LOAN APPLICATION & SERVICING PORTAL FOR A LENDING STARTUP

  • Detailed discovery phase to understand and document project scope, and explore third party APIs for integration
  • Software solution to automate and simplify the loan application and approval process, and speed up fund delivery to small and mid-size business owners
  • Integration with loan servicing platforms to automate loan EMI payments via ACH bank transfer
  • TECH STACK:
    Java Angular MS SQL
  • EXPERTISE:
    Digital Strategy & Consulting Business Process Automation Custom Software Development
  • VERTICAL:
    Banking & FinanceStartup
  • ENGAGEMENT MODEL:
    Fixed Cost Fixed Scope

BACKGROUND

Fundation, a lending startup is a credit solutions provider that wanted to change the landscape of loan disbursal to small and medium sized businesses nationwide through a streamlined, data-driven, digital process. They were in search of a custom software development firm that could help them develop a technology solution to revolutionize the online lending space and enhance the borrowing process for small business owners.

While the capital was provided through their partner network of banks and non-banking finance companies, Fundation wanted the application process to be completed and managed entirely online. They envisioned their customers applying for a loan using a web-based form with minimal documentation requirements while receiving real-time interactive feedback as they choose responses to the form fields. In short, they were looking to offer the equivalent of a bank loan in as little as two business days.

After considering several development companies, Fundation decided to partner with Asahi Technologies because, according to the client, we provided the most attractive proposal in terms of technology ecosystem, scalability, application security, timeline, budget, and post-launch support.

SOLUTION

Project Discovery

We started our engagement by first conducting an elaborate discovery phase. As part of the discovery phase, we did a deep dive into the project requirements, the different third party systems that the application needed to be integrated to, and understanding of Fundation’s proprietary algorithm that determines who qualifies for a loan and on what terms.

Challenges

While conducting the discovery phase, the following challenges became quite apparent to us.

Complex Third-Party Integrations - The application we developed needed to integrate with several third-party systems that helped verify the identity of the business owner and provide vital information on his/her credit worthiness. Each third-party system came with its own set of documentation, Application Programming Interfaces (APIs), and challenges.

Additionally, each system had its authentication guidelines and security protocols that we needed to adhere to, adding another measure of complexity to the project. This meant that our team had to grasp the requirements of each system fully; some integrations required SSL (Secure Socket Layer) implementation, while communication with others needed data to be encrypted to ensure that information exchange was secure.

Multi-factor Loan Approval - Fundation's proprietary algorithm, which determined which applicants qualified for the loan and on what terms was complex and analyzed multiple parameters and conditions:

Infographic

    Parameters for loan approval:

  • Industry of applicant’s business
  • Purpose of the loan
  • Business Credit Score
  • Officer's creditworthiness
  • Business loan repayment history

MULTI-FACTOR LOAN APPROVAL

    Loan Terms:

  • Loan type - term loan or line of credit
  • Loan amount
  • Interest rates
  • Repayment terms
  • Collateral required (if any)
  • Payment frequency

At the end of discovery phase, we put together a 150-page document that had confidential project blueprint information comprising the following.

Infographic1
  • Project Vision & Scope
  • Features & Functionality Definition
  • Collaborative Sketching
  • High Fidelity Mockups
  • Technical Architecture & Design
  • Project Plan & Roadmap
  • Refined Cost & Schedule Estimate

MULTI-FACTOR LOAN APPROVAL

    Parameters for loan approval:

  • Industry of applicant’s business
  • Purpose of the loan
  • Business Credit Score
  • Officer's creditworthiness
  • Business loan repayment history

    Loan Terms:

  • Loan type - term loan or line of credit
  • Loan amount
  • Interest rates
  • Repayment terms
  • Collateral required (if any)
  • Payment frequency

At the end of discovery phase, we put together a 150-page document that had confidential project blueprint information comprising the following.

Infographic1
Project Vision & Scope
Technical Architecture & Design
Features & Functionality Definition
Project Plan & Roadmap
Collaborative Sketching
Refined Cost & Schedule Estimate
High Fidelity Mockups

Project Implementation

Considering that this is an application for the banking & finance domain, threshold for error is very low. However, the strong logical reasoning and problem solving skills intrinsic to our team helped implement Fundation's proprietary algorithm without a hitch.

After thoroughly going through the different APIs and system documentation, as well as the authentication/security protocol requirements for each third-party system, we successfully integrated with and gathered information necessary for approval/servicing of the loan.

We connected with

  • 1.
    IRS to obtain client's tax statements
  • 2.
    Identity verification system to validate the business owner’s identity
  • 3.
    Credit decision/scoring system to determine credit profile/credit worthiness of the business & business owner
  • 4.
    Online banking system to collect business’ bank statements and understand business loan repayment history
  • 5.
    Payment gateway to process loan application fees and surcharges.
  • 6.
    Loan servicing platform to facilitate automatic loan installment payments via ACH bank transfers
  • 7.
    CRM System to store information of loan applicants whose loan is declined – for future marketing follow-ups

The information gathered in steps 1-4 above is fed to Fundation’s proprietary algorithm to determine if a user qualifies for the loan. Additionally, auxiliary non-numeric information (for example, customer’s reason for the loan) that played a role in the approval process required manual intervention from a credit analyst at Fundation. Loans requested towards working capital, inventory, capital improvements, equipment purchases, and expansion of facilities had a higher preference over loans requested for business acquisitions and ownership related events.

RESULTS

The state-of-the-art application built by our team enabled Fundation to efficiently capture applicant information, and, most importantly, simplify the loan application, approval and servicing experience for the business owner. As a result of this, Fundation’s clients can apply for loans with great ease and receive access to funds far quicker than going through a bank.

BENEFITS

  • The application we built for Fundation streamlined and accelerated the lending process
  • The completely automated loan application process enabled Fundation to provide superior service to its clients thereby competing directly with banks that still used a cumbersome paper based approach
  • Customer satisfaction rate among Fundation’s customers was unanimous and off the charts - 4.9 out of 5.0
  • The high customer rating brought more clients. In the two years after the app was launched, Fundation extended 250+ loans with a total value of 60 million dollars

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