Understanding Lending Analytics & Its Advantages for Your Business
With the digitization of banking and lending businesses, we see an increase in competition, faceless processing and turnaround time reduced from a few days to minutes/hours. It becomes extremely important to have control over entire operations. To survive in this competition, lending business houses need to have a close eye on compliance, Risks involved, and probable frauds arising.
Lending 3.0 evolves from paper to complete digital, and banking & financial institutions are continuously evolving to keep up with the changing times. These institutions are also interested to learn about Customer Behaviour trends, Geographical Distribution and know-how to target the right audience or grow their business with the existing customer base.
With the evolution of technology, the world of lending has drastically changed. Hence, there is a need for a solution that is more advanced than the existing ones. It has become a necessity for lending Institutions to track and monitor their various KPIs for sustainable growth. Lending Analytics helps in having a single-window view with a single source of truth.
What is Lending Analytics?
Lending Analytics provides a holistic view of the lending business to lenders based on different parameters. These parameters are based on the Loan Origination Process (LOS) and Loan Servicing and Collections which can track 100+ KPIs to get the hidden trends and data-driven insights for the betterment of the business.
Lending institutions generate huge data which has multiple dimensions; hence it is complicated for decision-makers to get business insights. Domain, as well as technical expertise, are needed to establish and manage analytics practices in lending organizations/Institutions.
Let us understand the features of lending analytics in much more depth.
What data points we would need in Lending Analytics?
- Loan application details like loan product, amount, tenure, interest etc.
- Applicant’s Demographics
- Applicants and Borrowers’ behavioural patterns
- All other operational and transactional data
Once we have such 1000+ data points; we clean it, model it and present decision-friendly dashboards.
Let us now look at the different types of analysis Lending Analytics can provide
Product Design and Performance Analysis –
It will help you identify which products are contributing most to your revenue and performing better. So that the marketing team can run focused campaigns to get more business from identified products/categories.
Demographic Analysis –
This can show decision-makers what their sales across regions are. Co-relation between products and geographies lets you understand what is a possible next target market or trending products by region.
Time Analysis –
This will help you understand the seasonality of consumer behavioural patterns, and business growth and help you set the targets and achieve the same.
Operations Analysis –
In the lending business, we have a lot of processes like application origination, credit check, underwriting, approval, servicing, collections etc. Operation analysis can help us to identify which part of our process is consuming more time and optimize them.
Customer Profiling –
This helps us to define customer personas based on different parameters such as age group, region, profession, income group, past credit history etc. We can use this data to introduce some new products or customize existing ones which would best fit customers.
Risk Analysis –
There is always a risk involved when we give money to anyone, so we should be very careful to whom are we giving the loans. This part of the analysis helps us to identify which type of loan can turn into NPL. Looking at the previous data we can add some additional security checks in our operations or take some collateral on specific kinds of loans to avoid them turning into NPL in future.
Adherence to Compliances –
To keep the tab on compliances/regulations in a sea of data points and customers it will help you point out the outliers and correct them.
Lending Analytics dashboards are created by leveraging advanced data visualization solutions such as Power BI and Tableau that facilitates businesses in decision making.
Benefits of Lending Analytics
For you as a lender, here are some of the benefits of adopting lending analytics for your business:
Identify cross-sell and up-sell opportunities:
With the Lending Analytics dashboard, you as a lender can get real-time access to customers’ financial behaviour. By tracking and monitoring the behaviour of customers who are repaying loan amounts on time, you have an opportunity to cross-sell them other loan products or top up their existing loans. This enables your business to grow just by monitoring the right customer segments through aesthetic and interactive dashboards.
Improve operational turn-around time (TAT):
Lending Analytics dashboards can also provide insights into how many loan applications have come in, how many loan applications have been processed and how much time it took to process them. These insights will help you to understand what operational areas need improvements and how application turn around be improved based on insights gained through lending analytics solutions.
Identifying the best collection strategies:
Data analytics, when applied to customer data, helps you understand their behaviour and characteristics to maximize collection yields from each. Traditionally, lending businesses used to create customer buckets for a few risk categories and set different collection strategies for each one. With advanced analytics, businesses get a nuanced understanding of their customer behaviour. With the help of data points like demographics, account activities, collection and risk ratings, and credit history, customers can be further classified into micro-segments to implement different collection strategies. It also helps understanding, which collection strategy works better for the particular customer segment.
Offer risk-based interest rates:
Through lending analytics, customer segments and their behaviours can be tracked easily. Based on these data points, tailor-made loan solutions can be created that can be flexible in terms of either payments or loan repayment amounts if the credibility of the borrower is sound. Assessing each borrower individually, risk-based pricing can be designed and offered to such borrowers.
Early signals on credit risk and frauds:
Lending Analytics gives you early warnings and signals about potential fraud by analysing your business data and patterns from the dashboards. It helps you to deep dive into the issues and rectify them on time before it’s too late.
Read our blog about Optimize Credit Risk Management by Leveraging Lending Analytics Solution
Why Choose Intellify for Lending Analytics Solution?
Specialists in Lending Analytics:
We at Intellify have expertise in deploying lending analytics solutions for various lending organizations. We have developed a business intelligence solution after auditing various challenges in the financial industry and designed a solution that is a perfect fit for your business.
Key highlights of the solution:
- 18+ dashboards for lending analytics
- 100+ KPI’s covering all 3 processes
- Dedicated dashboards for Risk and Fraud Analysis and much more.
Team of experts who have developed templates to develop stories using your data which helps in decision making. Here is our blog on- How to design a story with your data.
When it comes to data visualization and creating aesthetic, interactive and easily understandable dashboards, Intellify is a name you can trust. We have a decades of experience in building, curating and designing data visualization solutions that are appropriate for your business as a financial institution.
Our lending analytics solutions can be quickly deployed and is almost ready to use. It only needs to put together the list of data points shared by the Intellify team and connect to the pre-built data model. And it’s done! You will start getting insights from day one.
Embedded Analytics Experts:
Intellify has developed an Embedded Analytics Solution layer which let you integrate the Lending Analytics dashboards into your application thereby, helping you share those dashboards with external (outside your organization) users.
Intellify believes in creating state-of-the-art data visualization solutions for banks and the financial industry to improve, enhance and grow their business sustainably. We provide an embedded analytics solution that is designed to fulfil your business requirements.
If you are looking to adopt a dashboarding solution for your business, feel free to get in touch with our experts by clicking here.