It’s me Dmitriy Wolkenstein, CEO at TIMVERO and a digital lending evangelist, talking about the launch of a lending business for challengers. No matter if you’re a digital fintech brand or a pivoting traditional bank, I believe, this series of articles will inspire you with a few ideas and provide some food for thought.
So, let’s recall the issues we have already covered in Part 1 and Part 2:
In the third part of the series, we’ll focus on two more:
Banks need multiple tools and techniques to streamline the operations in credit products development or underwriting model improvement.
To overcome the challenges, challengers usually take these steps.
By taking these steps, banks can develop new credit products or improve underwriting models in a well-controlled and rapid way indeed. It helps them to increase profitability, minimize risk, and skyrocket customer satisfaction. By leveraging multiple tools and techniques, banks can stay ahead of the competition and provide their customers with innovative and effective credit products.
The number one goal of any financial institution is to generate profits while meeting secondary goals: building up financial inclusivity, delivering capital to improve lives, and providing updated custom solutions for the market.
Here are a few areas to pay attention to before you start lending:
Financial organizations need to check if their initial offerings do not result in significant capital loss. This may be challenging when no one is able to generate immediate profits. Accomplish this with basic financial modeling exercises that consider various factors, such as product offerings, customer size groups, average loan amounts or revolving balances, default rates, operational costs, and bad loan buffers.
Key metrics, such as an absolute minimum number of customers, target cut-off, and default rate, should be set up to monitor performance and make informed decisions.
Yes, I know, Excel is still the king of any data analytics, but there are faster and far more efficient tools integrated with your loan origination and loan servicing software, for example, timveroOS’s Cashflow engine . It helps digital banks create measurable tests of potential loan products in various customer segments and predefined starting points.
The Cashflow engine offers a streamlined approach to financial modeling and enables institutions to quickly adapt to market shifts and optimize their offerings to always be one step ahead their competitors.
There are a few powerful Business intelligence (BI) solutions out there to monitor if the business goals are met and estimate the progress.
The good news is that timveroOS includes the BI functionality with dashboards and other data visualization tools to help banks make informed decisions in real-time. Precise progress tracking is key for identifying areas for improvement, re-assessing and refining strategies, and ensuring that the bank or other financial institution is on track to meeting key objectives.
Evolvement ideas is crucial in digital lending, so it is worth planning out in advance. Banks need efficient ways to evaluate possible outcomes, identify new patterns in risk, products, and marketing, and implement market changes.
Usually, it involves data structuring and collection, which is usually difficult to set up from scratch and requires solid investment. However, once the data is ready to use, the modeling teams can start ML-powered experiments that mind compliance and regulatory requirements. Such experimentation allows banks to reveal industry patterns and trends, and make decisions faster and at lower risk.
After the model outcomes are generated, it is important for the financial department and stakeholders to store and evaluate them to determine the impact on cash flow and make necessary adjustments. In most banks, this process is highly disorganized and involves numerous spreadsheets, meetings, and email exchanges. However, timveroOS’s Cashflow module streamlines this process by linking the ML engine with financial projections, providing stakeholders with real-time access to various scenarios and portfolio performance. This real-time visibility enables quicker, more informed decision-making and allows for smoother implementation of changes.
Once the ML model is ready, the next steps are implementation and monitoring. However, if the origination or servicing systems are not equipped for fast adjustments, banks may need to request customizations from solution developers. TimveroOS offers a solution to this issue by providing critical settings in a no- or low-code environment. This enables customization through proprietary SDKs, eliminating the need for external contractors. The flexibility provided by timveroOS ensures that banks can swiftly and cost-effectively adapt their systems without relying on external resources.
Financial institutions can achieve consistent profits and develop new profitable products and experiences by adopting an effective approach. This approach includes financial modeling, efficient tools like timveroOS’s Cashflow engine, precise progress tracking, and KPI monitoring through integrated BI and dashboards, and leveraging data analysis with ML-driven experimentation. The importance of streamlined implementation, monitoring, and flexible customization by a no- or low-code environment is also highlighted.
By following these strategies, financial institutions can ensure data-driven, ML-powered evolution, leading to better decision-making, improved performance, and ultimately, achieving their profit objectives. Additionally, repeating the entire path from the first step will ensure continued evolution and increasing profits.
Contact us to learn more about advanced analytics.