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Fin Smart-Lend

Finastra Retail Banking (Prithumit, Ramy, Hemant, Clive, Amulya, Bhaskar)

Hacking through COVID
Loan Origination Innovation with PSD2 and FFDC APIs. Transforming Digital Lending in Covid Times
Hacking through COVID
Loan Origination Innovation with PSD2 and FFDC APIs. Transforming Digital Lending in Covid Times


Our Inspiration behind the idea ?

  • Given the unprecedented scale and dynamics of Covid crisis, trying to manage a Loan Book based on historical credit risk ratings doesn’t make sense; all previous correlations are broken. See: ‘FT: America’s $1.3tn car-loan pile-up’ for an example. Solutions are needed for Banks and Lenders that underwrite based on a current/forward looking view (rather than historical) to alert and mitigate Loan Defaulting risks
  • Current times, also calls for a more digital (behind the scene) transformation of Loan Origination journey (for customers). There are still manual processes involved like verification of salary/income documents for loan eligibility, which is a time-taking process for customers and not cost effective for Lenders and Banks as well
  • We do have the necessary ingredients for solving these problems with Loan Origination (more relevant in Covid times) through FFDC Open APIs, FFDC Partners and our Retail Banking core

What is Fin Smart-Lend ? 

Fin Smart-Lend aims to create a digital (behind the scenes) lending solution by fully leveraging PSD2 (as the innovation fuel) and FFDC Open Banking APIs to provide customers with unparalleled experience in loan origination process (like Digital Cash flow Analysis for Loan Eligibility) and also enabling lender banks to continuously monitor risks to loan repayment and defaults . This solution is highly relevant for current volatile COVID times and has three major innovation focus

  1. Digital (behind the scenes) Loan Origination in Covid times - Fin Smart-Lend makes use of customer's PSD2 Account Information Consent to perform real-time Digital Cash flow Analysis and shift lending decision from income based (eliminating manual salary statements processing) to real-time cash flow based
  2. Continuous Monitor of Loan Repayment Risk - In current volatile Covid times with fluctuating income and financial health of customers, historical credit risk ratings are not relevant as all previous correlations are broken . Fin Smart-Lend innovatively uses PSD2 Account Monitoring Consent and post the loan disbursement enables Banks to pro-actively monitor/asses real-time stress on Loan Repayment accounts
  3. Collaboration Opportunities for FFDC Partners and Loan Aggregators to strengthen the Digital Lending ecosystem for future

How Fin Smart-Lend works ?

  • Fin Smart-Lend app facilitates as smart Digital Loan Origination process for customers through FFDC Retail Banking Open APIs powered by Finastra's leading core banking product Fusion Essence. During the process of loan application, the app takes PSD2 consent from customers, through SaltEdge (FFDC Partner for PSD2) thus connecting customer's bank accounts and it's transactions with a consent to monitor accounts as well for future (renewing the consent periodically) 
  • For Loan Eligibility decisions, instead of using manual verification process and uploading of salary/income statements, Fin Smart-Lend makes use of the PSD2 account consent and SaltEdge's Data Enrichment APIs to derive income/expense from cash flows digitally and in real-time
  • Post Loan Disbursement, the PSD2 Account Monitoring Consent received during loan application is used to continuously monitor stress in Loan Repayment accounts. This is done against current balances and variation trends of income/expense transactions (monthly) happening in customer's account. It predicts chances of repayment defaults (through risk scores) that may happen for in future
  • We empower Banks to integrate this solution with Bank's custom analytics platforms. Alternatively Repayment Stress Monitoring Dashboards are created through Power BI using data from our Core Banking (Fusion Essence) and PSD2 consent via SaltEdge/FFDC

Future Prospects for Fin Smart-Lend:

  • Fin Smart-Lend uses PSD2 consent for customer's Accounts and Financial Information. Loan Aggregator and fin-techs can make use of the data and PSD2 consent along with FFDC Open Banking APIs to generate Personalized Loan Offers for customers
  • Fin-techs and Partners having solutions for Credit Risk analysis and Covid Vulnerability Rating frameworks can collaborate through Fin Smart-Lend and FFDC to offer real-time Loan Risk Monitoring solutions to Banks

Additional Details - https://devpost.com/software/smart-loan-origination

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