After the pandemic hit the world, loan defaults have been on a steeper rise than before. Direct consumers and SMEs are still struggling to repay loan dues, and the crisis is going away anytime soon. Consequently, a major challenge that all banks and financial institutions face today is tackling the hidden non-performing assets.
While retail lending constitutes 22% of total bank lending and generates 3.7% of NPAs, personal loans, car loans and home loans have relatively lower delinquencies. Financial lending bodies still need to give out loans and they can’t put customers through unnecessary hassles either. However, they still need the appropriate mechanisms to ascertain the creditworthiness of the applicant and reduce the risk of NPAs.
An effective way to get an accurate analysis of an applicant’s financial history to prevent NPAs and bad credit decisions is to undertake a detailed bank statement analysis. But, parsing through pages of bank statement data manually is tedious and erroneous, that too when you are assessing the financial health of several applicants. Moreover, bank statements are neither uniform nor consistent across various banks.
That’s where automation can minimise manual efforts and help with accurate risk assessment of an individual or SME at scale. No matter the format or number of pages of the bank statement, a smart system can tag and aggregate information within minutes in a visually appealing dashboard. It pays to invest in a robust bank statement analyser that has deep underwriting capabilities to cater to all sectors of loan applicants.
Transform the Lending Experience with a Bank Statement Analyser
An automated bank statement analyser engine reads the complete transactional data from the customer’s bank account, including debit and credit transactions consisting of key data. This gives a 360-degree insight into the applicant’s income, average balance, obligations, transaction patterns, and spending behaviour for a comprehensive review of their financial track record.
Here’s how a bank statement analyser (BSA) can make your lending process efficient, reliable and convenient:
1. Reduce Drop-Offs, Maximise Approvals
An automated BSA helps reduce the cost and turnaround times of your application process with the ease of processing loans quickly. It provides end-to-end digitisation with a frictionless and intuitive customer experience. You can move your overall lending process online wherein applicants can upload their bank statements directly to your Loan Management System (LMS).
By integrating the operation of your LMS and BSA, you can generate bank statement reports and loan repayment probability scores in minutes. Consequently, it elevates your overall customer experience and approval rates. Besides, the automated process reduces drop-off rates by reducing loan turnaround times.
2. Lower Default Rate and Optimise Performing Portfolios
The automated computational engine of the BSA helps lenders assess the inflow and outflow of funds of the applicant and identify the average daily balance to highlight any volatilities that may have an impact on their capacity to repay the loan. Additionally, it also helps fraud detection to curb payment fraud, loan fraud, fake documents or forgery and author fraud. The cost of online lending fraud has increased by 8.1% since 2017 globally.
Furthermore, the cost of online lending fraud is growing at an exponential rate than e-commerce fraud or retail fraud. As your lending institution embraces digital adoption, it makes more sense to invest in high-end tools to address the growing concerns and demands of a digital platform.
3. Improved and Confident Lending Process Flow
Improve the process flow of your lending lifecycle management by processing applications instantly with a BSA. It can optimise your operational efficiency in the following ways:
- Make sense of data with real-time analysis
- Integrate with your LOS/LMS to identify fraud documents
- Parse and process several formats of documents quickly and consistently
- Improve compliance with built-in documentation
- Focus on your core operations
4. Real-Time Analysis for Deeper Insights
The BSA can also enable you to fetch bank transactions data directly from the bank and can be integrated with your existing systems through APIs. It can allow your customers to provide bank statements via PDF upload or the net banking login. The engine then generates a real-time comprehensive report for the uploaded or fetched transaction data. As a result, it can assist in quick credit assessments at scale and real-time decision making with powerful insights.
Most modern systems are equipped with an accurate OCR or optical character recognition to convert different formats of bank statements into editable and searchable data. Thus, you can minimise the need for paperwork and automate data extraction to reduce the number of errors that is prevalent in manual methods of assessing or extracting data from pages and pages of historical bank statements. This way, you can dig deeper into the complete financial scorecard of the individual or business and even extract historical data that may be relevant for your analysis.
5. Deep Underwriting
A solid BSA has the potential to cater to the masses. Providing loans to individuals who have no access to credit since they may lack the required employment documentation or conventional credit scores, bank statement analysers can come in handy to assess their financial health.
Similarly, for SMEs who don’t have financial reports or collateral, the BSA can support flow-based lending decisions and has the power to transform rural credit. It provides a strong foundation for loan and insurance underwriting with quick and deep insights from the basic document of bank statements.
6. Customisable Data Categorisation
If you have specific rules to apply to your bank statement analysis, the BSA can be customised to suit your requirements. It can be seamlessly integrated with your legacy systems and generate specific reports according to your needs.
It can also facilitate underwriters to scrutinise, search and access every transaction in a search window. For instance, if users want to generate a COVID impact analysis report to assess financial records from lockdown or pre-lockdown or post-lockdown periods or a behavioural impact on the applicant’s transactions, you can customise parameters to generate such specialised reports.
Automating and scaling your lending process with a BSA product is a great way to elevate the customer experience by reducing the loan assessment and loan origination timelines.
Being completely automated greatly reduces the need for any manual interventions, thereby improving overall productivity with customer delight and enhanced customer retention rates.
Finezza, a premier lending lifecycle management and credit evaluation services platform offers a top-class bank statement analyser tool called Precisa that has the ability to parse over 15,000 transactions in up to 6 minutes. Besides multi-point integration with GST and credit bureau data, the BSA can deliver a well-rounded credit evaluation of your applicants for accurate risk assessment.