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Modernizing credit processes: cutting-edge solutions for improved financing
In an increasingly competitive credit market, companies need to save costs and lower time-to-cash while preserving risk metrics. Reply is working on innovative end-to-end solutions to support the design of streamlined onboarding and credit origination processes.
#LendingRevolution
#CreditMarket
#DataAnalytics
A market overview
Given their uncontestable economic impact, the SMEs segment is extremely important: for this reason, financial institutions should be concerned in well addressing one of their essential needs: financing. Financing is key for both companies and financial institutions, but there is still a gap between the demand and supply of credit. There are different reasons for which SMEs financial needs may be left unaddressed.
New lending propositions
Unreached by traditional credit offering, many SMEs have started to look at alternative solutions, asking for better and more flexible conditions, faster response time and fully digitalized processes. Heeding the call, a relevant number of new digital players have stepped up in the lending market in the last years, leveraging on on cutting-edge technologies, innovative and light operating/distribution models and less regulated environment. To keep up with the ongoing lending revolution, also financial institutions should consider to revise their credit processes, from a traditional model into an enhanced one.
Traditional model
Greater customer support
Pricing negotiation
Asynchronous process
Potentially higher costs
Need to meet the customer several times
Longer approval time
Enhanced model
Reduction of approval time
Possibility of subscription 24 h a day
Syncrhonous process
Digital signature
Digitization of documents
Streamlined process
Reply’s approach
Reply's approach aims at structuring innovative end-to-end solutions to support the design of streamlined onboarding and credit origination processes. Our expertise covers all the building blocks involved in these processes: from data management to the design of applications, calculation systems and decision engines, both from functional and technological point of view.
Data management
Data management is important to ensure quality of information used in credit evaluations. In this context, the challenge consists in identifying necessary data, selecting data providers, and defining data relationships to enable precise model implementation.
Calculation systems
Internal calculation systems using advanced data analytics, machine learning, and statistical analysis can give lenders an advantage in risk estimation for clients. Output includes rating, fraud index, income model, pricing, and ESG score, used to determine loan proposal's result.
Decision engines
Credit decision engines (CDE) determine if a loan proposal should be accepted or declined by implementing expert-based rules and strategies. CDEs play a central role in credit process by defining compliance with lender's policies and laws.
The technological layer
In order to quickly satisfy new business requirements, Digital Lending Platforms need to be more and more flexible and agile, focusing on a scalable, modular and decoupled architecture. The choice between a «Native», «Cross-platform» or «Hybrid» solution for the front-end bank application is the first challenge to consider. Then, there’s the need to introduce orchestrators: one being able to manage all the aspects related to the UX, defining the steps flow, and another one to manage the process from a business point of view. Finally, regarding core banking, banks can opt for a “cloud-based” or “on-premise” solution: the strategy will depend on the size of the bank and the complexity of the operations and IT systems currently in place.
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