Credit Card Loans: The 4 Important Stages in Retail Loan Origination

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A loan against a credit card is a modernized form of a personal loan. Many individuals now opt-in taking these loans as a means of financing that can help meet monetary needs in a relatively short period of time. The attractiveness of this loan product comes because of the ease of applying. If an individual has a credit card in their name, financial institutions can obtain customer data through the original credit card application in the database without the customer having to submit any new documents.

Credit card loans or loans against credit card are usually pre-approved and can be availed instantly. While processing fee is still charged, the entire process of converting a pre-assigned limit into a loan is hassle-free and fast. There is no need to visit a physical branch or any lengthy paperwork to avail this money, prompting lending enterprises to set up web and mobile applications to reach a wider base of customers.

Credit card loans mark the advent of new-age loan products which lending institutions need to exploit in order to stay popular among technologically adept customers. However, many well-established credit institutions are struggling to implement these products successfully due to the following reasons:

  1. Platform independence: To cater to the wide base of customers, it becomes important to develop remote applications for the Bank/NBFC across all platforms to achieve uniformity in excellent user experience. However, this process can be complicated and time-consuming without a robust system that can work across platforms in real-time.
  2. Automation of processes: While many financial enterprises already have working web and mobile applications in place, they still have manual processes and lack the option of having a completely digitized loan journey. This makes the process vulnerable to customer dropoffs and unfriendly user experience.
  3. Credit Decisioning: Credit card loans are approved by thoroughly examining the credit history and using this data in decision making. This requires different parameters to be considered as compared to traditional loan products. Loans against credit cards warrant different credit policies as well as configurable methods to implement it.
  4. High costs: The cost of customizations in a loan product are often exorbitant, especially to keep up with the latest advances in technology which attract millennials. This hurdle can be solved only through an agile system which is equipped to handle customizations easily.

Lend.In having worked with multiple domain experts, has devised a solution for pre-approved credit card loans which can overcome all complexities and optimize processes to drive sales towards the financial institution. 

Automating the pre-approved process to reduce TAT across all platforms

Lend.In enables banks and NBFCs to automate its loan disbursal process to drastically reduce overall TAT. It does this through creating  Straight Through Processing of pre-approved credit card loans directly to customers without manual intervention. Lend.In’s Product Configuration Platform is a low-code suite which allows the incorporation of modules all working together to craft a complete solution. For credit card loans, Lend.In uses three main modules to create a Straight Through Process:

  1. Digital Experience Manager: This module handles all user experience and front end processes. The DEM is a module working on configurations that can be made without the use of any code. Business users can configure changes which are reflected across all front end applications i.e both web and mobile interfaces. This is arguably the most important module for the credit card loan journey as it is used to enhance user experience which prevents customer drop-offs.
  2. API Integration Broker: Any efficient loan process makes use of all the tools in its arsenal, in this case, Lend.In leverages its API marketplace which contains integrations with trusted partners for all processes from KYC verification to digital signing to ease the customer loan journey.
  3. Credit Decisioning Engine: This engine is used for multiple purposes and can be used along with other credit engines for complex decision making. It is used to implement the bank/NBFCs credit policy and can be configured to incorporate any changes made.

Touchpoints in the pre-approved credit card retail loan origination

  1. Pre-approved Loan Offer Generation: Lend.In has the capability to integrate with the central database of the bank/NBFC, using information retrieved from there, pre-population of fields can be done in the loan application for customers possessing credit cards. This drastically reduces the time required for manually filling fields.
  2. KYC Verification: Digital KYC is enabled by Lend.In’s API Integration broker which is tightly integrated with third party APIs that ease the KYC process by speeding up database checking and matching of information from submitted documents.
  3. Credit evaluation and decisions: Through integrations with credit bureaus, relevant customer information is retrieved and then fed into the credit engine which then assesses the parameters to give an output in the form or a score which can be levied for decision making.
  4. Loan signing and agreement generation: The final loan agreement can be signed using third party applications and the agreement is generated to be sent to the customer through email. The loan is then managed using Lend.In’s Loan Management System.

Benefits:

  1. Streamlined lending process for intuitive customer experience: Lend.In’s flexible and agile architecture helps financial institutions automate the end-to-end credit card loan journey for their customers, thereby reducing TAT, customer drop-offs, streamlining processes and providing exceptional customer experience.
  2. Higher Productivity : In adopting pre-approved credit card loans, the implementation time is reduced due to faster utilization of integrations and functionalities that are exposed to cross-platform support, data integrations and security which allows organizations to focus on business problems.
  3. Deployment across platforms: For these small-ticket loans, Lend.In supports, the creation of interactive user experiences on any platform be it a web or mobile application with any operating system. Moreover, changes made on any platform are reflected across all applications.
  4. Lower costs: The return on investment provided to a business becomes greater by employing Lend.In. As a low-code easily configurable platform, the overall costs of updating and introducing new features becomes simpler as the process is easier for the developer and the customer.