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Building the Smart Phone Loan Software

Objective

The primary objective of this project was to create a digitally enabled platform where customers can apply for a short-term loan or an EMI-based loan using a computerized loan approval system called "Decision Analytics" without having to visit a branch. The goal was to create a product that would make the loan disbursement process simple and effective for both the customer and the bank.

Clients Requirement

The client wanted to develop an innovative solution for processing bank loans. As analytics tools have an important aspect of the banking loan management system, the decision Analytics tools were to be developed which would help the bank to identify whether the customer was eligible for a loan or not. The system required an instant real-time Smart Phone Loan Application along with a secured channel and integration of API, the client wanted to develop the push notification feature for sending campaign alerts and notices. The requirements were jotted down and the project plan was prepared to meet the client's expectations in a stipulated time.

Client: Banks

Services: Loan Software Solutions

insurtech

Challenge

Our team faced issues developing software that has multiple touch points and keeps the record of transactions coming from multiple streams. Platform compatibility was another major issue while developing a system, the application had to be responsive to both android and iOS systems. Similarly, the resources for Beta users testing and the technical acceptance from the app store/play store were other challenges that the team had to encounter while developing the application. Some of the other challenges the development team faced were:

  • To manage the phone loan portfolio
  • To maintain regulatory provisions regarding different ratios
  • Managing operational risk
  • Mobile Banking security challenges

The numerous metrics used to evaluate financial knowledge and skills, attitudes and motivations, spending and budget tracker, and savings goal tool can all be improved by using the personal financial goal tracking app. However, the architecture or the platform that can customize the prematurity Charge (also known as Penal Charge) rule according to the slab or penalty ratio of the withdrawal amount.

Project Scope

The scope of the intended phone loan system is as follows:

  • To make it easier for qualified consumers to apply for loans online and get them immediately in real-time
  • Using artificial intelligence to validate and determine the customers' eligibility
  • Utilizing Decision Analytics technologies boost productivity and efficiency in deposit products
  • Easy customer screening for banks that is system driven

Project Limitations

The following parameter serves as the project's limiting factor.

  • Only consumers who are found to be suitable by the Decision Analytics algorithm can apply for a phone loan
  • It is only applicable to small-sized loans
  • The possibility of sharing a transaction-based commission with a software vendor exists
  • Experts in artificial intelligence and decision analytics are needed

Benefits of the Smart Phone Loan System:

  • New digital and prompt lending services for customers.
  • Instant and pre-approved loan facilities.
  • A fully automated process for loans and no bank visits is necessary for the loan.
  • Increase the usage of Mobile Banking.
  • Helps in expansion of Loan Portfolio.
  • Increase in revenue of the bank.
  • Less effort for loan recovery.
  • No Paperwork needed for loan processing.
  • No extra collateral needed for sanctioning the loan.
  • Contactless digital lending experience.
  • Provision for micro loans.
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Features Developed

The loan management system required API integration with Bank’s Smart mobile app to get the customer’s data from the bank’s CBS. We had to always keep in mind that the banking system, where the immense transaction of money happens all the time, needs highly secure and systematic software. On top of that, the loan management system we were trying to develop required smart and swift features which can make the loan processing job hassle free on both ends. Our project plan started the development of features such as:

  • API integration with the Smart mobile app and also get the customer's data from CBS banks.
  • Decision Analytics tools was developed to identify the eligible customers (Define by the bank).
  • Instant eligible client's identification and real-time Smart Phone Loan Application.
  • Only eligible customers (Define by Bank) can register for the Smart Phone loan.
  • Only eligible customers determined by the decision analytics tools can register for the Smart Phone loan.
  • Instant disbursement approved loan amount to the Customer's account.
  • Account Profile and account validation identification system using decision analytics tool.
  • Push notification for sending alerts and campaign updates to eligible customers.
  • Making real-time effect in customer's account and bank's settlement accounts.
  • Specifying the loan amount, tenure, and different repayment method modality.
  • Automatically calculating the required EMI, interest, penalty, and service charge.
  • Easy admin portal access to manage/config the app and reports.
  • The System providing different reports (Required by Bank) with Dashboard and Diagrammatical display.

Note: The parameters in the Decision Analytics system can be changed as required by the bank or as per the direction of the central bank.

Parameters Included in Decision Analytics

The decision analytics system places a strong emphasis on many fundamental ideas for effective end-to-end loan lifecycle management. It facilitates effective and quick customer onboarding and also improves customer experience. The following were the must include parameters while screening customers to check his/her eligibility for the intended Phone Loan system:

  • Income Behavior of the user. 
  • Weighted average monthly account balance and average monthly income. 
  • Negative fluctuations in monthly income of the user.
  • Income patterns such as continuity in income like deposits and the total number of deposits over the past months.
  • Liquidity Position in Saving Account: Average ratio of withdrawals relative to the income deposits on monthly level.
  • Loan behavior, if a customer is currently enjoying the loan from the bank
  • Fixed Deposit Behavior, Amount of Fixed Deposit, Maturity date

Steps and Architecture

The complex architecture was created, including how the user would interact with the app and how the banking system would interact with the app. The data or instructions fed by customers (known as input) and how that provided input will interact with the bank’s software are presented in the architecture. The detailed steps of what a user needs to follow for using the application are also explained.

  • First, the customer accesses the mobile banking app by logging in.
  • The Mobile banking app communicates with the mobile loan module.
  • The mobile banking module requests customer data from CBS for an eligibility test.
  • CBS provides the requested data to the mobile banking module.
  • The mobile banking module will then use the acquired data to test customer's eligibility for loan and stores eligibility information in mobile banking loan module.
  • The mobile banking loan module sends eligible data to the customer's mobile banking app.
  • The eligible customer's mobile banking app will prompt the customer to registration for the loan.
  • The customer registers for the loan and applies for the loan.
  • The mobile banking app will approve and disburse the loan to customers' account.

Solutions

The secured API integration, which was successfully implemented, made it possible to minimize the challenges associated with mobile banking. We developed the phone loan portfolio and created a regulatory provision regarding different ratios. Identification of the right customer is essential and keeping that in mind a complete decision analytics tool was developed. Loan application is always a hassle job for a customer and one of the most important features successfully deployed was the instant real-time smartphone loan application, which has helped in saving time and effort of the customers who are actively using mobile banking services.

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Results

Within 2 months the Sofware was downloaded by around 5k users. The Bank was available to write off the debt by around 20%. Along with that, the number of users applying for loans increased by double that of the previous month. The Bank was also able to reduce its operating costs by around 5%. Our client also conducted a customer survey which showed after API integration the software with banking ERP the satisfaction rate was higher than usual.

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Lal Colony Marga, Kathmandu

01-4534586

+977 9801-022-389 (Sales)

+977 9801-880-284 (HR)

[email protected]

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