Lending and Loan originations are what banks always look up to! And when it comes to offering businesses, they really want this! The only thing that worries is the MSME lending process starting from acquiring leads, nurturing them well and transforming them to become your customers!

Therefore, the MSME lending process has been an issue and the solution is what is showcased in this article!

Table of Content

Why does MSME Lending matter?

Diversification of Loan Portfolio:

  • The lending of MSME’s gives banks an avenue of portfolio diversification.
  • Diversification of portfolio helps reduce risks and promotes better overall financial stability.

Revenue Generation:

  • Banks can find profitability in lending to MSMEs.
  • The financial strength of the institution is due to interest income and fees from the MSMEs’ loans.

Customer Retention and Growth:

  • Banks encourage such partnerships by providing continuous support for MSMEs.
  • Satisfied MSME clients can graduate and develop into bigger firms, growing their financial relations with the bank.

Fulfilling Regulatory Requirements:

  • Several regulatory boards even recommend that banks should have some level of lending to MSMEs.
  • This makes sure regulatory compliance while maintaining a good status in the industry.

Building a Positive Brand Image:

  • Positive branding is achieved through active participation of banks in MSME lending.
  • Furthermore, involving the locals boosts the image of the bank as a credit union.

Problems Faced in MSME Lending

Limited Credit Information:

  • Limited and fragmented credit information on MSME banks.
  • It affects the accuracy of loan decision making as well as evaluation of creditworthy applicants.

High Risk and Default Rates:

  • This makes MSMEs more prone to defaults.
  • However, banks find it difficult to manage and minimize such risks.

Manual and Time-Consuming Processes:

  • Traditional MSME lender processes are manual hence lengthy approval process.
  • It can limit responsiveness among banks in addressing the variable demands of SMEs quickly.

Collateral Challenges:

  • MSMEs may not possess enough collateral and this makes it difficult for banks to guarantee loans.
  • Hence it is very important to look for other collaterals or risk reduction strategies.

Regulatory Compliance Burden:

  • Complex regulations and changing trends associated with MSME lending make it an arduous task for the bank.
  • Striking this balancing act, in achieving compliance and operational efficiencies.

The Solution: MSME LENDING APPLICATION BY DECIMAL

The MSME lending Process application, constructed on Decimal Technologies’ Vahana No-Code development platform, represents a fully automated, API-enabled solution. Tailored for banks and credit institutions, it offers a comprehensive end-to-end loan origination solution. 

This innovative application streamlines the lending process, utilizing the power of Vahana’s No-Code capabilities to enhance efficiency and provide seamless integration through APIs. By leveraging this platform, financial institutions can optimize their MSME lending operations, ensuring a swift and technologically advanced loan origination experience.

Attributes of MSME Lending Process application

  • Responsive UI:
    • The interface adjusts seamlessly to different devices, ensuring a smooth and accessible user experience.
  • Self-service & Assisted Workflows:
    • Users can navigate through tasks independently or receive guidance, providing flexibility and support.
  • Easy KYC:
    • Streamlined Know Your Customer (KYC) processes simplify verification, enhancing user convenience.
  • Individual & Entity KYC Enabled:
    • The system supports both individual and entity KYC, accommodating diverse user identification needs.
  • Over 800+ API Services:
    • A vast library of over 800 Application Programming Interface (API) services facilitates extensive integration capabilities.
  • Configurable BRE Platform:
    • The Business Rules Engine (BRE) platform allows easy customization through a graphical user interface (GUI).
  • GUI-Enabled Configurator:
    • A user-friendly interface enables configuration without coding, simplifying rule creation and modification.
  • Auto-Service Creation:
    • Automated service creation streamlines the process of building, modeling, and deploying rules efficiently.
  • In-Built Policy Engine & Scorecard:
    • The system includes a built-in policy engine and scorecard for comprehensive decision-making support.
  • Configurable & Modular Architecture:
    • Drag-and-drop form configurator and modular architecture provide flexibility for customized application development.
  • Native Application Support:
    • Support for native applications ensures compatibility and optimal performance on various platforms.
  • Built-In API Management & Integration Broker:
    • The platform includes tools for managing APIs and an integration broker, facilitating seamless connectivity.
  • API Marketplace – Plug & Play Service Management:
    • An API marketplace simplifies service management, allowing easy integration and utilization of plug-and-play services.

Apart from this, the application helps you in the following:

Lead capture from multiple sources:

Gleaning of prospective consumer data from multiple sources, thereby expanding avenues of lead generation. This feature enables capturing data from across different sources thereby creating an efficient pipeline for possible customers.

Integration with Bureau and Other Services for Eligibility Check:

Smoothly link up with credit bureaus and other services in order to undertake intensive screening and verification processes. It provides a complete background checking making the decision accuracy process.

Configurable Business Rule Engine:

Benefit from a flexible built in “business rule” engine that updates to dynamically changing needs without cumbersome coding. It provides an opportunity for customization of business rules to meet the specific needs and facilitate appropriate decision making.

Aggregation and Analysis of Various Financial Data:

Accumulate diverse finance information about an individual or company to comprehensively understand their finances. It allows for an overall outlook or picture of the state of customers’ finance which aids informed decision making.

Ease of Capturing and Uploading Documents:

An easy-to-navigate website interface for capturing and submitting documents. This feature is user friendly and makes it easier for customers to navigate through the user onboarding process hence improving their customer experience.

Modules for Legal, Technical, RCU, and FI Teams:

Customize the system towards the requirements of legal, tech, the risk control unit and the financial institution teams. The modular approach makes cooperation simple and easy to supervise as every team will contribute to the final result adequately.

Digital Onboarding and KYC Management:

Provide end-to-end digital onboarding solutions and ensure adherence with KYC regulations for compliance. It provides a reliable method of facilitating customer onboarding while complying with regulators.

Dashboards, Reports, and Audit Trails:

View various dashboards, detailed reports, and auditing trails for clear tracking and evaluation. These features are very critical in supervision that has been made possible through making decisions based on the evidence.

The No-Code Power – Customize it your way without a code

Decimal’s technologies’ Vahana Cloud is a no code platform that is specially designed for Banking, financial institutions, and insurance sector. Using Vahana cloud for your BFSI applications brings a lot of expertise and multiple options so that you can build applications better than your expectations.

Have a look at this video for better understanding.

Offering a no-code development environment, it empowers users to create and deploy applications seamlessly. With features like drag-and-drop interfaces and customizable modules, it facilitates rapid development, allowing organizations to adapt swiftly to changing needs. 

Vahana Cloud’s scalable architecture, coupled with extensive API integrations, ensures flexibility and efficiency. It caters to a diverse range of industries, providing an accessible and user-friendly platform for building, deploying, and managing applications in the cloud.

So, No-code is surely a revolution in the development industry that saves you a lot of time and money!

Conclusion

In conclusion, the digitalization of MSME lending through no-code platforms emerges as a transformative solution for banks and financial institutions. Institutions can streamline the development process and benefit from the agility and customization capabilities that no-code platforms offer. 

The showcased MSME lending application exemplifies the practical application of these principles, paving the way for a more efficient, inclusive, and digitally-driven BFSI landscape.

It’s time for you to not fall behind! It’s time now. Choose your right partner and DIGITALIZE your process!

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