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Thursday, September 3, 2009
As banks become more tech savvy, they are increasingly looking at loan automation technology. To find out the benefits and the challenges, executive e
Posted by Tip at 9:09 AMand lending institutions need to be competitive in today's lending environment in order to be in business.
While they may endeavor to stay ahead with niche products, sustained marketing, effective customer care and efficient collection system, they can no longer depend on manual processes in their lending business. Geographical reach and brand loyalty can to some extent help them, but these are no longer the determining factors. It calls for efficiency in taking decisions, in servicing, in monitoring and in collecting.
Borrowers have the ability to borrow from their choicest sources and whenever they want. The institutions are realizing that the customers demand convenience apart from acceptable levels of interest. If a manager is not capable of processing a loan application within the least possible time, the customer has the choice to look toward others who can very well do so.
So, Indian banks and financial institutions are today following the footsteps of their global counterparts in automating their lending processes often using fully integrated solutions that cover the entire Joan life cycle - from loan origination through loan application process, risk assessment, decision-making, monitoring and management control of approved loans. And what's more, there are packages available in the markets which are customizable, scalable and implementable with the least interference to the existing automated environment.
Predominantly, these packages have: (i) risk management tools that help underwriters to automatically evaluate loan packages and give alerts on doubtful applications and evaluate the applicants in terms of liqUidity, collateral and credit history; (ii) document scanning facility that enables digital storage and transmission of documents and that ensures integrity of the document throughout the loan life cycle; (iii) communication facility for managers processing the loan applications by exchange of notes through the system and even through dedicated email systems; (iv) workflow automation which facilitates flow of loan applications through various stages seamlessly and within timeframes; (v) monitoring system that takes care of repayment schedules and managing PAs; and (vi) EMI reminders and default notices that are generated to customers from the system without the managers haVing to
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