All businesses aim to embrace the use of modern software technology to ease their core functions and enhance profitability. This includes lending businesses like banks, NBFCs, and MFIs. Fintechs are companies that are an amalgam of technology and financial functions to offer streamlined financial products/services that were previously available only through heavily-regulated, traditional financial institutions. Thanks to their modern tech capabilities, Fintechs are rapidly revolutionising the way banking is carried out in the economy.
Given the massive optimisation opportunities that Fintech infrastructure offers, traditional banks are facing severe competition in terms of popularity. Consequently, financial institutions that revolve around legacy systems are losing out big chunks of market share to these modern players.
What is Fintech-as-a-Service?
Fintechs technologies are a desirable solution for many traditional lending companies looking to leverage advanced business functionalities and financial processes. The recent upsurge in the popularity of digital payments, digital lending, insurance, wealth management, or robo-advisory has further heightened the need for technology backed banking.
Fintechs offer profitable avenues to lending businesses that aim to lead the financial industry. Many Fintechs are offering their APIs to other players in the financial markets as software to be integrated into their systems. This model is relatively new in financial markets and is called Fintech-as-a-Service.
Leveraging a Fintech-as-a-service platform allows financial businesses to optimise their end-to-end process, thus ensuring wholesome execution of a commercial service, provided through the Internet, on-demand within a specified timeframe. FaaS platforms ensure complete management and deployment of delivery environments. Moreover, they ensure legal compliance with banking regulations along with proper security mechanisms like strong authentication.
Why Must Financial Institutions Embrace Fintech-as-a-Service Platforms?
The Fintech revolution is gripping the financial industry rapidly. Let us find out why:
Automation of the Entire Lending Process
Modern bankers seek to enjoy seamless and hassle-free access to loan products and services to match needs. Also, customers wish to gain access to these services at a preferred place, time, and through the channel of their preference. However, most of the time at a traditional banking firm is spent dealing with paperwork. With an increase in loan demand over some time, it will become difficult to process all requests within stipulated time frames due to the limited workforce. Fintechs bring along Robotic Process Automation (RPA) to allow knowledgeable workers at traditional banks to dedicate their time to more complex operations. Traditional financial institutions can efficiently allocate monotonous or recurring tasks to Robotic Automated Processes to avoid errors. Additionally, the time and energy that employees save allow them to focus on more valuable matters.
Overall, it reduces the need for human intervention in the lending process and optimises it for the better. Automation of the lending process allows reduced processing times and increased efficiency. Using Faas models to automating lending processes helps businesses adopt a future-proof organisation model that creates the perfect amalgam of capabilities of robotics and human workforce. Fintech-as-a-service platforms allow financial institutes to use tech like software robots to automate business tasks involved in loan origination processes, for example, document filing and routing, email reminders, notifications, data synchronisation, etc.
Streamlined Document Analysis
To successfully streamline the workflow at a financial lending institution, loan officers must find a way to deal with massive document loads. Manually going through and verifying each document hampers the productivity at the firm, and also its recurring nature makes it error-prone. Most traditional businesses hesitate from adapting to newer technologies due to concerns like their effectiveness, change management, the sensitivity of their customer’s data and price points involved, etc. They fail to recognise that the profitability brought forth by new-age tech in the long term is far more when compared to the cost incurred by them.
Integrating a Fintech-as-a-Service model into their system allows them to help their customers in the most efficient ways. FaaS tools not only address business and compliance concerns of the industry but also help lending companies in fetching better returns. The use of advanced Faas tools allows convenient data extraction from documents, especially KYC, for financial businesses. With time-consuming data extraction and analysis out of the window, the Feet-on-street (FOS) reps can leverage their time doing something much more critical tasks like engaging the customer.
Reduction In Turn-Around time of the Entire Process
Enhanced automation tools reduce the processing time incurred at the office. They can reduce up to 25% of the routine tasks currently handled by underwriters at the financial lending firms, leaving them to deal with responsibilities of strategic importance. Fintechs can efficiently process credit data and perform a predictive risk analysis to omit out the possibility of bad debts within seconds. AI-backed decision support engines that Fintechs work with allow underwriters to take objective decisions in a time-bound manner, quite efficiently. Tasks like the assessment of GST payments, IT returns, and bank account information that is excessively draining for evaluators are performed in a jiffy, thanks to advanced technologies that Fintechs work with.
Leveraging Faas platforms allows financial businesses to prioritise risk factors by order of importance to reduce Turnaround Time (TAT) and optimises core processes.
APIs, as we know, is an integral part of software development, which are used as a way to develop for a specific platform. New Fintech platforms offer APIs that help traditional financial players to leverage the latest tech cost-effectively. Financial institutions can indulge in fully functional, distributed processes developed by other specialists, which they access through APIs in the form of FaaS. Since it is always prudent to avoid spending precious resources on reinventing the wheel, but they can rely on FaaS platforms to improve the way they function. Many Fintech startups with modern technology and advanced systems are now looking forward to selling their technology platforms as a service to corporations in the field. These FaaS platforms integrate seamlessly with any existing back-office of traditional banks and provide for non-banks a cost-effective and fast way to launch various financial products and services.
Finezza is a state-of-the-art lending lifecycle management platform that eases the process that India-based financial lending companies follow. This FaaS platform offers a unique Document Recognition & Data Extraction Module for its client businesses. The platform leverages deep learning tech and quickly identifies the type of document it accesses. It performs field detection through Optical Character Recognition (OCR). For data extraction, Faas platform uses Object Detection techniques to extract the relevant fields and crop the image. It automates the entire lending process from origination to evaluation, making it easy for the traditional firms to process a large number of loans. Reduced turnaround time for loan applications enhances customer satisfaction among clients and contributes to the profitability of lending businesses.