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If someone told us a decade ago, how mobility is gonna make sweeping changes in every aspect of our life, we might have scoffed. But check out us today, mobile and technology became an integral a part of our life from manufacturing to checkout lanes at supermarkets, no sector has been left untouched by the innovation in mobile technology.

Lending institutions have joined the race of mobilising the world thanks to the demand of the “smartphone obsessed” clients of today. Leveraging the ground breaking capabilities of the next-gen mobile phones have helped them to streamline their workflow and reduce their overall turnaround.

Loan Origination Process

Traditional loan origination process won’t to be a nightmare of arduous paperwork. Once a possible borrower is identified, a sales agent/ Business Correspondent contacts them to finish the appliance paperwork and gather documents for underwriting. The sales agent would then submit the appliance, which might then be forwarded to the loan officer.

In the case of incomplete documentation, the sales agent may need to get in-tuned with the borrower and retrieve them. Else, the appliance would be rejected. As you'll see, alittle mishap could have an adverse effect on the TAT.

Once the appliance is submitted, it's going to take quite few days to finish the verification process. Even retrieving the appliance status amidst this chaos would be highly impossible which might just aggravate the already concerned borrower.

Mobility in Loan Origination

The new-age mobile applications not only eliminate the appliance paperwork but also lookout of documentation and credit assessments injecting a way of transparency into the method .

e-KYC

Mobile apps have integrated e-KYC solution this aspect simplifies the onboarding process, reduces the mayhem of submitting relevant proofs(address proof, identity proof, pan card, etc. and) completes the whole verification process during a fraction of seconds.

However, not everyone would be allowed to access the confidential data of a private , and it might be done only with the right consent of that specific person.

In the case of Aadhar, the verification process might be administered only in two ways either employing a unique OTP or the Biometric information of the individual (Finger Print Scanning and IRIS).

Sales Agents

Empowered with a mobile application, sales agents could complete the whole application process within a matter of minutes. All they’d need to do is refill a sort of borrower’s information, upload required documents and submit it online.

As the entire process is totally automated, there would be no room for error or incomplete documentation. A sales agent could easily retrieve information about the status of an application through the mobile device and alleviate the concerns of a customer immediately.

Customers

Instead of counting on a Banking Consultant, customers could use the self-service mobile app directly and apply for loans right from the comfort of their home.

The user-friendly nature of mobile apps would help them complete the appliance soon and keep them informed of the status of their application .

Financial Institutions

The automated application process and therefore the document identification aspects available during a sales agents mobile app reduces manual labor , simplifies the loan origination process, and improves customer satisfaction.

Overall Impact

Mobility loan origination helps lenders accelerate the lending process, eliminates paperwork, reduces latency, makes the appliance status transparent and keeps customers satisfied.

Credit Scoring

Credit scoring plays an important role within the authorization process. Lending Institutions often draw the ultimate decision supported the credit score of a borrower.

Challenge

However, within the case of emerging economies which promote financial inclusion, the bulk of the borrowers might not have a previous credit history, in those cases, it's impossible to depend completely on traditional credit scoring data like CIBIL score.

Though the e-KYC system comes as a boon to verify the customer’s identity, verifying their credit worthiness was a nightmare. But how could mobile applications lend a hand to mapped out this issue?

Mobility in Credit Scoring

To solve this dilemma, the financial institutions have come up with a totally customized credit evaluation system which uses new-age data and mobile technology to guage a Borrower’s ability, stability and intent to pay when processing their loan request.

Their evaluation system uses several data points across personal, financial, and social media are wont to evaluate a customer’s creditworthiness employing a custom-made mobile app.

This app appraises a customer’s behaviour supported the info available across the several apps installed on their mobile . It even analyses their psychometric behaviour with a questionnaire of sorts to bring maximum possible people under the anvil of organized credit.

Watch this TED ask skills Shivani Siroya unlocked the untapped potential hidden within the data captured on an individual’s mobile by creating a credit scoring model exclusively for the unbanked borrowers within the developing countries.

Here, she explains the challenge she faced while creating a credit scoring model for an individual who has no prior credit history and the way she harnessed the facility of the mobility to spot potential opportunities.

She narrates the story of Jenipher, a 65-year-old small business owner in Nairobi, Kenya. Though Jenipher has been running a food stall within the central downtown for many years , she had neither the collateral nor the credit history required to use for a loan from a financial organization .

Jenipher ruled out the choice of Loan Sharks, because the interest rates were sky-high. Though she was eligible to use for a microloan through a Joint Liability Group, the meagre sum made this feature inadequate for her requirements.

When she was trying to find alternatives, Jenipher’s son found Shivani’s app and convinced her to use for a loan through it. the appliance prompted her to travel through a test of sorts and requested access to specific data points on her device.

Once the request was granted, the app deciphers both good and bad aspects of issuing Jenipher a loan. the tiny savings balance and credit history raised red flags from the attitude of a standard lender. But the choice data retrieved from her device painted a special picture altogether.

The mobile app took an array of options into consideration, right from the essential biographical information of the borrower to the amount of individuals they contact on a day to day . They assess the borrower supported the dimensions of their network/support system, and therefore the consistency they demonstrate on a day to day .


After much research, they found out the subsequent facts from the behavioural data:

4% increase in payment rate among people that contact their family frequently

6% increase in repayment among customers who have consistent travel pattern.

People who communicate with atleast 58 or more different contacts on an everyday basis were proven to be good borrowers.

Based on thousand different data points just like the examples mentioned above, Shivani’s organisation granted Jenipher a loan supported her willingness and capacity to repay deciphered using the mobile behavioural data.

Tala (Formerly Inventure) has helped deliver around 200,000 loans in Kenya in 2016. Initially, that they had a default rate of 50-60%, but with the credit model, it dropped right down to but 10% thus making the payment rate in line thereupon of traditional banks.

Overall

Leveraging alternative credit scoring aspects to return up with a new-age mobility solution would slay the hindrances within the traditional methods and let the state take a step towards financial inclusion.

Repayment/Collection

The collection is an integral a part of the lifecycle of a loan. Any delinquency during this stage could cause problems for both parties involved – Financial Institutions and Borrower.

Technology has made the tedious process a breeze. We are aware that tech savvy customers could make their repayment with the touch of a screen using their mobile app, but what about technically challenged folks who are located in remote areas of the nation?

Business Correspondent

Equipped with a mobile device that's integrated with the core banking cloud application, a BC could perform transactions on behalf of a customer seamlessly. rather than hustling around with collection sheets they might just update the repayment status on their mobile app immediately.

Besides replacing the gathering sheet, a mobile app could also act as a knowledge domain for loan officers which they might ask answer customer queries about repayment schedule, previous payments, pending balance, etc..

Though it seems great as a business model that takes, it's its justifiable share of risks as this type of transfers the general responsibility to a 3rd party. Regulation measures like rigorous internal audits and policies can mitigate the danger factor only to a particular level.

To ensure that compliance is maintained constant supervision of the third party agents becomes fundamental. Mobility comes in handy to resolve this issue also . The built-in GPS tracker within the mobile app would help the lenders keep track of a field agent’s real-time location and stop any potential frauds.

In short, mobility could speed up the repayment process considerably, enhance the operational efficiency of a set officer, and stop potential frauds(like the EMIs getting used as Float Money).

Notifications

Right from the stage of application to fulfilment and repayment, mobility solutions tend to return in handy with the frequent notifications about the loan status or critical reminders regarding the loan account.

Customers get push notifications a few change in their loan status or reminder about repayment schedule on their app. Field officers get notifications about the allocation of a case or the loan account on their mobile device.

Offline Sync

When a loan officer is travelling to remote locations for collecting loans, he may need to affect network disconnectivity. However, his work entails making a note of repayments on the gathering sheet and reporting an equivalent to the back-office at the top of the day while depositing the collected money.

This process requires smooth synchronisation of his updates. The offline sync feature of the mobile app would make sure that the info entered by an agent is cached & stored until the connectivity is restored. When the officer gets back to a neighborhood with good network connectivity, the cached data are going to be synced with the server.

Summary

Mobility has unarguably played an enormous role in reducing the inefficiencies within the lending sector. The latent process of traditional loans has been transformed completely to a swift mode using the newest technological advances.

Mobility reduces the general TAT of a application process, injects transparency into the equation, reduces staff problems, promotes user experience and bridges the gap between customers & financial agency with just slightly of a screen.

Undoubtedly, Mobility is that the way forward for rapid development within the lending sector. because the Mobile phones became an integral a part of an individual’s life, the mobility solutions have clothed to be a “must-have” feature for Financial Companies to realize traction within the lending industry.

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