Loan Management Software

The Covid-19 pandemic has infected millions of people globally, bringing down economies to a standstill, and is still spreading its fangs far and wide. Despite adequate measures, governments have failed to contain its spread. Both international and local health authorities recommended measures like social distancing and self-quarantines to help provide the spread of this deadly virus.

Current Scenario

The Confederation of All India Traders has raised concerns about the possible spread of coronavirus through currency notes. Even the World Health Organisation has advised nations to take measures to maintain proper hygiene during the processing of notes.

RBI records show that there are 10,875 crore banknotes and 12,000 core coins in circulation, as noted on the 31st of March, 2019. Authorities suspect that paper currency can serve as a carrier of different viruses and infections as it is circulated through hand exchange between unknown people. It can even lead to magnified health hazards during the coronavirus pandemic.

India, in the past, had seen instances when Indian banknotes were found to be the carriers of pathogens. While it is unclear how long Covid-19 virus survives on surfaces, it is suspected that it may stay on various surfaces for a few hours or even up to several days.

Various financial institutions across the globe have undertaken practical measures to disinfect cash through the use of ultraviolet light, high temperatures, quarantining, and the destruction of existing cash.

The Way Ahead: A Digital Economy

Tech companies have been paving the way for digital solutions to modify the cash dependence of the financial systems for more than a decade now. However, regulations that worked to check the functioning of traditional banks often hampered the progress of digital technology companies trying to make a mark in financial markets. However, recently, due to a strange twist of fate, governments collectively are discouraging paper money and promoting digital monetary transactions.

On the 16th of March, RBI issued a useful advisory propagating the use of various forms of digital payments among Indian citizens explaining how it is better, given the current scenario. It suggested that the use of alternative forms of payments from the convenience of their homes through online channels like mobile banking, internet banking, cards will also help citizens avoid crowded and public places. In a quest to fill up the void, digital payment avenues present a streamlined and straightforward retort.

This calls for instant financial infusions into the economy to cope up with the downs of the coronavirus crisis. In this regard, digital mediums seem the best suitable recluse. Digital lending allows borrowers to access payments in a streamlined fashion.

This sudden need and preference for digital modes of payment should be viewed as an opportunity for tech firms to steer towards growth. While some experts suspect that this shift is temporary, others believe the convenience of using digital will be the sticking factor. Moving forward, with every transaction that is conducted virtually through digital mediums instead of old-school physical cash fortifies the change that’s under process. Although driven by acute necessities, the adoption of digital payment technologies in the wake of COVID-19 is still getting users comfortable with virtual money.

However, critics also voice the opinions that the unbanked and underbanked sections of the economy would not benefit from such a pandemic-inspired wholesale shift to digital money. The reluctance surfaced during cash usage will affect older and weaker sectors of the population who like to trust cash and lack digital access for formal participation in the digital economy. That is why it is imperative to reinforce the adoption of simple online banking accounts for all citizens that simplifies the distribution of direct payments to them. The Indian government is working relentlessly to improve the financial literacy of the citizens with initiatives like Rupay Cards, Kisan Credit Cards, and Jan Dhan Bank accounts, etc.

Fintech Future

Given the numerous advantages that digital payments offer, like speed, ease of business, and touchless transactions, they remain a viable option. The payment technology companies are all set to implement safe and effective solutions with no physical contact, in-person, and online. The advent of coronavirus has accelerated the adoption of digital payments and other alternatives to material options like cash and checks.

Fintech giants and innovators in the digital payment space have been building apps and allied infrastructure to aid mobile and digital banking practices for a while. In some cases, their ambitious plans include turning the economy into an entirely cashless environment. Fintech startups can capitalise on government initiatives like Rupay Cards, Kisan Credit Cards, and Jan Dhan Bank accounts, etc. They can enter into synergies with public institutions in a quest to penetrate the informal economy.

Not only would such collaborations bring long term benefits like less tax evasion, instant transfers, and payments but also help avert the spread of the deadly virus and pathogens through physical money transfer. It would not be entirely wrong to conclude that going digital is the safest route for Indian financial markets.

Finezza is a lending management software tool that digitises the process of lending for NBFCs, MFIs, and banks for maximum efficiency and better returns. The easy to use framework automates the process by digitising the customer onboarding process and allowing instant loan disbursal to borrowers through easy creditworthiness assessment. It uses efficient data extraction and segregation modules to help with customer onboarding.

Backed by AI and ML-based algorithms, the software streamlines the origination process, and even assists loan evaluation officers with reports. It dramatically reduces the chances of NPAs with its smart decision-making reports that access credit data as well as alternative data. Finezza also helps lenders in financial markets, digitise the loan collection process, and optimises the ROI of the business.

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.

Conclusion

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.