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India's New-Age Digital Banks: What’s so ‘New-Age’ After All?

How Finezza’s Mobile Ecosystem Helps Optimise Loan Management Process

Lending Lifecycle Management

While many fintech firms are competing with traditional banks and lending institutions by offering loans that can be approved with just a tap on the phone, lenders are compelled to digitise their processes and offer various mobile lending solutions to compete with the market. However, though many mobile lending solutions are mushrooming, very few solutions help in speeding up the procedures and match the expectations of today’s millennial empowered borrowers.

How does Finezza’s Mobile Ecosystem Help Optimise Loan Management Process?

Finezza’s mobile ecosystem enables various lenders, including banks and financial services companies, to encapsulate their entire digital lending inside a single mobile app. Finezza’s convenient mobile ecosystem ensures faster and easier customer on-boarding, simplifies the collection process for loan agents and also helps customers upload their documents in no time as well as track the status of the applications on the go. In short, Finezza’s mobile ecosystem interlinks the lender, customer and collection agents, thereby offering wholesome and seamless loan servicing at a rapid pace.

A Look Into Finezza’s Unique Ecosystem Of Mobile Apps 

1. FoS App (Feet on Street):

Finezza’s FoS app is designed to empower the field staff to bring in more customers through its enhanced mobile application services. It offers paperless processing across all stages like data acquisition, screening, field investigation reports etc. Further, the status of applications can be tracked while on the go. Some of its features include:

  •       End to end loan application processing
  •       Enables easy uploading of documents
  •       Helps track the status of the application on the go
  •       Location tracking
  •       Automated follow-ups with leads
  •       EMI Calculator

2. Customer App:

Finezza’s Customer app allows for customer self-service. Customers can learn about the various types of loans offered and apply for the required category of the loan directly through their mobile. In addition to this, customers can track the status of their application on the go, estimate their creditworthiness, receive approval as well as accept the loan proposal instantly on mobile. Further, customers can access necessary reports like EMI schedule, payment details, etc.from their mobiles.

Finezza’s Customer app thus reduces the turnaround time as well as the overhead expenses related to customer reach and customer support. The Customer app helps the client to save colossal expenditure that would have otherwise been incurred on customer support functions like that of call centres.

Some of the features offered by the Customer app are:

  •       Self-service for lending lifecycle management
  •       Upload documents easily
  •       Track the status of the application on the go
  •       Accept loan proposal instantly
  •       Schedule repayment
  •       Self-help

3. Collection App:

Finezza’s Collection app is a form of delinquency management solution targeted towards simplifying the field collections and enabling better recovery of debts. The Collection app by updating the collections on mobile and web allows lenders to do away with the traditional receipt books, reconciliation procedures and other issuance and processing paperwork.

This app dramatically benefits the collection agents as they can now easily track the status of their customers who have to repay the loans. Further, as various manual procedures related to faulty customers and misrepresentation issues are automated, the risks associated with float money are significantly reduced — all these results in less turnaround time.

Given below are some of the features of the Customer app:

  •       PTP tracking
  •       Follow-up tracking
  •       Real-time customer information
  •       Location tracking
  •       Collection updates (mobile and web)
  •       Address locator

Today’s millennial generation has entered the financial market with better technology like that of mobile apps and various other financial management suites that enhance the loan management process. Hence, it becomes imperative on the part of the lenders to adapt to the changing customer needs and expectations before it is very late.

Today’s empowered borrowers expect a quick processing time and faster decision-making tools. A recent study by PwC showed that three out of four demographic groups preferred online borrowing as opposed to traditional forms like contacting the branch or calling lenders. [1]

Hence, incorporating digital lending technology into the business forms the best way to propagate new products, customise the lending and decision making process and at the same time meet the customer requirements quickly. Finezza’s mobile ecosystem suite caters to the present millennial empowered borrowers and lenders as well, as it includes various components of the loan management system like customer acquisition, loan self-sourcing, loan servicing and loan collections all of which can be done with a tap of the finger.

This mobility suite designed for all the stakeholders helps to reduce the loan turnaround time, automate customer notifications, and thereby free up the lenders’ and borrowers’ time to make critical decisions.

Benefits of Finezza’s Mobile Ecosystem Suite:

  • Results in lower turnaround time on account of quick access and better customer responsiveness.
  • Enables quick marketing of products, given the seamless integration with existing as well as legacy systems.
  • Helps to improve operational efficiency on account of automation and minimal human intervention.
  • Ensures optimal customer reach on account of better mobility of products and ability to reach a broader customer market.
  • Finezza’s mobile suite safeguards lenders against potential risks. This is because of its enhanced fraud management solutions and improved credit assessment packages.
  • The mobile suite helps to tighten the collection process and also minimise the operational costs.

Transformation into a digital lender is not that easy. It requires not just converting the paperwork into digital format but also restructuring the entire legacy back-end process. The Digital Banking report that researched the global state of digital lending found out that many organizations were beginning to embrace the need for online and mobile lending. Though there was significant growth in mobile lending and online lending processes, most of them were substandard and failed to meet customer expectations. [2]

34% of organizations had a mobile app for lending. As to the ability to complete the entire loan originating system through mobile, 31% of respondents were positive of completing the transformation process, 33% felt they would complete within and year and 12% in the next three years. These results prove that there is a stronger movement towards digitization of consumer lending. [3]

However, for the digitisation of loans through mobile apps, speed is a prime factor.

Lenders have to keep pace with the expectation levels set by other sectors like travel and retail, to meet the desire for immediate personalised service. Research on the time taken to complete a mobile loan application showed that 25% of organizations reported under five minutes while 55% said between five to ten minutes and remaining 20% said that it took more than ten minutes.

Hence merely installing a mobile app will not suffice. One has to streamline and revamp the existing process so that it integrates seamlessly, and also ensure speedy processing and delivery of loans as we move into the age of rocket science. 

One must install a complete end-to-end foolproof mobile lending solution to optimise the digital lending initiative fully. Finezza offers a whole end-to-end mobile ecosystem to facilitate all requests, detect potential delinquencies, optimise the conversion funnel, and ensure seamless loan servicing. Check the mobile suite here.

Finezza Stages in Loan Origination ExplainedLoan Origination System

Understanding How Finezza Can Streamline The Loan Origination System

Loan Origination System

“What is your biggest challenge in initiating the loan process?” This was the question posed to bankers in a recent survey by Moody’s Analytics.

The Answer: 56% of bankers reported manual data collection and further back and forth talks with client.

The commercial lending landscape to tackle the above issues has begun to witness a sea of changes given the emergence of technology and related competition. Many lenders recognise the necessity to automate their processes and thereby be more responsive and efficient to serve their customers. Automation has paved the way into the lending scenario in many ways, more particularly concerning streamlining the loan origination process through various loan origination solutions.

The Process Of Loan Origination 

Loan origination is the procedure by which a borrower applies for a particular loan and the lender processes that loan application. The loan Origination comprises six stages, as shown below:

1. Customer Pre-Qualification Details

This includes the essential list to be submitted to a lender like business details, total income, income tax returns, bank statements etc.

2. Application

This stage deals with procuring the loan application carried out either on paper or through electronic modes or mobile apps.

3. Processing The Loan Application

This stage of LOS comprises reviewing the application (by the lender) for its accuracy and ensuring its completeness. Alternatively, a sophisticated LOS solution automates the entire process by flagging various fields that are missing and send it back to loan applicants.

4. Underwriting

Post processing, the lender starts the underwriting process. Underwriting is a procedure that decides the risk in accepting the loan application based on borrower’s credit, repayment capacity and collateral.

5. Negotiation

Based on underwriting, the application is approved/rejected or sent back for further information.

6. Final Screening And Covenant Testing

In the final screening, the documents are screened thoroughly for compliance with internal and external regulations and a quality check is also done. This step decides as to whether the loan is to be disbursed or not. Testing for covenants and policy exceptions is also considered by laying down methods for collecting and analysing data at regular intervals.

Once these stages are completed, the decision to disburse the loan is made. Various loan vendors in their race to become more strategic and quality-focused, are increasingly embracing the latest technological advancements for a Loan Origination System (LOS) by way of new software solutions.

Ideal Features Of A Loan Origination System

Given below are the general features that must be present in any good loan originating system:

  • Multiple entry points for receiving applications like the internet, mobile apps, fax etc.
  • Online receipt of credit bureau information 
  • Calculation of various credit scores from multiple inputs
  • Making revisions as per new amendments (internal and external)
  • Valuation of collateral through various interfaces
  • Comprehensive checklist
  • Analysis of bank statements
  • Automatically update the credit databases and process other updates. 
  • Customisation of the underwriting process.
  • Automatically upload scanned data to the server.
  • Generate various reports in multiple formats for decision making
  • Customised follow-up of loan

How Finezza Offers A More Comprehensive Loan Origination System

Finezza LOS

Finezza’s team of tech and product veterans provides customisable and comprehensive end-to-end LOS Solutions designed to offer consistency as well as reduce the operating costs throughout all phases of loan management. We offer secure APIs and data pipelines that can be easily integrated. The security needs are factored with data-access controls.

The solution encompasses the entire lending cycle right from screening the applications to loan disbursal and follow-up. Below are some of the benefits of the solution in detail. 

  • Finezza combines the loan origination and management systems into one seamless flow, making the entire process of lending smooth.
  • With optimised disbursal processes and post-loan collection workflows and customer service, Finezza ensures a rapid and insight-driven experience for the lenders and consequently, a better experience to their end customers.
  • Finezza’s proprietary Loan Eligibility Estimator helps blend seamlessly various data points across numerous transactions, bank account statements, financial parameters, GST, IT and Credit Bureau data to create a realistic view of the business/person who is being evaluated for a loan. It is capable of taking inputs that mimic the credit evaluator’s understanding (haircuts, cash component as per industry, et al) of the business into its algorithms and builds scenarios concerning possible loans and terms that can be offered to the potential borrower.
  • Finezza’s extensive range of tools for Credit Assessment like Bank Statement Analysis, Financial Statement Analysis, a unique scoring model that goes way beyond just the credit score to predict the repayment success of a loan applicant, etc. help to analyse the creditworthiness of a loan applicant and to cut-down the application to credit assessment time to just a few hours.

Let’s take a look at how Finezza’s Analytics Suite optimises the loan origination process..

Finezza’s Credit Bureau Analytics:

  • Consumer integrations with all the four main credit bureaus (CIBIL, CRIF, Experian, and Equifax). 
  • Provides credit-focused grouping and alerts on data points for highlighting risks.
  • The LOS solution provides a loan history status, repayment history, detailed summary of borrowings, one-click detailing and ‘Enquiry to Success’ ratio.
  • It also provides a DPD analysis for all the products.
  • Finezza’s solutions also offer all the KYC information of the applicant.

Finezza’s Efficient Bank Statement Analytics:

  • Helps to analyse bank statements in real-time, with all accounts aggregated at an application level.
  • Automatically identifies and classifies different kinds of transactions, with in-built fraud detection checks. 
  • Finezza supports more than 250 banks and 600 formats.
  • Finezza gives a quick picture of the inflows and outflows (for business or non-business purposes) and the average monthly balance, among other things.
  • Finezza’s solutions help identify monthly, weekly, and quarterly patterns of transactions.
  • Creates counterparty leader boards to identify the top client or vendor, based on the total number of transactions for the statement period.
  • Identifies cheque returns (inward and outward), aids wild card searches for specific entries, and also calculates how volatile the account is based on the fluctuations in the balance.

With Finezza, You Also Get…

  • A 360-degree assessment of an applicant’s creditworthiness and helps you create personalised eligibility criteria.
  • A unified view of all loans across bank statements, CIBIL, and CRIF.
  • To choose the bureau you’d like to include in your calculations, select duplicate loans to exclude from calculations, and also view all the aspects of a loan (principal, tenure, ROI, and EMI) to make the right credit decisions.
  • View the business inflows from different banks, consider circular transactions, and view the loans classified into business and non-business.

With the convergence in the lending industry, banks and other financial institutions are pressured to sustain their revenue streams. With such high stakes, the lenders have to refine their procedures to boost their revenues while simultaneously mitigating their risks.

Today’s lenders have to maximise their lending operations through competitive rates, reduced cycle time, the quick and hassle-free disbursal and closure of loans and an overall outstanding client relationship. Hence a proper loan originating solution that measures up to the market demand and competition is a necessity to offset market competition arising due to the availability of multiple credit avenues.

Finezza offers a complete range of end-to-end loan solutions that not only cater to the current needs but also provides for future enhancements. Click here for more information on Finezza’s products.

Use Social Media To Assess Loan Applications

How Social Media Can Help You Assess A Loan Application

Lending Lifecycle Management

Today, everybody has a strong social media presence, no matter if your an individual or a business entity. Even though the social media platform has been subjected to a lot of criticism for invasion of privacy, it has served as a valid medium for revealing insights into a company’s intentions and legitimacy.

This data is used by several companies to assess customer behaviour. Even banks and fintech companies are taking advantage of this incredible medium for data to validate the authenticity of a loan applicant. A well-maintained social media profile can actually be a smart way to procure small business loans.

Whether your customers are young personal loan seekers who have no previous credit history and hence would also not have a lucrative credit score, or a start-up that is seeking a business loan to grow their business, social media can be a viable platform to access valuable and confidential information about your applicants.

How You Can Use A Loan Applicant’s Social Media Profile To Assess Their Credibility

Here’s how social media can serve as a data point for assessing your loan applicants:

1. Verifying the Information Provided

Basic information like the physical address along with the name of the business or individual can be cross verified with the actual information that is provided by the applicant. If the information does not seem to be consistent across all social media platforms, it can raise suspicion and be subjected to more scrutiny to validate the information.

2. Duration of Social Media Presence

The duration and the foothold of a business can be quickly assessed by looking at the social media page of the business. Pointers like how many followers, likes and reviews they have can help to assess the positive impact of the business. The longer the age of the business social sites, the higher the aggregation of data that can be utilised to assess the brand and its products and services.

3. The Posts

The next thing you can check are the individual posts on the social media page. What kind of posts are published on the platform, how frequently are they done, and what are the reactions to these posts? This information can be used positively or negatively to assess if the business has been marketing their products effectively.

The posts should not be solely used for driving purchases and sales. They should also be used to share valuable information, encourage learning, convey greetings during festivals, discuss trending topics, etc. A good combination of such posts is a telltale sign that the business is using the platform to genuinely build a connect with their customers and have long-term plans for the business.

4. The Followers

Along with the posts, checking the quality and quantity of followers or connections of the business page is important. The number of followers on social media signifies whether end customers really like the product and help to assess whether the business has a chance of success.

5. Ratings, Reviews and Testimonials

Checking the ratings and previous reviews of the business is something which we all do before we buy a product or avail a service. The same goes for validating a loan application. How has the online reputation of the business been so far?

Bad comments and reviews are not just harmful to the business but also for the business loan application. Going through the social media reviews of the business will convey the success and the overall journey of the business so far.

6. The Frequency of the Response

Social media platforms help to connect and engage with the audience by getting your story across in an appealing manner. By looking at the response of the posts, comments and likes, you can gauge whether the business is really all out for connecting with the audience and converting them as customers.

It shows how well the business is interacting with their audience and making an effort to maintain a positive customer relationship. Checking if the business has responded to individual comments and accounted for all customer feedback is a great way of knowing if the business truly cares towards the needs of their customers. An unresponsive social media footprint shows an irresponsible business that does not value its customers.

7. Determining Terms for Online Loans

There is a strong relationship between customers who are active and responsive on social media, turning out as good customers. This is a fundamental sign of a good and thriving business that will do even better over time and so be able to repay on time.

The information on social media platforms can help to determine the terms of the loan by personalising the loans with special interest rates for that particular customer.

8. Useful for Loan Origination and Customer Acquisition

Data in social media pages can indeed be a starting point to acquire new customers. When several businesses use it to attract customers, why not use social media data to acquire new customers who might need loans to meet their capital demands?

As a fintech company, you can start your own social media page and market your campaign to acquire prospective customers and businesses to avail loans from your institution.

Else, you can surf the social media pages to look for prospective customers who are doing good and enhance their position by providing them loans.

9. The Five C’s

Traditionally, in the lending industry, the primary attributes that lenders often look for are the Five C’s – Character, Capacity, Capital, Collateral and Conditions. All of this can be informally assessed by using data from the social media pages.

By going through information of a business page or an individual page, you can understand their

  • Character – on a personal basis.
  • Capacity – know their trustworthiness or capacity and ability to repay the loan.
  • Capital – money the borrower has already invested.
  • Collateral – physical assets that can guarantee the loan if the borrower can repay it.
  • Conditions – understand the overall competition and economy of the business position.

Even though social media is a relatively small consideration for companies who make business or individual loan decisions, it is a significant data point that should not be overlooked. Use social media to your advantage and leverage the power of data from gaining insights that otherwise will not be possible.

Rather than relying on factual information presented by the business or individual, why not take a step further and assess the actual and real time information available in social media pages. In this digital world, it’s time to go beyond assessing the creditworthiness by just looking at the credit scores.

For new businesses and consumers who don’t have a previous credit history, social media can serve as a tremendous platform to gather data and decipher the real picture.

Build your own credit assessment algorithm by using Finezza’s loan management software to power your lending decisions. Get in touch with us to know more about how you can use social media to make smart loan decisions.

How To Prevent Loan Fraud

Signs Of Business Loan Fraud And How It Can Be Prevented

Lending Lifecycle Management

The advent of new technologies has paved the way for a new era of financial services within the digital ecosystem. Thanks to the milieu of fintech companies, small to medium-sized businesses can get access to capital resources easily.

However, with new pathways, opportunities are rife for sophisticated fraud strategies, greatly harming the financial services industry. In fact, according to recent findings from our Global Identity and Fraud Report, 55 percent of businesses globally reported an increase in fraud-related losses over the past 12 months

Despite the tightened reins on lending, business loan fraud is still prevalent. Therefore with all the advancements that fintech companies provide, how can they ensure that they are a step ahead of uncovering business loan fraud?

Here are the ways you can detect business loan fraud:

Identifying a Business Loan Fraud

Small business loan frauds are not as visible as consumer loan frauds because businesses are not really viewed as victims in the way consumers are. There is a lack of legislation requiring frauds to be reported and therefore, a dearth of information to identify them.

Besides, the fact that a business loan fraud can be three to ten times more profitable than consumer loans, this should be a growing concern for companies to adopt the right strategy to identify red flags and tackle them effectively.

1. Knowing the Small Business Fraud Types

Business loan frauds can be characterised based on a first-party or third-party basis, varying significantly in frequency, severity and complexity. A first-party fraud or victim-less profile is attributed to having some form of material misrepresentation. For example, misstating revenue figures in the loan application.

The second type is third-party involving a third-party stealing the identification details of a known business or an owner in order to borrow credit using the victim’s name.

2. No Physical Presence of the Business

Businesses that don’t have an official physical presence or are shell companies run by fictitious entities can be a cause of suspicion. These type of businesses are often created for money laundering and are easy to form and operate.

3. Multiple Businesses Associated with One Person

Having multiple businesses under one owner is a red flag that needs more research and exploration to find out if it’s legitimate. Look at how much each business is earning and if there’s not much income to it, it can indicate something suspicious.

4. Commercial Bust Out

A bust-out is another tactic that involves the criminal opening several lines of credit under different business names and eventually abandoning all accounts after maxing out or exceeding all the credit lines.

5. Lack Of A Solid Business Plan

Getting a thorough understanding of what the business is doing and aims to do is of utmost importance. What is the overall business strategy? If the company lacks a lucrative plan, the chances are high that it can be a scam to extract money.

6. Inflated Earnings

Several businesses tend to have overly exaggerated or misrepresented earnings in their book of accounts. Some do it deliberately while others can do it mistakenly without the intent. In either case, if the company’s income appears to be inflated that what it actually should be, it can only be known with proper verification.

7. Unaudited Financials

The financial health of the company should not be taken for granted on the sole basis of the applicant’s words. Always insist on audited financial statements. Since it’s very easy to fabricate the financials, you should always rely on solid data to verify the financial statements with the bank statements.

8. Never Payment

Never pay or never payment occurs when the business opens a new account and never makes a single payment on any debt owed. This translates as a financial loss for lenders to write it off as a credit risk problem. Never-pay losses are on the rise now more than ever and so, organisations must have a way to predict never-pay behaviour and prevent losses.

9. Account Takeover

This is a third-party fraud when an impostor takes over an existing account that is already established by the legitimate business. These kinds of frauds are facilitated through phishing scams and accomplished with the interception of credit cards and statements to take over an account.

Moreover, business identity thefts that utilise the letterheads and contact information of an existing company are also predominant.

10. Lack Of References

It’s important to check for references to any past dealings with banks or organisations. If something is fishy related to the previous history of the business, then more questions need to be asked. Knowing such references will help to decipher the credibility of the business and their position.

Challenges Faced in Identifying Small Business Fraud

Lenders face a plethora of challenges in identifying business loan fraud. The most critical challenge is to make sure that the data sources that are used to check the applicant’s information are reliable. Rather than relying primarily on the applicant’s self-reported data, there should be scope for cross-verification to understand the credibility of the business.

Moreover, as loans are applied for online, using the ‘faceless’ channel of Internet and mobile, there is an even greater chance of business loans frauds and scams. Therefore, organisations might need to implement additional risk mitigation efforts in delivery channels that are not face to face.

Best Practices to Prevent Business Loan Fraud

Incorporating the following measures can reduce the chance of business loan fraud losses:

1. Verify Information from Multiple Sources of Data

A cross-dimensional analysis of several data points including the bank statement, financial statement, GST information, KYC details, credit score, social media channels and more is highly recommended to identify fraudsters.

Conducting a thorough analysis is the best way to eradicate false positives and uncover any anomalies. Using modern technology of big data and machine learning to your advantage will help you decipher customer behaviour and identify any offenders.

2. Smart Decisioning Through Analytics

The prevalent norm across multiple sectors of business is achieving more with fewer resources and balance cost reduction efforts. One common approach to managing customer acquisition costs is through adopting automated decisions through targeted analytics.

Implementing a unique score-based approach that considers the vast data points for the applicant’s creditworthiness assessment will reduce manual efforts and mitigate fraudulent activities. This is where analytics come into play and help you to segregate suspicious entities from those that don’t exhibit characteristics of fraud. As a result, you can oversee trends, patterns and set fraud risk tolerance levels and simplify customer treatment.

Finezza helps to mitigate your risk of business loan frauds by incorporating analytics and a solid credit assessment strategy that will help you get rid of false positives. Finezza’s comprehensive loan management system help clients streamline authentication by verifying and validating business data using analytical tools that account for multiple sources of data from several networks.

We are committed to listening to client needs and producing customised solutions that mitigate business loan fraud by delivering quality data, targeted analytics and blended decision making. A well-executed fraud detecting strategy will improve fraud identification and operational efficiency, in turn reducing customer acquisition costs.

To know more, get in touch with Finezza for a free demo.

GST

GST: A New Data Source For Fintechs To Assess Loan Applications

Lending Lifecycle Management

When the government first introduced the Goods and Services Tax (GST) in 2017 to the Indian economy, there were several concerns about crossing over to this new tax regime. As it happens with every change, the new tax regime was not readily accepted by all. Nevertheless, it helped to re-organise the small and medium enterprises sector which contributes to about 30 to 35% of India’s GDP.

The success of the GST reform is highly debated and whether it is beneficial to all or not, it will take some more time to assess its positive results. But, it has certainly brought about a huge benefit in this digital era of analytics. GST has paved its way to create a tremendous opportunity of generating financial data of companies, which was otherwise not possible.

The access to this data has provided a huge platform for fintech companies to assess the creditworthiness of the applicant and make data-driven decisions in credit lending to small and medium-size businesses.

GST: The Basics

The goods and services tax or GST reform has been one of the most radical tax reforms in India, which unifies multiple indirect taxes including VAT, Octroi and Service tax under a single system. It was introduced with an aim to bring about greater transparency, uniformity, and accountability within the market.

Over 8 million businesses are registered under this system generating around 58 invoices per month. Also, as an effect of GST, businesses would have to file around 37 returns per year as opposed to just 2 returns in the previous system.

Technology Shift – Pre and Post GST

One of the key issues when it comes to SME financing is that this sector is highly informal. Often, there was no scope or access to data points regarding their cash flow because SMEs operate in unique business models. As a result, it caused a lot of heterogeneity, making credit appraisal a cumbersome process.

There was no sure shot way to assess the credit standing of the borrower and most of the time lending companies had to rely on a uni-dimensional assessment of data using the credit score.

Even though the switch to GST was a nightmare of sorts for SMEs, it has generated a vast amount of financial data that can be used in multiple ways to solve the credit problem. The shift to GST has led to more SMEs transferring from a desktop-based system to cloud and mobile-based system.

The data generated subsequently will serve as the most credible data on the supply chain of the business. Along with its e-bill format of sales, it will ensure that there will be absolute precision and transparency of the business. In a nutshell, the data generated from the GST can help to assess the financial health of the business in terms of its cash flow, supply chain and sales.

Leveraging GST Data for Flow-Based Lending

Under the GST regime, the buyers of goods and raw materials can claim input tax credit which has already been paid by their suppliers. This creates a transparent cycle where buyers are mandated to have proper invoices as well as ensure that taxes have been paid by the suppliers so that they can get tax credits.

As a result, there is s greater tax compliance in the entire chain and there is a record for every transaction including sales and purchases. Such record-keeping is useful for fintech companies when they undertake credit assessment as they can cross-verify financial statements provided by the applicant with the actual data that is available in the GSTN or GST Network.

Instead of relying solely on traditional lending parameters including credit scores, previous credit history or financial data that applicants provide, utilising the GSTN data point will help to bridge the gap. This will enable fintech companies to cater to the working capital requirements of SMEs with minimal documentation and quick loan disbursal.

In addition, it will also help fintech companies to create customised lending products tailored to the specific credit requirements of each borrower. As you gain access to a standardised and centralised network of real-time data from the GSTN, you can simplify your loan lending process. From loan origination to assessing the creditworthiness of the borrower, it will your loan servicing process hassle-free and cost-effective too.

Advantages of Using GST to Assess Loan Applicants

Make the shift from traditional asset-based lending process to data-based lending by gaining access to consented GST data. Get your hands on firsthand information of turnover and cash flow with great accuracy. Here are the benefits of using GST in your analytics of credit assessment:

1. Make Lending Customer-Centric

Gaining insights from the GSTN will help you discover an accurate and personalised profile of the loan applicants, which in turn helps you deliver personalised loan offerings with competitive interest rates that cater to the need of the end user.

2. Access to Vast Amount of Data that Can be Used to Gain Multiple Insights

With GST, you can access data that includes:

  • Purchase Data – Inward supply information about goods and services and insights on trends
  • Sales Data – Outward supply of goods and services, aggregate turnover, HSN or Harmonised System Nomenclature – wise classification of merchandises summary with financial health trends
  • Customers Data – Understand the details and nature of customers across products and their breakdown
  • Geography – State-wise Bifurcation and breakup of Sales
  • Vendors Data – Access to top vendors list across products and their breakdown in detail
  • Public Data – Compliance status and GST registration details

3. Uncover False Positives

You can verify if the applicant is providing the right financial information by comparing real-time information from the GSTN. Do away with false positives and assess if the borrower will be able to repay the loan through understanding the financial health of the business. Identify and differentiate false information and weed out prospective defaulters to lower your loan defaulter rates.

4. Multi-Dimensional Assessment of Creditworthiness

Rather than relying on data provided by the applicant and on the credit score, you can gather data across various points from the GST information and make a thorough assessment with a quick turnaround time.

By building a relevant statistical model from data-driven platforms of GST, credit score, bank statements, KYC, etc. fintech platforms can access instant insight into the overall credit behaviour of the applicant.

Evaluate Applicants With Data-based Lending Using Finezza’s GSTN Analytics

The true power of data goes beyond its availability and aggregation, the actual worth of data lies in its power to generate insights and using it for your operational excellence. Simplify your credit assessment process by leveraging GST data from Finezza’s suite of loan management software.

The high-end analytics of Finezza’s loan management system provides a detailed analysis that takes into consideration several data points including the GSTN, multi-credit bureau analysis, bank statement analysis and more.

India is expected to witness a surge of development across the SME sector and this involves more lending to meet the capital needs of growing companies. Avail the great opportunity of nurturing the MSME ecosystem of India. 

The GST system of India is a win-win for both companies who can seek new loans using their transactional details and financial institutions that can provide quick capital resources after assessing the financial position of the business.

Get in touch with us at Finezza, if you are looking for a comprehensive lending lifecycle management software.

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14 Factors To Consider Before Zeroing In On A Loan Management Software!

Lending Lifecycle Management

Are you struggling with a manual loan management process? Or are you unable to cope with disparate loan origination and management systems that offer a fragmented view of the process? Cut down all the paperwork and make your loan management process cost-effective with a singular loan management software that solves all your needs.

An automated and comprehensive loan management system adds tremendous business value to your institution and aids you to elevate your overall customer experience. With loan management software, you can deliver loans with quick turnaround time and make the overall experience worthwhile for your customers.

What You Need To Remember Before Choosing A Loan Management Software

When it comes to providing seamless customer experience, finding the best loan management software for your business needs is like buying a new suit: one size doesn’t fit all. The basic expectation is that the software should enhance your operational efficiency and be easy to use! 

Here are some important factors you should consider when you invest in an effective loan management software:

1. Scalable Solution

It is of utmost importance to opt for a loan management system that grows as you grow and diversify your products and services. The software should be able to cater to all the lending needs of the companies ranging from consumer loan, commercial loan, asset financing and more.

A well-structured software system will account for a broad range of use cases and emerge as a true business value driver for the company.

2. Cloud Based vs On Premises Deployment

As a growing lending company, you might not have a dedicated IT department to develop and manage an advanced software solution. That’s where cloud-based solutions make your job easier and help you deploy a fully manageable software system with quick implementation.

What’s more, you can gain access to advanced features and functionality, enjoy regular maintenance, software upgrades along with prompt IT and customer support when you need it.

3. Centralised Solution

No need to store data in multiple systems that take care of different stages of the loan lending lifecycle! A loan management software stores customer data in a centralised place, allowing easier retrieval of data and providing a 360-degree view of the customer.

Irrespective of the branch or team that handles the loan application, the entire loan department should be able to access a singular and holistic view of all applicants.

4. Comprehensive, Integrated Origination, and Servicing Functionality

The ideal software partner should offer an integrated overview of all the different processes of the lending lifecycle, including loan origination, credit assessment, loan disbursal and loan repayment modules.

A good choice for fintech companies would be a program that offers a product suite of customisable modules that incorporate a comprehensive view and avoid the fragmentation of data.

5. Proprietary Credit Assessment with Thorough Analysis

The benefit of using technology to your advantage is by aggregating the right data and deriving insights from the data. The best software services should provide integration with all credit bureaus and other valid data points that help you assess the creditworthiness of the applicant precisely.

The top programs include proprietary scorecards that enhance credit bureau data and analysis from unconventional data points including GSTN, social media inputs, bank statement analysis and more. It should utilise the advantage of artificial intelligence and machine learning technologies to continually provide efficiency.

6. Smart Automation

An operationally efficient lending process is one that automates multiple mundane tasks so that your staff can focus on evaluation, analysis and other critical decisions. A good loan management system should save substantial time and energy as it speeds application submission, reduces human errors, reduces the need for manual re-entry of data and increase loan approval time.

A good software choice should start with foundational precursors based on lending industry best practices and then allow the company to customise based on their own style.

7. Mobile Access

Application-based services in mobile phones are commonplace today given the digital era. A mobile-based application can be immensely useful for both the customer and the company. From the customer’s point of view, it offers great convenience to handle their loan details from their phone. And, for the company, it serves as a medium to acquire new customers and retain existing customers.

8. Reporting and Analytics Capabilities

The loan management software should be able to generate analytical reports that help to decipher bottlenecks, streamline the process and improve productivity. It should not just improve your operational efficiency, but also help you oversee trends and resolve problems.

With continued used of the system, it should offer a scope of creating custom reports without breaking your head and help you assess KPIs, customer acquisition and process-related metrics.

9. Speed and Agility

A quick, transparent and seamless loan disbursal is what customers desire so that they can access capital resources without any hassle. Your entire lending process should meet the expectation of your clients.

A good loan management software should keep your customers informed of the loan progress as you quickly assess their creditworthiness and disburse their loans on time. The speed and agility of the loan lifecycle is a major asset to attract new customers.

10. Authenticated Access

As the data is stored in a singular and centralised repository, providing the right access to the right section of users is important. This will help different teams to access the relevant data without waiting for unnecessary approvals.

11. 100% Secured Services

A cloud-based loan system provides features like real-time sharing and updating of data, automatic creation of documents and more. Security of data is definitely vital when you are dealing with managing confidential and critical financial information of your clients.

Therefore, opt for a loan management software with built-in security features that cover data security, user security and network security.

12. Third-Party Integration

A loan processing module should also work in sync with your other systems like a CRM or ERP. It should be able to connect with remote sales personnel with up to date information so that they reach their targets.

All of this requires the software to connect with third-party applications to auto-populate information and save time on re-working.

13. Easy to Use

Like any other technology, you will have to train your employees to use the loan management system. A complex loan management software with a complex workflow is the last thing you want to deal with. Save yourself the headache and choose a software with a clean, simple user interface that doesn’t have much of a strenuous learning curve.

14. Technology and Customer Service Support

Last, but not the least you need access to a team of technical experts to take care of downtime and errors. This will enable you to stay focused on revenue-generating activities, whilst your onus of managing the technology platform is borne with the experts who are adept at handling any problems.

Choosing lending software is a major decision that needs careful consideration of the above factors. Always choose a provider that offers value to your business, taking care of all your short-term and long-term business requirements.

Finezza is a leading provider of loan management software that provides all the features to enhance the performance of your lending process. Get in touch with us today to know more.

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