology for operational efficiency. To make the most of these technologies, the loan management system should be open to integrations with other systems so that data can flow in and out of the system efficiently through APIs. A dynamic loan management solution should enable easy integrations with IoT devices, biometrics technology, POS systems, etc.
The Indian fintech segment has been the torchbearer of several path-breaking initiatives and adopted innovative models to tackle the challenges of a volatile market. Digital lending and paperless loans are soon set to take off with a large number of individuals, SMBs and corporates dependent on a reliable credit system for their needs.
It’s high time that NBFCs adopt digitisation and leverage on a dynamic loan management platform such as Finezza to cater to the growing demands of Indian consumers and SMBs. Build the core of your business by investing in an efficient and reliable loan management suite to expand and diversify your lending business.