Operational and Transactional excellence in Lending to drive down operational costs and achieve regulatory compliance.

The current climate of increased regulation, combined with a global economic slowdown, is challenging the profitability of retail banking operations around the world. Driving down operational costs while complying to regulations are among the top priorities of banks. The most successful banks will be those that have transformed their business models to achieve greater efficiency across the operational value chain. In his article, “Banking Must Digitally Transform Consumer Lending”, Jim Marous, CEO of the Digital Banking Report highlights how improved lending operations can lead to easier application processes, faster credit decisions, increased transparency, innovative borrowing options. All this will result to a happier customer.

Objective is to enhance operational efficiency

As the existing systems leave little or no room for further IT intervention, there is an obvious renewed demand for a flexible FinTech product that helps drive down operational cost and allows transformation. As most of these transformations require manual workarounds outside the system, these changes take time in transferring data between functional areas, as the data no longer exists within the system.

Traditionally, banks practiced adopting a lending module, as part of a core banking system and with other siloed functional and business point systems resulted in a heterogeneous mix of applications. Varied technologies and capabilities of this kind often created chasms between business processes across disparate systems, leading to numerous hand-offs between various departments and functional units. Such hand-offs increased the transaction turnaround time, and even failed to provide a unified view and timely notifications and escalations.

FinTech platforms that can bring all stakeholders inside the lending solution is critical

In order to enhance the operational efficiency across the value chain, banks need to adopt FinTech solutions and applications that offer the capabilities and features which can bring all the stakeholders of the lending ecosystem inside the solution. Secondly, these technological advancements must be able to build or procure a componentised and flexible solution with high level of configurability.

More importantly, banks need to abandon the redundant technology-driven approach and instead adapt the business-process driven approach in order to deliver quality user experience. A change in the approach can simply deliver better business activity monitoring, with event driven or rule based notifications and escalations while providing comprehensive and unified view of the entire lending portfolio.

Business driven and process-centric platform based FinTech solutions are the need of the hour

Apt FinTech advancements can help banks in combining rule-based validations, rule-based accounting and standard BPM capabilities powered by an enterprise class workflow mechanism. Combining these factors can bring all stakeholders of the ecosystem including product, policy and process, credit and operations teams well inside the solution. This enables the various stakeholders get detailed insights, as per their role, in the form of performance metrics and dashboards across the lending supply chain. Further benefits include  significantly reduced transaction turnaround time, and enhanced operational efficiency while achieving complete control over the procedure.

It is highly critical for banks to identify the right-fit business driven technology solution with a high-level of configurability and componentisation. This solution flexibility offers sophisticated operational capabilities to successfully meet the heightened demands of today’s regulatory and operational environment.

We would be happy to hear your thoughts on how you are seeing the Lending technology market is evolving.

Case Study – Bajaj Finserv transforms Commercial Lending with penApps Lending Factory