Transforming Consumer Lending with Connected Banking
The future of digital lending requires a modern platform that focuses on delivering a superior customer experience while also improving operational efficiency. With connected banking, financial institutions can enable intelligent decision–making, improve customer experience, enhance disbursement timelines, and reduce operational risk.
Gain insights from Jim Marous from The Financial Brand and Ankur Rawat from Newgen Software as they explore how a connected approach to digital lending can support rapid innovation and unlock value in a highly competitive marketplace.
Agenda of this webinar:
- Current status of lending process in financial institutions
- Understanding the value of a highly personalized, connected banking approach
- Key driving factors that are accelerating this shift
- Where to start
About Jim Marous
Jim has been named as a top-5 influencer in banking, is the co-publisher of The Financial Brand, the owner, and publisher of the Digital Banking Report, and a contributor to Forbes and numerous other industry publications.
Nicholas: Hello, and welcome to the Newgen webinar, Transforming Consumer Lending with Connected Banking. I’m Nicholas [inaudible 00:00:11], and I shall be your host and the moderator for this webinar.
I thank you all for making the time to join us today. The response has been overwhelming, and we are excited to talk about the nuances of consumer lending in 2021.
Today we have with us Jim Marous, the widely recognized financial industry strategist. He’s a top five FinTech influencer, he’s the co-publisher of The Financial Brand, the owner and the publisher of the Digital Banking Report, and a contributor to Forbes and numerous other lending industry publications.
We also have our co-presenter Ankur Rawat, who is the director of product solutions at Newgen.
Jim Marous will talk about the benefits of digital lending transformation and the components of a superior digital bank. And then Ankur will take us into a deep dive into how Newgen can help financial institutions transform consumer lending with its retail loan origination solution.
At the end of the presentation, we’ll conduct a Q&A session. We request that you type in your questions into the questions window of your go-to meeting anytime during the webinar, and our experts will address them at the end of the session. So Jim, I’m going to pass it off to you.
Jim Marous : Thank you, Nicholas. As we get into the whole idea of digital banking transformation and transforming consumer lending with connected banking, we really have to get into what are the dynamics and what is expected from the consumer now that COVID is on the tail end of its run.
In conjunction with Newgen, we created a white paper called transforming consumer lending, consumer lending with connected banking. It’s a brand new white paper that includes research not yet seen around the conjunction between the lending process and digital transformation.
It provides insights in this state of consumer lending and provides a foundation for transforming digital lending in a hypercompetitive marketplace. I’ve been in the research business now for quite a while and there’s very few things that surprise me. But I think what’s interesting as we get into digital banking transformation, we’re learning more and more about where financial institutions not only are but where they think they are.
What we found in this research correlated with what we found in recent research after COVID, where organizations did not rank themselves as highly as they did before COVID. So why is that happening when people are continually making new changes to make consumer experiences better?
I think the primary reason is because the marketplace has gotten more and more competitive. Organizations have done more and more to improve the customer experiences and legacy financial institutions are more and more behind the eight ball.
Onto the next slide.
You’ll see that as we look at the next slide that digital banking and digital lending maturity continues to be low. What is surprising here is that compared to research we’ve done on digital banking transformation, the transformation of the lending process is far below what organizations have seen on a global basis from digital banking transformation and data maturity, innovation maturity, and in the maturity of digital transformation overall.
As you can see here, the number of organizations that consider themselves to be digital lending leaders is microscopic. Even when we asked, “Are you a fast follower?” Which is usually a scapegoat for those organizations that think they’re doing okay but not perfect, was really relatively small compared to other research we’re doing. Only 21% of organizations thought they were a fast follower. And usually what we see is that analysis, self-analysis, is usually overstated by a bit.
What really concerns us is that 62% found themselves to be laggards, and a total of 73% really find themselves behind the eight ball in moving the digital lending process forward.
While it’s not surprising, it’s very concerning. And as I mentioned, the reason why this analysis is ranked so low is primarily because the competition has gotten so good.
When we look at what organizations need to do, the first and foremost challenge is how can I make the application, the credit adjudication, the disbursement of funds and approval process faster and simpler? From the consumer’s perspective, they no longer want or expect to go through a lengthy process.
What you’ll see on the next slide is when we asked organizations, what makes a superior digital lender? The number one answer was connected front office and back office processes. What that highlights is we’re not talking about just the ability to easily fill out an application on a mobile device or on an online app, but the organizations understand that the only way to do that is to connect the front office and back office.
If we don’t fix the processes, there’s no app that’s going to go fast if we keep the old ways of doing things. Organizations also say in a superior digital bank we’ll develop better business applications, it’ll integrate the core and it’ll secure collaboration within the organization.
I think what’s interesting here though is that organizations recognize that we will not be able to move forward with digital banking transformation, digital lending transformation, data analytics maturity, innovation maturity, unless we fix what’s behind the scenes.
We work with an organization that said in their digital new account opening process, they had to throw out everything they had done in the past. Thrown out the entire set of rules and regulations that they looked at, and they started from a blank sheet of paper. And rebuilt processes with a digital mindset that said, if we can help the consumer get through a step without their involvement and maybe just with a validation that what we did was right, we’re going to make it faster and simpler.
In a world where the apple cart can be applied for and received in less than two minutes, a consumer’s not going to go through a 15 to 20 minute process to get a loan. Our systems and our processes are broken. Many organizations are stymied by the fact that all the going back and forth, we can only speed up the process if we relook at our back office, if we automate things that can be automated. If we allow the consumer, instead of asking them to fill out a complete application, that we take data that’s available in the third party and individual marketplaces in data, prefill it and have a consumer just validate the information.
We have to open up our minds to the possibilities of functionally changing everything we’ve done in the lending world. On the next slide, you’ll see that in addition, we asked organizations, what’s the most important benefit of digital lending transformation?
Not surprisingly organizations believed that would provide superior customer service. They also said it would improve operation efficiency. Now, what’s interesting about that is while improving the operational efficiency was ranked a far second place, we find that many organizations continue to focus more on efficiency than on effectiveness.
What we find is if you improve the customer experience, you will automatically improve operational efficiency. Because that’s the nature of the beast. However, if you focus on improving operational efficiency, it doesn’t mean that you’ll necessarily improve the customer experience. We have to get out of the mindset of continually trying to reduce costs, when really what we’re trying to do is generate more loans.
Very similar to the new account opening process, we find that over half of the consumers that start a digital lending process abandon their shopping cart, abandon the process before they finish because of the complexity, because of the cumbersomeness of the process.
Now, some of those consumers may say, I’ll just go to a branch. However, we cannot rely on that because there are alternatives in the marketplace. In a marketplace where consumers realize they can enter into a buy now pay later agreement on the site of the retail site, or they can get a digital loan or a digital credit card in minutes, they will look for an alternative that’s faster and easier and makes my life better instead of going through your processes and trying to work under your rules for cumbersomeness.
So when organizations say, “What’s the benefit, how do I pay for this?” The way we pay for this is through additional loans. If we improve the process from right now about a 15 to 20 minute process on a mobile or an online app down to minutes, the way the consumer expects it. And we’re only talking about the application process, we’ll increase the number of loans generated by at least 50% above what we are today. Because we see abandonment rates between 60 and 80%, most financial institutions. And in many cases, financial institutions aren’t even measuring the impact of friction.
They just take the loans they’re getting or the people that are coming into the branch. When in reality is if you improve the process, you can more than fund the reconfiguration of your lending process and the time and money it’s going to take to rethink how you generate digital loans.
On the next slide, you’ll see that not only is there an understanding of the benefits and the impact, we really understand that when our primary objective of automating the loan process is to improve the customer experience, is to reduce risk, to reduce operational costs, is to functionally transform the competitiveness of your organization in a digital lending marketplace.
So what does this tell us overall? Number one, it tells us that most organizations know the problem. Most organizations know what they need to improve and change. Most organizations know what the destination is. So if you’re on a journey and you know why you want to get to a certain place, you know how to get there, you understand what you have to avoid and new paths you have to get to get there. What’s the challenge?
Why is it so hard to move that first step or second step or third step towards that process? Number one, change is difficult. Just the whole concept of change. In addition, the ability to know what you need to do next is very difficult. And internally, at most organizations, you really don’t have the internal capabilities of breaking down processes and rebuilding them, knowing what other organizations have done.
When I talk to financial institutions globally about how do you get to that next step? The only way you get to the next step is through partnerships with solution providers that have already gone down that path. What’s the benefit of dealing with a solution provider in this way? Number one, solution providers have seen every part of the ugly process that you probably have in your financial institution. We have a lot of examples of how organizations have done the transformation, because they’ve leveraged the intelligence and the experience of solution providers that have already done it for multiple organizations.
When I was in the banking industry from the bank perspective, I remember saying, “Yeah, but you don’t know how ugly it is. You don’t know how our data looks. You don’t know how our process is.”
The reality is is a solution provider does know this. They’ve seen it before. They’ve seen all of it before. They also can bring to you, they can leverage experiences, the intelligence that they’ve had going through the process in all it’s organizations, to make it so you can do it faster.
I was with a financial institution last night, and their biggest concern is, I know where we have to go, I don’t know how I get there quickly. And we were talking about it. And the reality is it’s with a solution provider that has already been there, and we don’t have to worry about who’s the best solution provider. You want to find the one that’s the best partner for you.
Because what that does, that allows you to move forward quickly and efficiently, and move on to the next part of digital banking transformation.
On the next slide, you’ll see that in our research we did, we not only looked at the focus of digital transformation and how it impacted multiple areas. We realized that there are objectives and there’s challenges, legacy systems, and the lack of data are big challenges. What we found though was these are excuses. And I say they’re excuses, not because they’re not problems, they are challenges.
But what we have found is that when you work with a solution provider, they’re used to legacy systems, they’re used to data and operations not being perfect. They’re used to the challenges that you’re seeing because they’ve worked with other organizations that have the same challenges.
You do not need to change your legacy IT systems to make your digital lending process better. Let me repeat that. You do not need to change your legacy IT systems to make your digital lending process smoother, easier, and more efficient. We can automate processes. We can take steps away. We can simplify the engagement without having to transform the core. Now is it still important to modernize the core? Sure, it certainly is.
I’m just saying that using that as a contingency for moving forward is simply putting the head in the sand and not moving forward. We need to as organizations realize more than ever that we can’t fix everything at once, but we’ve got to fix the key components that drive our business.
In the previous session I did with Newgen, we talked about new customer onboarding, new customer engagement. It’s the same thing. If you asked me what are the two most important things that you can do as financial institutions to improve your overall objectives and your results and make money, I’d say improve your new account opening process and you improve your digital lending transformation process so you can generate more new accounts and more loans.
This will fund the transformation. There’s no place that is more important than to make it so the customer doesn’t start in their mindset, say, “My financial institution is too difficult to work with. My financial institution takes too much time to let me open an account, to get a loan, to get a credit card, to do the what they’re now considering to be simple processes.”
The consumer wants you to know them, understand them, and reward them for their business. They don’t want you to ask them the same questions you’ve asked them over and over again in order for them to get a loan. In fact, when I work with my business side, my financial institution, if I want a loan, I know it would take a lot of time, more than a half an hour to take the application in the branch. I know they don’t have a digital lending capability.
It would then take three to five days for approval. It would take another three to five days to close. On the other hand, PayPal who collects my subscription revenue and I use to pay out to my contractors, provides me on an ongoing basis, a short term loan or a bridge loan for me to at any time say, “Yes, I want it.”
In fact, it’s on my mobile device. It’s a preapproval that’s out there all the time. If given the choice between simply pushing a single button and saying, I want to take advantage of that offer, or going into a branch that has limited opening times, doing an application, not knowing if I’m getting it approved. And then waiting for the application to get approved and transformed and made into a funding that I’m not sure I’ll get, which choice am I going to make?
Consumers are making decisions now more than ever based on their time availability, how much am I willing to pay in higher rates, lower fees, whatever it may be in order to transform my business, my life efficiently?
On the next slide, you’ll see that not only is digital lending transformation not easy, there is an understanding that organizations have to become digital. That’s more than a mindset. We already know which digital organizations are the most advanced on the customer experience, on the use of data, on efficiency.
So what’s different between the digital organization and the legacy organization? Number one, speed, creativity, innovation, productivity. What is interesting is there’s also connectivity. Data is spread throughout the organization so that everyone in the organization can then be involved and can help a consumer get what they need. But it’s more than that.
On the next slide you’ll see that not only do we have a need to become digital, we have to transform at the top. So I mentioned earlier, most organizations know what they need to do, why they need to do it, when they need to do it, and the benefits of doing it.
If they don’t move forward, in many cases, the burden of not moving forward had been totally rests on the shoulders of the leadership. Leadership has a difficulty in embracing the transformational vision of what a digital organization looks like. They have a hard time having a clear vision and a sound strategy around what digital really means.
They may not understand the technology. They certainly are not change-oriented. You have to realize that most organizations, your leadership has been in place for 25, 30, maybe 40 years, they’ve been very successful. Your organization has been very successful in doing what you’re doing. What is interesting though is while you’ve been successful, you’re not ready for the future.
And what we’re finding out also is most organizations don’t measure attrition very easily. So what happens is while you’re not losing customers, you’re losing business. You’re losing growth opportunities. Unless you embrace a digital vision, unless you’re that organization that can get a consumer from point A to point B simply, easily, with the empathy knowing what they need to do to save time in their lives. We will lose that business.
On the next slide you’ll see that what it takes is you need to make digital lending fast and simple. You need to have the empathy in place that says, I’m going to look out for the consumer. I’m going to make it so a consumer can open a loan or take a loan application out anywhere they are, on any device they want.
I’m going to process not just the application, but the approval and the disbursement of funds quickly, easily, and efficiently. I’m also going to make sure that everything is transparent, that the consumer’s going to know where in the process they are, and how long it’s going to take to get to the next stage.
It’s also going to be risk adverse and it’s going to be very efficient overall. If you look to the next slide, you’ll find that when we look at overall digital lending and digital lending transformation, we’re really talking about transforming the lending process in a connected banking ecosystem.
This is a chart from Newgen that I really love because I think it illustrates so well what the impact of connected banking really is. Number one, we’re not confined to the branch.
We’re not confined to an environment that needs to have people involved all the steps of the way. It involves the whole organization, done well, it increases growth and it decreases cost. It brings together the entire experience that makes it personalized, on the channel, and connected in a contextual way that you are almost predicting when the consumers going to need loan as opposed to them having to ask for it.
But to get connected banking involves the whole organization. It’s not departmental. It’s not a project that can be simply checked off. It’s a process, an ongoing process that’s got to move forward. We’re going to get into a deeper view of this, but I think what’s important is to realize, again, the importance of partnering with an organization that allows you to actually make this headway quickly and easily in a way that’s already been tested, and in a flexible way where other organizations can be brought in to bring the best of all solutions.
On this slide, I’m going to pass over to Ankur who’s going to talk a little bit more about the way that Newgen moves from why you need to do it to how you actually do it. [inaudible 00:25:47].
Ankur Rawat: Thank you, Jim, for a beautiful presentation on describing the significance of transforming consumer lending using the connected banking concept that Newgen has provided.
Now, rightly said, we always hear to the industry analysts like Jim, in terms of why the financial institutions should do something. In this case, transforming consumer lending.
Now, one of the things that I have realized based on my discussion with various institutions, consumer lending has usually taken a backseat because it was one of the first processes to be automated, pretty standard across different institutions. It was not as complicated and unique as commercial lending is. So it was the first ever candidate for automation and standardization.
And the overall automation took place very early, but after that, the innovation, the continuous improvement on the consumer lending has taken a backseat. So we do see a lot of organizations coming to us and saying that, “Hey, you know what? We feel that the lending process that we have is currently outdated. We are running on legacy systems, they work fine, but we are not ready for the new technologies and the innovations that are there in the market for us.”
So let’s talk about from why we should transform the consumer lending to how we can transform using Newgen’s consumer lending platform.
Now, I love the slide from Jim’s research wherein based on various institutions, data that is collected, the components of superior digital bank have been highlighted. So we have talked about the connected front and back office processes. We have talked about the need for speed, with the ability to develop business applications rapidly.
Now it could be either to develop or even change as per the market dynamics, having an integrated ecosystem with third party applications, third party systems, which are used in the lending process. And finally ensuring that not only you are able to provide a secure, collaborative way to communicate with the customers, the members, but also at the same time, any third parties or any entities involved in the process. Whether these are brokers or appraisers, or even the employees should have that digital channel to communicate and collaborate during this loan cycle.
So I’m going to talk about each one of these and how Newgen helps in these pillars for success in superior digital bank.
The very first item, connected front and back office process. Now we all understand it’s important to have a seamless communication flow of information, but a lot of times we are not very of the challenges or the great divide between the front and the back office.
So what we have seen is while the whole organization is striving towards customer experience, higher revenues, cost reduction, the front office and the back office are very different when it comes to objectives, skills, time of work, et cetera.
At one hand, the front office is burdened, or their objective is to have a happy customer. Or the customer satisfaction is their main goal. Whereas in the back office, it’s more of a transactional work wherein they have to complete the tasks. So we have completed let’s say 30 closings today or 40 underwriting today. So that’s majorly their objective.
In the front office, we do see the skills are on a transactional basis. The task resolution is done on a solo basis. So each branch officer is able to do multiple tasks, but those are all transactional. Whereas in the back office, we see operational skills. We see the teams working as a whole, trying to complete the process.
On one hand, the front office receives the work every day. So each loan application, a new customer request, and it is arriving continuously. Whereas in the back office, it comes as a workload which has to be managed, distributed. So it becomes a long term project, if not very long term, but for a few days when we have underwriting to be completed, closing to be completed for these loans.
Now the great divide that comes even after such differences is especially with the distributor workforce, the disparate IT systems which do not connect with each other, and the different objectives that these things have.
Now, how do we tackle these objectives? How do we shorten or even curb this particular divide?
Now with Newgen, what we are able to deliver is a connected front and back office process for lending cycle, wherein it’s a single platform, whether the customers or members are coming in through channels such as online applications, they’re coming into branch, they’re calling up the customer care center. Or if the back office processes are being automated, whether it is underwriting closing, all of these activities are happening on one single platform, which is Newgen’s lending platform.
Secondly, these are all integrated, which means the flow of information between multiple solutions, multiple systems, whether these are credit bureaus, pricing engines, appraisal systems, all of these systems communicate seamlessly with each other, using the tightly integrated Newgen lending network. There are defined KRAs for front office, back office, and while these are different and rightly so, but the overall objective is to accomplish the organizational goals, which are customer satisfaction, quick disbursement of the loans, and higher loans and higher revenue.
Finally, a very basic aspect of the solution, but a robust workflow engine, which comes with Newgen’s solution. The idea here is to treat these loans as transactions and have the best possible workload management into picture of the best possible work distribution work allocation, diversion management with Newgen’s solution.
The benefits to front office and back office with Newgen’s solution are as follows. So with the integrated systems with credit bureaus completely tightly integrated, their appraisal systems, the front office is able to cater better to their customers, the members, with instant application submission approvals, even if the loan is not approved presenting the counter offers or negotiating with the customers on the rates.
And when the customer comes in to ask, where is my loan, they should have the ready made answer. So they’re able to have that information in real time from the back office and able to answer the customers with the actual status update.
Now, there are benefits to back office also, and we believe that the back office ultimately is responsible for 60% of the customer experience, because front office people cannot really deliver if they do not have support and information from the back office.
So with the back office, we are able to deliver again with Newgen lending platform, easy workload management. So they’re able to have a complete picture of the pipeline that is coming in, how that will be distributed. If there are student loans, will those be processed separately as compared to if there are home equity line of credit or home equity loans?
If there is any exception, let’s say a lower credit score or OFAC positive hit, how are those exception handled? If the documents are missing, how are those documents again, requested from the customers?
And finally with all these workflow capabilities, the overall objective and the benefit with Newgen’s solution is with the increased efficiency. So as Jim talked about, a higher number of loans is the key objective in the lending process.
We talk about the efficiency, which allows the back office users, the bank as a whole to handle more number of loan applications with similar or even lesser employees.
Now, let’s talk about the second pillar of the superior digital bank. It talks about developing business applications rapidly, and this is what we do with Newgen lending solution.
We are able to allow our customers to change the applications or even create new applications, new solutions, using Newgen’s lending platform. Now, there are different changes which are continuous in nature when it comes to lending. So we have seen institutions saying that, “Hey, we want to create a different flow for our student loans as compared to credit cards as compared to home equity loans.”
And rightly so, because the cycles are different. The turnaround time for these loans are different. On one hand, we have credit cards which are approved instantaneously. On other hand, we have home equity loans or even mortgage loans which take a couple of months as per the nature.
So how do we segregate these no-touch, low-touch loans based on the changes requested by these banks?
Secondly, we have seen quick changes that are requested by the institutions saying that, “Hey, we want to change how the solution looks. We want to change the customer experience, how the customers are interacting. We want to add fields.”
Now these are very basic small requirements, but we have observed that with the existing legacy applications, other vendors, the banks really have seen cycle of months in terms of implementing that change.
Similarly, there are different changes that may be required in underwriting. So banks continuously try to experiment on the decisioning engine, the underwriting engine, auto approval engine that they have. And how that is impacting their default rates.
So the overall correlation is done, and there are changes which are required in the lending rules at that point in time. So how do you as an institution are able to make that change quickly and as per the expectations of the customers?
Finally, you may want to create additional reports, maybe just trying to get some sense of the seasonal nature of the pipeline that you have in the lending process, or you may want to track your month end load of the pipeline for the loans.
So how do you create such reports which are ad hoc in nature, and you want those instantaneously instead of waiting and sending that request to IT team who will take a few weeks or a few days to create those reports?
Finally, as the technology changes, we have seen new systems coming into the market for ID authentication, for lending decision, or even OFAC checks. We have seen that every time a new system comes into picture or is popular, the banks ask us to change or add a new integration layer.
Now how easy it is for the lending platforms to make those changes?
Now, the answer here is with Newgen’s lending platform, we are able to deliver a low code platform for our lending solution, where in all these changes that I just talked about are fairly easy, a matter of day when we can make those changes. Whether it is changing the process flows or routes using the process designer, changing the look and feel using the UI/UX designer, adding or configuring new rules or changing existing rules on decisioning, on cross-selling of the loan products, or adding reports or integration layers.
Now, as per a report, on an average, if you are using a low code platform it really shortens the chain cycle by 66%. Which means that if there’s a change which takes around six months, you’ll be able to do that within a couple of months.
Now let’s talk about integrated core and third party systems. It’s important aspect of superior digital bank. It is also very obvious secret sauce when it comes to the banking industry. So we all understand that yes, systems have to be integrated, but how do we curb the challenges? How do we handle the challenges that may come up during this integration cycle?
And with Newgen lending platform, based on our experience with multiple third party applications, based on the open API architecture that we have, we’re able to deliver a seamless, integrated and unified experience to both the customers as well as employees during the lending life cycle.
So what we do is we are able to deliver integrated experience when the customers are coming in applying for the loans, we are able to integrate with online banking for existing customers, existing members. We are able to integrate with CRM, such as Salesforce or MS Dynamics to deliver the leads directly into the application process.
We’re able to enable seamless integration using OFAC, IDV, digital verification systems and credit bureaus. Now, this really helps in auto approval, auto decisioning of these loans. With a seamless connection, the customers are able to receive the auto approvals instantaneously on the website itself.
Similarly, during the closing process also, we are able to have this, deliver a seamless experience to the customers. So the closing can be done using DocuSign, e-sign, and the documents can be generated from Newgen’s solution. Or if the institutions are using the likes of [inaudible 00:40:34] or CSI or Laser Pro, we are able to integrate with those as well.
Now finally, the most important integration in the lending process is always the core banking, because nobody wants to add or reenter the data that has been captured in the lending cycle again into the core banking. So we deliver real-time, bidirectional, and complete 100% data entry directly into the core system. So this is an automated push and pull with the core system with real-time data exchange.
Now, the results with an integrated core and third party systems with Newgen lending product is 40 to 50% of the loan applications are instantaneously decision.
And this includes home equity, HELOCK, as well as a good candidate for auto approval, like credit card or personal loans.
The final pillar for superior digital experience or superior digital bank has always been the remote secure collaboration between internal and external stakeholders. Now, as you mentioned, we are at the tail end of the COVID scenario, and hopefully we are able to move into the normal world as quickly as possible.
But I think one thing that we have learned from past year is that it is very important to have the digital channel and digital first strategy, whether it is for the customers, members, or even if it is for the internal and external stakeholders. So we saw banks adopting the digital technology whitelisting to allow their employees to work from home. And at the same time, they were interacting with the customers continuously on a digital channel.
So we always delivered as part of the Newgen lending platform, different portals, different channels for borrowers, brokers, appraisers, or even the internal approvals within the loan cycle. They’re able to remotely access the solution and access the online portal on different mobile devices, a tablet device. And for the borrowers and brokers, if there is a need for additional documentation, again, they’re able to upload all of that content onto the portal.
Now this really eliminates any manual follow-ups that you may be doing, calling up the customer, asking for a few additional documents, sending emails from your personal Outlooks. So that is eliminated with the online portals.
Secondly, all of these entities are able to have a quick update on the loans. So borrowers, brokers are able to see what’s the latest status on my loan. Approvals are able to see how many loans are pending for their approval.
And it really reduces the turnaround time, because now all of these entities, all of the parties have quick access, immediate access to the loans.
Finally, any of the updates that are happening can be sent through auto alerts, any activities which are happening on these secure, remote collaboration channels has complete accountability. So we are able to generate reports on when did you send the communication to the borrowers and when did they access these portals? And when did they upload the documents?
Now, from a benefit perspective, we have seen 90% reduction in manual follow-ups. And this was a great hit in terms of the PPP loans that were prevalent in the last year. And the overall follow-ups manually done with the customers were reduced to 90%. And there’s a complete compliance with [inaudible 00:44:31] timeline, because as soon as you’re able to send additional requests for the documents to the borrowers, you’re able to stop that clock for [inaudible 00:44:40] and be in total compliance with [inaudible 00:44:42] timelines.
These are some of the examples of the online portals that we have for borrowers. So borrowers are able to not only just apply for the loans online, in a very intuitive, great customer experience environment, and using different devices like tablet mobile. But at the same time, they’re able to track their applications where these are right now and also upload the pending documentation if required.
Similarly, there’s a digital layer for brokers as well, wherein they’re able to log in, submit the applications on their customer’s behalf. So if you as an institution are heavily relying on the broker network, this is something which really adds value to all of our customers.
Finally, while it is not very… I’ll say for the appraisers, there are a lot of appraisers who are engaged through emails, follow-ups. So the same can be engaged through these online channels. And especially when it comes to small business loans, we have seen the need for engineers, environment consultants, especially with the CRA loan applications. But the idea here is that any entity that is involved in the lending cycle, the idea is not to have any manual follow-ups, handoffs with these entities or parties, but rather have a digital channel, digital front for them to easily collaborate and communicate with the bank.
Finally, I wanted to, again, recap with this slide, and again, a Newgen concept for connected banking. To me, it is more of a symphony, and this reminds me of a beautiful code that no one can whistle a symphony, it takes a whole orchestra to play it. Which really means that a connected banking can only happen when people, function, systems, processes are working in conjunction with each other. And again, it’s a boundaryless banking wherein we are also encapsulating the employees, customers, partner, but at the same time, extending that banking ecosystems to FinTech, aggregators, merchant suppliers, or any other channels.
The overall objective is having a higher growth, reducing the overall costs, and at the center of the connected banking is the customer who is the key for the superior digital bank.
Thank you, and we’ll open the session for any questions that the audience might have now.
Nicholas: Thank you, Ankur. So if you do have any questions, please feel free to type your questions in the webinar here, the go-to webinar.
So it does look like we do have a question here. I believe this is going to be for you, Jim. The question is with so many options in the market, how do you find the right products for our consumer lending solution?
Jim Marous : It’s interesting. We go through this process quite a bit, and I was talking to a group of banks last night about the fact that when we made decisions around CRM systems, when we made decisions around who should be our partner for mobile banking, a lot of organizations spend so long evaluating options and continually changing their mind because providers continue to jockey for position is who can be best.
I think the first thing you need to do is you have to find out who you’re comfortable with, but don’t spend so much time in the evaluation phase. If they deliver what you want and if they’re talking your language, and if they can provide you what you’re looking to do, if you know your destination, they say, “We can get you there,” and you feel comfortable with that.
Take the action now. Don’t continually or evaluate. I think we talk about this with almost everything we’re talking about right now with the digital transformation, you can overthink the process. And in the amount of time it takes to move forward, you lose momentum and most importantly, the marketplace goes beyond you.
So right now, more than ever, speed is most important. You need to move forward with a solution. It will pay for itself. And I think Ankur would agree that when they meet with financial institutions, sometimes the point… Everybody agrees, yes, yes, yes, yes, yes. And then they delay. That delay is painful not only for the solution provider, obviously, but it’s very painful for the organization that’s trying to make the decision.
Because not moving forward is not an option right now. We’re seeing new products and new services being innovated every single day, and every delay puts you further behind. As I said, the world has never changed as fast. It is never going to change this slowly again. So if you’re hoping for a resting spot it’s not going to happen. So all I can suggest is make action, make a decision, and move forward.
Nicholas: Thank you, Jim.
Okay, so it looks like we have another question here. Ankur, I’m going to direct this one at you.
It says, can Newgen work with / overcome legacy IT systems and processes to be able to process a loan application seamlessly and frictionlessly across all channels, including call center, or if a customer walks into a branch?
Ankur Rawat: Yeah, and that’s a good question, and I say this because typically the core banking systems or the legacy applications, it’s really hard to change those. And rightly so, because they’re like an airplane cockpit. It’s so complicated and it rightly deserves so.
Changing the core is very difficult, so if you have to add any process on top of it or add any feature, it’s very difficult. So what we do is that we add an automation layer on top of the core banking system, which is our lending platform. So what it means is that any and every point where you have certain limitations in terms of tracking of the loan, workflow management, work allocation, or even underwriting. So all of those aspects are taken care by Newgen. So we have that workflow layer as part of the lending platform.
And we are able to also connect with these legacy systems using different methodologies. So we always work as per the technology that is there, whether it is very basic technology asking for a screen scraping or [inaudible 00:51:31] kind of thing, or if it deserves an RPA based automation. But if these are the applications which expose some kind of APIs or web services, we have all those channels, all those technologies to ensure that we are seamlessly connecting with these systems in real time.
And if the system does not provide real-time then in dashboard. So we have all the options. The idea is to ensure it’s a seamless flow of information when it comes to these legacy systems.
Nicholas: Thank you, Ankur.
So looking here, it looks like we have another question. Jim, I’m going to direct this one at you. It says that we want to upgrade our digital lending solutions. How do we sell this business case to the board?
Jim Marous : I mentioned in my presentation, I think the best way to sell it is with new loans. Again, I met with some banks over the last couple of weeks, and the way they’re actually breaking it down into why to do digital transformation in general or why to transform the new account opening experience is look at the number of accounts that are leaving you because the process is so friction laden.
The reality is in our research, we’re seeing that more than 50% of loans do not get processed because it takes so long. And let’s say we fix 50% of those, that means you’re increasing your loan volume by at least 50% simply by improving the digital lending process. The revenue on that 50% growth in loans I will almost guarantee is going to pay for a transformation of your digital lending experience.
Now, that’s only if you take the guidance of the solution provider you select and actually simplify the process. If you buy something and you don’t do what’s recommended, or if you continue in a new account opening process to require signature cards, which are not required. Or you do not automate back office process, do not speed up the process, do not take away all the friction that currently is there, but do it halfway. Your results will not be what you expect them to be.
So the best way to sell it is buy new loan growth. And we’re talking about new loan growth simply from those customers that now abandon the process. We’re not talking about finding new loans, and the reality is over time you will find new loans because it’s a lot more efficient, and you’re going to stand out in the marketplace as a place that they can get loans quickly. But I’m just talking about correcting current problems to improve numbers from people that wanted to go with to you but didn’t fulfill on the process because your processors were way too cumbersome.
Nicholas: Thank you, Jim.
So moving on the next question here, Ankur, I’m going to direct this one at you. The question is what is the key value proposition of your platform amongst the other players in the market?
Ankur Rawat: Sure, sure. So one of the pillars of a superior digital bank as Jim mentioned was the ability to develop business applications rapidly. Now we understand, and it’s a fairly valid argument that we have seen a continuous change in banking industry. Even the best of bankers have never been able to guess what is going to happen let’s say three years down the line, even one year down the line.
So the changes are so frequent and so dynamic, it’s really hard to keep up with the requirements for the lending process. We do see often that every time after procuring a solution, the banks are looking for an upgrade or change in the solution after two years, three years.
It is only because even if you are able to jot down 300, 400 requirements for what you need in your ideal lending solution, you still will have that requirement or the list completely changed after a couple of weeks. So the idea here is not to have an ideal architecture, ideal solution, but the most important aspect is having an adaptable solution, which is what Newgen provides. So this is a key value proposition of Newgen, wherein all of the components that we deliver are highly configurable.
It’s fairly easy to make changes and adopt to the market, adapt to the market dynamics, which are initiated through either compliance requirements, internal innovations, or industry trends or analyst recommendations.
Nicholas: Thank you, Ankur. We do only have a few minutes left here, so we do have another question that I’m going to direct at you, Ankur.
It says we are just starting with our journey and we don’t know what we don’t know. How is Newgen helping banks like us and what is the blueprint for this?
Ankur Rawat: Awesome. Yeah, so what we would say is, first of all, we have implemented the solution multiple times. As Jim mentioned earlier, this is the benefit that you’ll have with the Newgen solution, as well as other solutions in the market. Wherein they have the experience, they’ve seen the ugly part of the processes.
Secondly, we do the heavy lifting with our customers, so we are able to minimize the amount of time you have to invest in aligning the solution as per your needs in integration. So we are always proactive in letting you know what we would need for the integrations, for the configurations in the system.
And because it’s out of the box, typically we have seen that the amount of changes that you will do in the system would be probably 15% to 20%. So with that said, what we do is that we help the customers even before the procurement, before the selection, by sharing some of the best practices on evaluation cycles. And once the selection is done, we help the customers in doing a heavy lifting for the overall analysis, having those tri-party calls with all the integration parties, and ensuring that we deliver the solution to the finish.
Even after go live, we have one month of hypercare support to ensure that we are able to make you comfortable when you go live in your lending process.
Nicholas: Thank you, Ankur.
So we are about out of time here. So I do want to thank Ankur and Jim for giving insight on the consumer lending digital process. I want to thank everybody for joining us today for this webinar.
Ankur Rawat: Thank you, thanks everyone.
Jim Marous : Thank you.