Non-Banking Financial Companies (NBFCs) are making a behind-the-scene yet significant impact on the Indian economy. Despite not having a traditional banking license, they promote financial inclusion, support economic development, enhance innovation, and deepen financial markets.
A report by the Reserve Bank of India (RBI) reveals that the share of NBFCs in the total credit extended to the economy increased from 16.4 per cent in December 2022 to 29.1 per cent in February 2023, highlighting their role in the Indian economy.
With digital innovations transforming the financial landscape, NBFCs is leveraging technology to improve operations and functioning. NBFC loan management software is one such tool that enables NBFCs to automate and streamline their lending processes; let us read about its importance in detail.
Importance of NBFC Loan Management Software for Lending Business
The growth of NBFCs in current times hinges on adopting innovative technology to keep up with the fast-evolving market dynamics and customer expectations. A scalable lending management system can help NBFCs unlock their full potential and transform the lending experience for the customer.
Below, we discuss some benefits of the NBFC loan management system for the lending business.
1. Streamlines Lending
NBFCs play a crucial role in providing credit and finance, especially to the underserved and unserved segments of the Indian economy. Often, applicants who approach them may not have access to traditional banking channels due to a lack of credit history, improper documentation, or banks not having sufficient penetration.
The NBFC loan management software aids NBFCs in promoting financial inclusion by streamlining the entire lending process. Information from multiple channels and alternate data points like credit bureaus, bank statement analysis, GST analysis, and more ensures that worthy applicants are allowed credit without compromising the quality of the loan portfolio. The loan management software also aids in better risk management.
As a result, approvals become much faster, benefiting both the lender and the borrower. Streamlined loan processing helps NBFCs scale their loan operations and increase their customer base.
Using Artificial Intelligence and Machine Learning Technologies makes the entire process more streamlined, faster, and even more secure for the borrower and the lender.
2. Promotes Paperless Processing
The NBFC loan management software enables paperless processing as document management becomes digitised. Everything is stored centrally and digitally, eliminating the requirement to maintain humungous physical filing records.
Accessing any record requires a few clicks and can be done quickly, unlike when the records are stored and maintained manually. The traditional loan application process is cumbersome, paper-heavy, time-consuming, and human-intensive. Additionally, paper-based lending systems often result in incomplete paperwork, delivery delays, and unwanted expenses.
Another benefit of paperless processing is that records are maintained securely; there is no risk of documents getting lost or destroyed.
3. Improves Loan Management
Tracking payments and managing defaults and delays are crucial aspects of lending lifecycle management. Delayed or missed payments pose a grave threat to lenders. Manual tracking and following up on delays is a reactive approach.
The NBFC loan management software leverages analytics to detect customer reliability concerns proactively and flag such accounts before disruptions or delays occur. Lenders can improve their debt collection and tracking of loans by automating tasks like payment processing, interest calculations, and loan account updates.
Borrowers also benefit from this as they have real-time access to their loan information and can avoid delays as they receive timely reminders. Improved customer engagement encourages timely repayments; borrowers can track loan repayment schedules, receive timely reminders and track payments in real time.
Finezza offers a flexible Payments Module that supports NACH, eNACH, cheques, online, and UPI-based payments, giving customers ample choice.
4. Reduction In Errors And Cost
NBFC loan management software helps lenders lower operational costs by automating tasks, reducing the time and labour required to perform them. The turnaround time for processing loan applications goes down with automation, which means lenders can improve their productivity.
Automating tasks also improves accuracy and reduces mistakes occurring during manual processing. Errors increase risks and costs for lenders; using the software helps lenders overcome challenges posed by manual errors.
5. Customers Benefit Through Better Service and Improved Experience
Automation ensures customers have a user-friendly and convenient experience throughout the loan lifecycle. The NBFC loan management software makes the application process more customer-friendly and loan approvals faster. Customer service post disbursement also improves with chatbots offering quick resolutions for most problems that customers might face.
Self-service portals allow customers to track their loan applications. After disbursal, they can resolve their queries and manage their loans through these portals, which makes them feel empowered and hence increases customer satisfaction and loyalty.
6. Provides Compliance And Regulatory Support
NBFC Loan Management Software helps NBFCs comply with all relevant regulations and industry standards, such as Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements.
It ensures accurate data reporting and enables documentation retention. Automating accounting tasks, maintaining financial documents and creating taxation reports helps in the creation of reports with complete accuracy.
To Sum It Up
The NBFC loan management software helps lenders streamline lending, enables paperless processing, reduces costs, benefits customers and helps lenders in compliance and reporting. It is essential for any NBFC looking to scale its operations and reap the benefits of technological innovations and automation.
Choosing the right software for any NBFC requires focusing on the size and complexity of their operation, specific needs and the ease of using the software.
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