Alternate Lending Software

Alternative Lending Overview

Alternative lending has been experiencing a transient rise for the past decade amidst all the speculations about it being a bubble. These organizations have revolutionized the process of lending by tapping into the unmet demand of cash crunch and extending a helping hand to underserved. An outstanding loan management system tailor-made for alternate lending companies (alternate lending software) which need to scale up their lending portfolio for operational excellence.

The rise of alternate lenders has provoked a technology-driven disruption that is challenging traditional lenders with the speed at which the lending activity is performed by using alternate lending software. Most of these digital disruptors act more or less like “matchmaking platforms” which connects lenders with borrowers and lenders.

Alternative lenders offer an end-to-end digitalized loan experience right from the stage of loan origination to closure. These lenders boast about their lightning-fast approval process which is backed by near real-time credit risk analysis engines that rely heavily on proprietary machine learning algorithms and data science.

Types of Alternative Lenders

Alternative lenders could be classified based on two important factors: the borrowers they serve, and their funding model.

Borrowers:
  • Individuals:

Initially, the online lenders catered only to prime and just below par borrowers who were concerned about paying off the consolidated debts. As the market grew and new players emerged the credit spectrum moved down to accommodate even borrowers with low credit scores. The lenders were given an option to scatter their resources amongst a range of borrowers based on the risk profile of the customers.

  • SMEs:

SMEs often face structural challenges which make it difficult for them to procure affordable credit. Alternative lenders offer the small business borrowers an opportunity to unlock the access to capital for sustaining a cash crunch.

These innovative are progressively adding SMEs to their borrower subset and offer them the much-needed liquidity through Small Business Lending Products to increase their inventory, expand the employee pool and even refinance their existing debts.

Funding Model:
  • Marketplace Lending:

Marketplace lenders neither take deposits nor lend to customers themselves. Instead, of taking any risks onto their balance sheet, they just act as matchmakers between the two parties and generate income through commissions and charges collected from borrowers and investors.

  • Balance Sheet Lending:

A class of online lenders who practice alternative finance happen to transfer the risk of the loans offered on to their book and lend to the borrowers from their pockets as an act of commercial lending depending either on the balance sheet of businesses or against the amount they are expecting to receive in the future.

Challenges faced by Alternative Lenders

Though alternative lending industry seems to look as though it is booming, it does have its own set of operational challenges from keeping up with the regulatory restrictions to securing funds and building a business model which has low operational costs. Here are the most common challenges faced by alternative lenders:

Loan Origination:

Since they’re a new asset class, they’ve trouble identifying and attracting the target customers. Most lenders tend to resort to traditional marketing strategies to spread the word, which turned out to be less fruitful.

These firms seem to lack when it comes to the segmentation of customers. The inability to differentiate the customers and offer them tailor-made products seem to lead them down the road of process gaps and accompanying inefficiencies that result in a higher turnaround time.

Credit Risk Analysis:

Credit risk analysis is a primarily data-driven process. Being a relatively new asset class when compared to the traditional origin, it is rather hard to predict the performance of the loans and analyse the credit profile of a borrower who is underserved. While the application of advanced data mining and analytical tools could resolve this issue, the time & cost involved in the implementation is too high.

These firms seem to lack when it comes to the segmentation of customers. The inability to differentiate the customers and offer them tailor-made products seem to lead them down the road of process gaps and accompanying inefficiencies that result in a higher turnaround time.

IT Infrastructure:

A good technology infrastructure is the primary competitive advantage alternate lenders have over the traditional lenders. However, as the needs of the industry is rather unique, and since there are no ready-to-use technology solutions available, they may have to either create a product from scratch or customize an existing solution to meet their requirements. This might have an impact on the cost as very few players offer low-cost tailor-made solutions.

Transaction Cost: 

As there are an array of similar alternative lending platforms available for the borrowers and lenders, maintaining swift turnaround time is essential to retain them. So, to achieve that they may have to invest in cutting-edge technological solutions which would reduce the turnaround time and increase the number of transactions through the platforms while persevering low transaction costs.

All these challenges call for a tailor-made Alternate lending software like Finabile, which is a prominent loan software used by top lending institutions around the world.

Finabile - Outstanding Alternate Lending Software in the Sector

The critical operational challenges faced by the alternative lending industry demands the presence of a tailor-made Alternate Lending Software, which is robust and entirely scalable to ensure stable day-to-day operations.

Finabile’s seamless integration with third-party credit analysis frameworks offers alternate lending software the necessary analytical edge to segregate the right borrowers in the neverending list of underserved people with no prior credit history.

The omnichannel capability of Finabile alternate lending software which offers a uniform experience across a range of customer-centric delivery channels would attract a large number of target customers and encourage them to interact with the providers on a platform which they are comfortable with.

The state of the art security offered by Finabile would not only ensure that all the financial transactions are recorded under high-security standards but also provide a foolproof system which could withstand cyber threats and its all done using Alternate Lending Software.

Features

Tailor Made for Online Lending

Increased Oversights

Multi-Channel Customer Acquisition

Employee Empowerment

Omni Language Experience

Low Operating Costs

Benefits

  • Dynamic workflow management - Finabile
    Agile Application Process
  • lending software - Finabile
    Uniform User Experience
  • easy installation - Finabile
    Easy Implementation
  • cost effective - Finabile
    Cost Worthy
  • Flexible and scalable software - Finabile
    Swift & Scalable
  • Robust reporting module - Finabile
    Cloud Based Solution

Loan Lifecycle Management

Finabile offers a robust loan origination system that integrates with any front-end delivery channel seamlessly. Our intuitive software scrapes all data entered through the plethora of interfaces scrupulously and stores them securely in the cloud for credit risk analysis.

Seamless integration of third-party credit rating modules fills the gaps in the existing infrastructure and reduces the turn around time of a loan application substantially.

  • Effortless Onboarding
  • Swift Credit Analysis
  • Short Turnaround time

Finabile is a robust back-end loan management system which could be customized to fit any alternate lending business model and their unique product offerings. The cloud-based interface would act as a backbone of the platform by storing all crucial information of the loan portfolio which would help in the decision-making process.

Our robust rules engine comes with a predefined set of loan products with an array of options to customize the interest model, transaction fees, loan period, amortization, etc.  Our application is designed in such a way that it would only require minimal manual intervention.

  • Configurable Loan Products
  • Different Interest Rates

Finabile hosts an exclusive interface to take care of the post-approval life cycle of a loan product from loan disbursement to the closure of a loan account.

Our system would habitually track every little aspect of the post-approval phase from date of repayment, repayment arrears, delinquencies in payment and write-offs in the same interface.

  • Frequent Payment Update with ECS
  • Delinquency Monitor
  • Track Loan Performance

The integrated accounting management system of Finabile is a robust accounting solution which also acts as an interface to manage and take care of account aggregation activities which include everything from automatic journal entries to spontaneous computation of interest rate, taxes and chart of accounts. Every successful arrear would reflect immediately on the financial statements such as balance sheet.

  • Custom-made Accounting Rules
  • Book-like Double Entry Accounting
  • Configurable Frequent Postings

Finabile’s in-built reporting module is a powerful data visualization tool which provides 100+ ready to use reports that would give an in-depth insight into the performance of the complete loan portfolio and critical indicators which ultimately determine the success of a business model..

  • 100+ Ad-Hoc Reports (Balance Sheet, Profit & Loss Statement, Total Value of Loan Disbursed, Active Loan Outstanding, Active number of Borrowers, Non-Performing Assets, etc.)
  • 6 Unique Classifications (Borrowers, Loans, Savings, Funds, Accounting and XBRL)
  • 4 Different Types (XML, PDF, XBLR, and CSV)

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