Fin Smart-Lend (Loan Origination Innovation with PSD2)

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  Fin Smart-Lend | Loan Origination Innovation through PSD2 and Aggregator Concept

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Inspiration

1. Given the unprecedented scale of Covid crisis, customers require additional loans to meet their urgent requirements. Thus there should be a platform which provides customers an option to select tailor made loan offer from lender of their preference.

2. Banks have soaring NPAs and trying to manage a Loan Book based on historical credit risk ratings is not relevant as all previous correlations are broken. Solutions are needed that provide a real-time view of customer's credit risk assessment (based on his/her current financial status) to mitigate risks in Loan Origination and offering. Additionally, lender should be able to continuously monitor customer's financial status and proactively assess the repayment risk to take appropriate action.

3. There are multiple actors in Digital Lending process (Loan Originators, Lending Firms, Specialized Credit Decisioning firms, Loan Servicing Agencies). Current times calls for Digital (behind the scenes) aggregated solutions where these players can collaborate to strengthen the lending eco-system and tap into Open Banking Innovations which are happening rapidly (like concepts of marketplace)

What it does

Fin Smart-Lend aims to create a collaborative and digital (behind the scenes) lending solution by fully leveraging PSD2 and FFDC potential. The solution allows Finastra clients (i.e. financial firms – banks, NBFC etc.) to provide their customers an unparalleled experience in loan origination process in current unprecedented Covid times with two major innovation focus

1. Create Opportunities for Development of New Business Models by providing emerging fin-techs a ready-to-use infrastructure for collaboration (Lending firms and Loan Aggregator fin-tech) and thus reducing their time to market

2. Digital (behind the scenes) Loan Origination in Covid Times - Fin Smart-Lend uses PSD2 account monitoring consent to perform real-time Digital Cash flow Analysis and shift lending decisioning from Income based (manual salary statements processing) to cash flow based. It also enables lenders to monitor repayment risks on loans (real-time stress on Accounts). Through this solution we are enabling banks to pro-actively assess repayment risk and take necessary steps for correction, if required.

Subsequently, through Fin Smart-Lend we plan to establish a consistent revenue stream for Finastra since it hosts all the players across value chain and orchestrates their collaboration effort. It provides a win-win scenario for all actors involved in the lending process with maximum benefit being delivered to end customer

How we built it

Challenges we ran into

Finding Loan Aggregator partners and similar fin-techs that would provide out of the box frameworks for different geographies has been a challenge

Accomplishments that we're proud of

1. Making use of PSD2 as a connector to digitize and automate processes in Loan Origination workflow which is helpful for Lender Banks as well as Customers in current Covid crisis
2. Obtain a more real-time view of their Credit Risk assessment in Loans, to allow a better, more proactive management of loan books for retail lending products. Reduce dependency on historical credit ratings, as given the unprecedented scale and dynamics of Covid crisis, all previous correlations are broken

What we learned

On Technical Front - In this Hackathon, we learned the usage of new and powerful low-code tools like PowerApps and Microsoft Flow (simple workflow engines) through which we can develop prototypes in quick time and connect to FFDC Open APIs to build a solution/application

New Business Models in Loan Origination - During our idea research, we have learned about Loan Aggregator concept and how it works in different geographic markets and explored various such solutions and framework proposals available in fin-tech domain. We have also learned a lot on PSD2 and types of consent that applies in different geographies for Open Banking

What's next for Fin Smart-Lend ?

1. Fin Smart-Lend as a framework opens up multiple collaboration opportunities via Finastra's FFDC Open API platform and partner eco-system. Next, we would like to explore how we can tap into opportunities for integrating Loan Aggregators and similar fin-techs in lending ecosystem to collaborate
2. Helping Loan Servicing Agencies make use of Fin Smart-Lend's "PSD2 Connect" to create their own Loan Risk Evaluation application and model through Data Services in FFDC

POC screenshots of Fin Smart-Lending

Built With

• ai
• azure
• ffdc
• node.js
• openapi
• powerapp
• psd2