India’s Non-Banking Financial Companies or NBFC sector continues to be at the forefront of driving credit outreach for the country’s underserved low-income, retail, and MSME market. The total asset size of all NBFCs in India is more than $370 billion, and they provided close to 20 per cent of all credit in India till March 2018 versus 15 per cent three years ago and still growing steadily.
Despite recording robust growth, there is more at stake for NBFCs who can leverage untapped markets and grow their portfolio of products and services. There is a growing need for NBFCs to focus on developing innovative products to cater to low-income, urban customers in unorganised sectors.
In such a scenario, NBFCs are adopting new business models driven by technologies to seamlessly facilitate the design, implementation, and execution of personalised credit products and services. Technology-centric practices and loan management software are gaining momentum to make NBFCs future-ready.
The Need for a Future-Enabled NBFC
In a natively digital age, digital technologies are taking over businesses and industries globally and the traditional lending business as we know it is becoming obsolete. The majority of customers are using digital channels including portals, text and voice chat for self-service needs.
This is just the beginning. With time, these numbers will only keep multiplying and over half of the customer interactions will be handled by virtual assistants. Consumers will do most of their saving, investing and borrowing online too.
The key takeaway for NBFCs – Indian lenders cannot turn their backs on digital technologies. They need to focus on enriching customer experiences digitally at scale and speed. How can this be done?
At the core of it all, the need of the hour is a scalable lending management system that is integrated into the daily digital lives of consumers to transform the lending experience to a whole new level.
Loan Management Software – Strengthening the Core Business of NBFCs
Here are some of the ways how new-age lending management software are reinventing the wheels of legacy lending processes:
Disrupting the Customer Onboarding Experience
Onboarding a borrower is a cumbersome process, especially for collateral-based loans. New players in the lending space are harnessing the power of the latest technologies to provide a seamless digital lending experience for customers. Digital onboarding of customers is the new normal with the use of technologies and makes the entire lending journey process a pleasant experience for all:
- Identical Mobile-first journey.
- Self-service or assisted closure of lending journey with online loan applications.
- Ability to Jump different channels without breaking experience.
- Certainty and transparency into the entire lifecycle of the lending journey.
Faster Credit Assessment and Underwriting Process
To ensure a faster lending process, NBFCs need to bring in an efficient credit assessment mechanism right at the beginning. Using alternate data from multiple channels, you can ensure that the customer can start using the credit line within hours of approval.
There is no need to wait for a longer time to ascertain the creditworthiness of the individual when algorithms get to work to decipher multiple data points and come with a unique credit score of the borrower.
- Evaluate creditworthiness with alternate data points include scores from credit bureaus, bank statement analysis, digital footprint, GST analysis and more.
- Analytics to compute and rank credit score by running data from several sources
- Identify false-positives and defaulters.
- Automatically approve or disapprove loan based on different decision-making parameters.
Seamless Workflow Engine
An effective loan management software should have the managerial capacity to assign roles and responsibilities to multiple users for a seamless process workflow. There should be no scope for confusion, error, and unaccountability. With agile digital operations, the system facilitates the replacement of many manual processes.
This involves multiple processes of managing leads, application, documentation, underwriting, assessing creditworthiness, valuation, decision and finally disbursal of loans.
As a result, there is greater transparency in the business where one can retrieve the complete status of any application within a few seconds without actively working upon it.
- Proactively propose offerings of loan products and services with digital footprints of customers.
- Speed up verification and application process with the online application of loans.
- Seamless customer interactions across various touchpoints with identical mobile-first and other digital interfaces.
- Elimination of paper-based documentation in the loan application.
- Decipher patterns in unstructured and structured data sources to assess the creditworthiness of clients and detect fraud.
- Leveraging analytics and data-driven decisions for efficient underwriting and fraud detection.
- Disbursal of loan digitally to a bank account.
Overall the culmination of using technology can offer a one of a kind experience to your customers and help your NBFC to scale new heights.
Automated Collection Process
Having an efficient loan collection process is as important as onboarding a new customer. The repayment schedule and reminders should be automated without multiple follow-ups with the customer.
It should also facilitate automatic repayment schedules by giving flexibility to the customer to determine their schedule according to the rate of interest of the loan.
- Auto-generation of customer statement with flexible and multiple modes of payment option, thereby circumventing a trip to the loan agency
- Digitised collection strategies to identify red flags and delinquency score
- Managing collection with a personalised course of action for each category of customer
- Managing settlements with grievance and disputes redressal
- Optimise collection efficiency to monitor outstanding receivables periodically
Unlocking Greater Value
Additionally, a digital lending journey that is based on a scalable loan management platform can drive significant value for lenders. It not only helps you offer a hassle-free experience for your customers but also helps you improve sales effectiveness with lower operating costs.
With an increase in loan processing speed and reduced turnaround time, loan volumes can also significantly increase, thereby leading to greater profitability.
- Improve processes and transform operations
- Transform underwriting through the simple use of analytical tools
- Embrace a new attitude to winning over customers
- Adopt a customer-focused, data-driven approach to lending lifecycle management
The Unlimited Scope of Technology for NBFCs
Rising customer expectations and the advent of digital technologies have accelerated the need for NBFCs to transform their operations and rethink their strategies with new innovative business models.
Deep-tech lending management models become more intelligent as more data is fed into it. With greater data comes deeper insights that ultimately benefit modern NBFCs to strengthen their operations and create bespoke loan products and services for different segments of customers. Technology can become a game-changer to forge meaningful relationships with customers and build the NBFC of the future.
Contact us at Finezza to assess where our Lending Management Software can drive value for your NBFC. We help lending firms leverage analytics to underwrite more loan applicants and identify the risk profile of borrowers that traditional underwriting methods may not detect or comply with regulations.