A sturdy decision management system can be a lender’s safeguard against financial risks that the credit evaluation process exposes them to. It harbours a promise of distinct competitive advantage to lenders with improved and flawless decision making. Fast-tracking the credit evaluation and risk management process at the lender’s end ensures increased financial security. It also facilitates easy loans for borrowers improving the customer service in entirety.
The Traditional Credit Evaluation Process
As a borrower applies for a loan, lenders gear up to evaluate their creditworthiness in terms of estimates about their ability to regularly repay loans through fixed monthly instalments in the future. For this, lenders request the proofs for the applicant’s current financial situations and income and even their borrowing and repayment history of any previous loans raised by them.
Lenders conduct an in-depth analysis of the borrower’s past behaviours as well as current debt standing to accurately determine how efficiently they would be able to repay the new loan they have applied for. They also take into consideration the size of the loan applied for and the length of the commitment for the association. Combining all the factors together, lenders try to get insight into the borrowing behaviour of the applicant and assess the level of risk involved if they sanction the loan. All these entail the traditional credit evaluation process for all loan applications. However, the traditional approach to credit evaluation fails to recognise the additional internal and external factors that contribute to risk.
Need for Automated Decision Management Systems in Credit Evaluation Process
Understandably, risks are an inevitable component of banking operations. However, they can be easily mitigated or easily predicted with efficient credit evaluation by lenders.
Financial lending businesses are trying hard to reduce the losses resulting from frauds and cybersecurity threats to protect the financial data of their clients. However, these lenders also need to protect their own wealth that gets eroded at the hands of unreliable borrowers. If a borrower misses out on his monthly loan repayment or worse, misses out a series of repayments, it results in hefty losses for the lending business.
Sometimes, it is argued that collaterals offered against the loans raised by borrowers make up for the lender’s losses. But in actuality, the amount of time and money spent to convert the collaterals into liquid funds result in negative returns for the lenders. Thus, financial institutions must closely evaluate the credit risk involved in sanctioning loans to each individual applicant.
How Can a Decision Management System Improve the Credit Evaluation Process?
With the rising demand for credit resources, credit risks also increase. Financial lending institutions need advanced technological solutions for ensuring that the quality of the credit portfolio growth is maintained. They aim at an acceptable risk/return ratio depending on their risk appetite, hoping to operate profitably in future.
Implementation of a Decision Management System helps lenders build a loan portfolio structure with minimum aggregate risk (losses) in the event customers fail to fulfil their loan repayment obligations.
How Can Finezza’s Decision Management System Fastrack Credit Evaluation Process?
Finezza’s CAM Generation
Finezza’s software simplifies the process of accurately assessing an applicant’s creditworthiness in multiple ways. Loan evaluating officers can get a unified view of all the loans that an applicant might have raised in the past through CAM generation. It saves them a lot of time-consuming manual research.
Finezza’s GST Analytics
Finezza platform also offers GST Analytics that uses tax filings on GSTN as a data source. Modern enterprises count on cash flow-based lending for the most part. They borrow money based on the projected future cash flows of their company. While most financial lending companies sanction loans backed by the recipient’s past cash flows, GST Analytics helps a loan evaluating officer be a better judge of an applicant’s loan application in the case of cash flow-based lending.
Finezza’s Credit Bureau Analytics
Finezza’s loan management software features credit bureau analytics. The unique functionality takes into account data from four main credit bureaus CIBIL, CRIF, Experian, and Equifax. The framework ensues credit-focused grouping and alerts on data points for highlighting risks concerning the lending businesses. The system complies with loan history status, repayment history, detailed summary of borrowings, one-click detailing, and ‘Enquiry to Success’ ratio for streamlined credit evaluation. Finezz’a credit bureau analytics also execute automatic DPD analysis for all the products.
Finezza’s Bank Statement Analytics
The Saas solution helps lenders analyze bank statements in real-time, by aggregating all the applicant’s accounts at the application level. To streamline credit evaluation, the system automatically identifies and classifies different kinds of transactions, running in-built fraud detection checks. This results in a precise report about the inflows and outflows and the average monthly balance, among other things. The framework also identifies monthly, weekly, and quarterly patterns of transactions made by the borrower through his bank account. Finezza platform also identifies cheque returns (inward and outward), aids wild card searches for specific entries. It red flags volatile accounts based on the fluctuations in the balance.
Finezaa’s Customisable Loan Eligibility Assessment
Finezza lenders can create their own customised loan eligibility criteria and devise calculations to facilitate the right credit decisions for their business. They can choose the bureau they like to include, efficiently omit duplicate loans and view all aspects of the loan to assess the creditworthiness of an applicant on their own terms. They can also use the information from GST analytics by factoring in the applicant’s tax fillings on GSTN as a data source for flow-based lending. The responsive interface of the Finezza framework helps lenders with quick and precise credit assessment in a matter of a few hours using a single system.
Finezza is a quality SaaS product and that focuses on long-term relations with lenders. The company offers modern technological tools, multiple salient features, and a simple user interface to its clients. Working with experienced techies and business relationship managers. it offers an end-to-end lending management solution to fastrack the credit evaluation process at the lenders.
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