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Smart Lending
Updated On : September 2017

The word Smart once meant fashionable, stylish, chic, modish and so on. Normally it was used as an attribute to
humans, and in some cases to pets.

"Smart" of late has outgrown its original definition. We have now, smart buildings, smart cities, smart phones etc.,
Business processes that involve a set of predefined actions or events automated in workflows also deserve a precursor
"Smart". Smart solutions are not simply fancy statements. Applications on lending, trading, health care are being
developed as a smart solution.

The BFSI sector is highly process driven and efforts have been put in place to address efficiency,accuracy and security of
financial transactions, that demand very stringent regulatory controls and MIS through adopting Core Banking
Solutions.

Core banking solutions, enabled customers to do smart banking. More customer centric approaches are required in the
portfolios of borrowing and lending of banks. Now the banks are more focussed in lending to improve their spread. The
actual lending process goes through a series of events. To cite a few, customer capture, credit appraisal, KYC norms,
collateral management, inspection, disbursement, monitoring asset quality, repayment, recovery, and closure of
accounts.

The lending systems in vogue are partly automated, controlled in disparate systems and partly manual. For years,
lenders have employed relatively static, tedious and highly complex lending models that lacked focus on consumer
interest, experience, preferences and priorities.

In this, context, smart lending is a natural corollary, given that core banking solutions and payment systems are already
in place. Smarter, faster, agile commercial lending: the future is all-in-one

Smart lending solutions at the centre seems to be artificial intelligence based new software algorithms that price and
rate individual as well as business credit. Moreover, thanks to digitalization, paperless (digital) processing seems to have
eliminated the slow and tedious pushing of paper between retailer, borrower and lender.

Take a peek at the features of smart lending solutions.

Desirable high level requirements.

General features
Web-based platform- data centre or cloud hosted. Integration with CRM

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Comprehensive data capture for all application types Tightly integrated single point of credit assessment Enable lenders
to streamline and holistically improve their loan processing capability for all commercial loan segments, including

Large Corporates
Commercial and Industrial
Small and Medium-sized Enterprises

Data flow- to and from core banking Query engine and report writer Integration with payment systems.

Desirable Modular components

Loan originating module
Instant Duplicate Check
Rules-driven Tailor-made Document Checklists
Credit Reports and Eligibility check
End-to-End Straight-Through Processing (STP)

Credit risk and limit management

End-to-end workflow for credit requests and credit applications
Flexibility to maintain View/Maintain borrower and Group
Comprehensive Database for All Counterparties
Parameter Maintenance
Limit Allocation

Collateral & Limit management module

Collateral Maintenance
Complete Documentation Workflow
Security Completion Certificate (SCC)
Single View of Customer (SVC) Limits
Data Warehouse Integration

Collection and recovery

Queue Management
Call Management
Field Management
Collateral Management
Document Generator
MIS Reports
Performance and Incentives Management
User Administration
Collection & Recovery Integration

Stressed assets settlement

Waivers and write off
Suit file and follow up
Securitisation

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 Factorisation

The next challenge would be to address inclusiveness. Millions cannot reach credit owing to trust deficit created by lack
of credit scores, no collaterals and no bank accounts. Recently, in Kenya, a mobile based credit lending application
Mkopo Rahisi (Wall of Love) owned by InVenture,Kenya has made waves in micro lending. With the user's permission,
InVenture collects data from the applicant's mobile device to verify identity, build financial, behavioural, and social
characteristics for proprietary algorithm, and to customise the loan terms to his or her unique circumstances. So far, it
has been downloaded over 130,000 times, has more than 50,000 active customers and has disbursed 120,000 loans to
middle and low-income Kenyans.
Now that's smart!!

Refer : https://www.youtube.com/watch?v=kSR8G8mfp84

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