Blog Details

5 Achievable Steps to Transform Retail Lending with Digital Loan Origination System


Sometimes, ‘more’ is not always great. Especially in retail lending. More manual processes, more legacy systems, more technology investments is not the solution for customer delights. They are living the dream life in today’s ‘instant and short’ era, where even sports like cricket have its duration reduced from days to 50 overs to 20 overs.

Borrowers no longer wish to wait days or months of tedious paperwork or lengthy loan origination processes. They expect tailor made credit offerings, documentations and automated approvals in minutes. This is the reason for the mass customer emigration from traditional financial services to digital fintech providers.

Key steps for revolutionizing retail lending:

Faster generation of loan applications

digital loan origination system can help manage complete retail loan application journeys on a single platform.

  • Digital application journeys

Lead acquisition journeys can be quickly created for multiple channels like website, SMS, self-service portal, branches etc. Codeless drag-and-drop designers create intuitive journeys with dynamic forms for quick data entry to capture borrower information.

  • Digital document management system

A digital LOS helps financial firms to use the latest digital DMS technology smart collecting and maintaining documents. This, along with integrating with credit rating agencies, immensely speeds e-KYC processes. Moreover, intensive manual data entry process can be eliminated with smart OCR (Optical Character Recognition) capabilities.

  • Integration with credit rating bodies

Digital loan origination system integrates seamlessly with credit rating bodies, other external systems and enables instant eligibility checking, previous transaction histories etc. Based on such intelligence, pre-approved offers can be generated, displayed and applications captured.

AI-driven automated approvals

Digital loan origination systems, backed by machine learning and intelligent decision engines processes, can quickly process credit details of borrowers from multiple systems and create a comprehensive actionable borrower profile. New data points can be created and analyzed. Borrower data patterns from multiple sources, professional and industry profile, credit scores, insights are generated and processed with business rules in a drag-and-drop designed journeys for automated lending approvals. Making pre-approved offers and instant credit fulfilment possible. 

Simplified and consistent regulatory compliance

Retail lending landscape is littered with regulations for protecting the interests of the lenders and borrowers. However, navigating the tedious regulatory maze in resource and cost intensive. A digital loan origination system will have the latest compliance communication templates with regulatory bodies and customers.

End-to-end compliance is achieved with real-time notifications and status updates. Integrations with regulatory bodies ensures comprehensive compliance coverage including Foreign Account Tax Compliance Act (FATCA) and e-KYC. All transactions and processes have an audit log for tracking by customers and internal teams. 

Automated Risk Underwriting

Applications can be automatically underwritten based on predefined parameters, risk appetite and integration with rating agencies. Exceptions can be managed with certain rules put in workflow. The fraudulent cases can be singled out. Real-time management, control of deviations through timely updates and alerts can notify executives for corrective actions.

Quicker loan disbursal processes

Digital loan origination platform manages loan types and interest rates It can automatically calculate loan EMI with repayment details. EMI payment transactions are also managed and real-time alerts, status updates and deviation notifications generated. Auto-disbursement instructions can also be implemented, subject to risk criteria, for instant fulfilment. Amortization schedule are also generated with partial or full disbursal schemes and delivery orders. Documents and repayment instruments are instantly verified on the digital platform in real-time.

The benefits of digital LOS for retail lending transformation.

Automated decisions

Taking decisions are tough. Thankfully, business rules can be automated through journey designers. Based on pre-defined matrix, applications can be automatically assigned to the relevant management in case of deviations, loan limit breaches etc.

Analytics based on set algorithms and activity tracking help in real-time decision making. It can also make the platform regulatory compliant for audits with improved process transparency.

Reduced transaction costs with real-time AI

Transactional and operational costs are substantially reduced through automation. Seamless integration of end-to-end journeys boosts the faster fulfilment and robotic underwriting. Routine manual processes are interconnected with robotic journeys through visual designers. Data entries are minimized through integrations with multiple internal and third-party system.

30% reduction in loan origination costs in retail lending is achieved through automated approvals and processes, powered by digital loan origination system.
Shorter sales cycles with higher conversions

Sales team can be empowered with powerful real-time AI tools that will provide them intuitive advice on credit requirement of borrowers. Guided actions will help in closing loan contracts faster. This will also help the sales team in seizing every opportunity while fighting the constraints of rapidly changing environment.

Lending journeys and processes can be digitalized and automated from end-to-end. This will involve everything i.e. pre-screening, application processing, underwriting, approvals and finally the disbursal of loans. Across all kinds of loan products right from personal loans, business loans to car loans and gold loans. Thus bring the power of intelligent lending truly to the masses.