bizacuity

Automating Loan Approvals for a Digital Bank

About Client 

The client is an established digital bank based in the United Kingdom catering to Small and Medium Enterprises (SMEs).

Background

The global banking landscape is experiencing a swift surge in fintech companies, with the United Kingdom leading the pack in both adoption and innovative approaches. Traditional manual procedures, extensive paperwork, and outdated underwriting processes have long hindered operations, prompting banks to prioritize modernization and automation.

Digital banking portals now offer seamless access to loan management systems, enhancing the overall user experience for customers. These intuitive portals automate loan applications and streamline the credit approval processes, contributing to heightened customer satisfaction in the era of automated mortgage procedures.

Challenge

The client’s legacy manual processing system endured constraints while handling challenges with the sudden influx of loan applications, causing delays in KYC (Know Your Customer) verification and entering data into the nCino platform.

  • Despite having a platform (nCINO) for storing user information , the manual validation of  data, calculation of risk metrics and their accuracy contributed to inefficiencies
  • Manual procedures often led to bottlenecks within loan processing workflow , impeding scalability and resulting in delays additionally elevating the risk of data entry errors
  • The manual verification of critical data like company names, loan purpose, and bank statements, along with credit-risk assessment, added complexity and time constraints to the loan processing workflow

Recognizing the limitations of the manual process, the bank identified the need for an online portal to automate the loan application and journey process. This in turn would enhance efficiency, transparency, and accuracy in loan management systems.

Solution

To address the challenges of manual loan processing, BizAcuity initiated the following steps to build a portal that could streamline the loan management systems:

Understanding the Legacy Manual Processing:

Hosting a series of workshops and meetings with the relevant stakeholders from the bank facilitated a comprehensive understanding of their legacy loan application processes.  These processes involved manual verification of documents, conducting credit checks, and assessing risks before making loan decisions. This collaborative effort was instrumental in pinpointing pain points and areas for improvement.

Building and Designing of the Portal 

  • The initial phase involved understanding the client’s requirements, followed by designing UI screens after multiple discussions from the client, with Adobe XD being used as the design tool
  • Frontend: The team built a user-friendly frontend using ReactJS framework, ensuring a seamless experience for applicants
  • Backend: Express JS was chosen for backend development due to its flexibility , scalability and high performance
  • Loan details such as director, shareholder, or partner details, guarantees for the loan, financial and accounting data, and business insurance, etc., are submitted by the customer on the portal frontend, gets captured in the cloud-based MySQL database and then synced with nCino, the loan ledger, from the backend

Consent Feature Implementation:

Customers were given the option to provide consent for accessing their financial information via Open Banking and Open Accounting APIs. This empowered the bank to gather relevant data while adhering to the UK General Data Protection Regulations (GDPR)

Minimum Viable Product (MVP):

A  MVP was developed specifically for the unsecured business loans product, targeting loan requests ranging from £50,000 to £100,000, with the goal of automating the collection of data directly from customers online without manual intervention. This portal underwent alpha testing with selected customers and businesses. Based on user experience feedback, minor enhancements were implemented, tested again, and the portal went live within a notable period of 5-months from discovery to delivery

Outcomes

  • Effortless Customer Onboarding through Automated Loan Approvals: The portal’s seamless access to real-time creditworthiness assessments facilitated smoother loan approvals, enabling users to complete their loan application process in less than 30 minutes with all necessary documents, thereby leading to heightened user conversion rates
  • Secured Data Access with Customer Consent: Enabling the consent feature in the portal ensured legal compliance with data privacy regulations and contributed to building trust with customers by providing personalized experiences and mitigating risks associated with data processing. This accelerated loan processing time, enhancing operational efficiency and customer satisfaction
  • Precision in Operational efficiency: Automating the loan approval procedure was pivotal in eliminating human errors. This ensured faster and accurate loan decisions, simultaneously enhancing operational efficiency
  • Boundless Expansion: With scalability at its core, the portal was configured to handle application volume surges ranging from 5 to 10 times the current volume and onboard new customers. This would potentially lead to a substantial revenue growth by up to £10M. 
  • Rapid Response and Flexibility: Streamlined processes cut out a major chunk of turnaround time for the loan approval cycle, ensuring swift loan decisions. This shift enhanced banking agility and resulted in overall improved customer experience and satisfaction

 

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