Transforming from traditional manual loan processing to a digital approach can be done either by digitalization of the entire process at once or by gradually transitioning from manual to digital. This approach will not disrupt existing business operations and will provide time for resources to acclimatize with the new process.
Digital journey or automation of the lending process needs to be done stagewise, which will provide breathing space to address teething issue and provide better lending process experience for both field officer and borrower.
- Loan Sourcing: Digitalizing the data capture process by enabling field/loan officers to capture information during interactions with borrowers. This is integrated with Dedupe, KYC ID verification, & Credit Bureau inquiries. Additionally, host of vendors and third-party API stacks are available to verify borrower/MSME identity, assess creditworthiness, detect fraud, and ensure compliance with AML regulations.
- Credit Decisioning: Automate the Credit decision with Business Rule Engine, which enables Credit Officer to take informed decision rather than taking manual decision which might lead to human error.
- Document Management: Digital loan processing eliminates the need to store piles of paper documents. Borrowers’ documents can be securely e-signed using Aadhaar- based authentication and maintained digitally for instant access when needed.
Digital journey or automation of the lending process needs to be done stagewise. This will allow breathing space to address teething issues and provide better lending process experience for both field officer and borrower.
- Loan Sourcing: Digitalizing the data capture process by enabling field officers to capture information during interactions with borrowers. This is integrated with Dedupe, KYC ID verification, & Credit Bureau inquiries. Additionally, host of vendors and third-party API stacks are available to verify borrower/MSME identity, assess creditworthiness, detect fraud, and ensure compliance with AML regulations.
- Credit Decisioning: Automating the Credit decision with Business Rule Engine enables Credit Officer to take informed decision rather than taking manual decision which might lead to human error.
- Document Management: Digital loan processing eliminates the need to store piles of paper documents. Borrowers’ documents can be securely e-signed using Aadhaar-based authentication and maintained digitally for instant access when needed.
Investing in digitalization process using intuitive user experiences, paperless workflows and automated credit decisioning tools will streamline the entire lending process and create a more agile organization. Credit Managers no longer need to go through every step of the lending process, physically manage the corresponding paperwork or depend upon underwriters to evaluate borrower information.
Operational Cost Efficiencies
Operational cost efficiencies refer to reducing expenses and improving resource allocation by streamlining processes and optimizing productivity. Some of the ways to enhance operational cost efficiencies are as follows:
- Cost savings given that loan processing is labor intensive and contains several manual steps
- Enhanced quality and process improvement with more accurate data collection resulting in less errors that must later be corrected
- More informed credit decisions leading to lower delinquent payments and reduced collections activity
- Improved fraud detection and risk management through machine learning algorithms
Benefits of Digital Loan Origination System
Outlined below are some of the key benefits of implementing digital loan origination systems:
- A single centralized system
- Compliance with lending regulations
- Reduced loan approval time
- Elimination of manual loan processes
- A faster and more accurate underwriting process
- Fraud detection
- Simple and easy lending audits
- Diminished risks of data compromise
Since data is becoming more integral to lending every day, data protection and privacy have once again turned into crisis areas that need proper solutions. Simply put, as digital lending grows, so does the risk of data breaches. From a security perspective, integrating robust cybersecurity measures like advanced encryption and authentication technologies is paramount to protecting sensitive customer data.
Author: Venugopala K | Principal Consultant
Venu is a veteran of the Banking, Logistics and MFI domain with over 30 years of corporate experience, with the last 15 years at Craft Silicon. Solutions, design and implementation are his forte and he has integrated design & implementation to best serve the business needs. Venu has contributed extensively to the growth of BR.Net.
