4 Steps to Smarter Credit Lending

Gursahib Suri | 28 September 2020

Intelligent Automation to drive efficiency and speed in the SME lending process for lending institutions.

Many UK Lenders feel like they are stuck between a rock and a hard place. With the British Business Bank (BBB) issuing directives to lenders providing credit schemes on one hand and businesses, both viable and not-so-viable, seeking for financial support on the other hand, British lenders are feeling the squeeze.

Approval rates for emergency coronavirus support loans has been at 73% for BBLS and 51% for CBILS, with almost GBP 12 Billion of the BBLS loan expected to be at a significant risk of default.

Working under tremendous pressure to support businesses, lenders are drowning amidst the high volume of work, lack of supporting technology, stretched resources to validate, process and disburse loans and the very real risk that many of these loans could be defaulted on, risking not just profitability, but even the lender’s sustainability.

Recognizing the challenges faced by large, traditional lenders, many smaller and nimble FinTechs have leaned on new technology solutions to improve processes around credit lending. Hence, 6 new FinTechs were added on by BBB.

LatentBridge has created a 4-step approach to smarter credit lending leveraging Intelligent Automation that large, medium- and small- sized lenders can easily adopt and implement.

  1. Collaboration and Communication
    1. Online Peer to Peer Collaboration Tools: Enabling a collaborative environment between functions like operations, finance, risk, and support teams for exchange of data, documentation, decision support and regulatory compliance.
    2. Communication Channel Intelligence: Use existing customer communication channels to provide timely, context-rich information through regular emails, notifications, updates and other communications.
  2. Data as an Intelligence Driver
    1. Real-Time Decision Analytics Dashboards: Dashboards that deliver a comprehensive view of credit analytics to support real-time decision-making, based on available information.
    2. Reliable Credit Insights: Integrate forensic intelligence to credit appraisals by doing a data deep-dive from multiple sources like borrower history, market feeds, 3rd party credit research inputs, industry and company performance, default rates and others.
  3. Workflow Acceleration
    1. Automated Workflow Tools: Enable customers to quickly input, validate and apply for loans with minimal manual intervention by use of trusted data like audited financial information, accredited KYC-AML, Directors checks and other sources.
    2. Intelligent Processes: Enable digitalization across the lending cycle through Smart Workflows & entitlements-based activities.
  4. Efficient Regulation and Delivery
    1. Compliance Tools: Implementation of organizational credit limits, client-sectoral exposure and similar firm-wide checks & balances at various stages of the lending cycle from loan request to loan approval.
    2. Pricing Engines for Credit Products: Integrated top-down pricing calculators that are fully integrated to back-end credit bureaus and permissions to front- office to enable speedy loan offers and manage customer expectations.

Lending Institutions can leverage all or a combination of these steps and incorporate technologies such as AI, ML, OCR tools alongside RPA bots and other digital elements to drive efficiency across the lending process. The data deep-dive can provide critical business and industry insights to help lenders manage these loans.

LatentBridge’s scalable, AI-based Intelligent Automation (IA) platform, ALBAI, has helped accelerate a mid-sized lender’s credit assessment and decisioning process through AI and ML tools. The lender saw a 40% reduction in processing time, 90% reduction in average response time and 60% reduction in cost.

In another situation, a bank’s loan authorisation process had a high propensity for human error. By modifying the workflow, the bank realised 95% reduction in input error with over 90% of the process being automated.

Write to us at info@latentbridge.com to get a free consultation with our expert on how we can help your business accelerate and scale its automation journey.