<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2024/12/Finflux-Vishal-Miglani-012000-1251-1.webp" alt="M2P Fintech" title="" id="jnrncj69t" width="100%" height="500">The <a class="link" href="https://m2pfintech.com/blog/focus-rise-of-co-lending-model/" target="_blank">journey of co-lending</a> is remarkable. What started as a small step to boost liquidity has turned into a well-heeled program, with every leading business wanting a piece of the pie. There is enough information about the program and its uniquity all over the internet, while close to none detailing the practicality of launching the program.To bridge this gap, we sought the expertise of industry veteran Mr. Vishal Miglani, Vice President of Strategic Alliances &amp; Collaborations at TruCap Finance Ltd. Mr. Miglani was kind enough to share his in-depth knowledge on the practicalities of implementing and expanding co-lending programs, offering a true view “from the trenches.”TruCap adopted M2P’s lending suite in 2021 to significantly scale up its lending book while lowering operational expenses. M2P’s intelligent Business Rule Engine and configurable <a class="link" href="https://m2pfintech.com/loan-origination-system/" target="_blank">Loan Origination System (LOS)</a> &amp; <a class="link" href="https://m2pfintech.com/loan-management-system/" target="_blank">Loan Management System (LMS)</a> workflows helped them process substantially higher volumes, increase productivity, and enhance operational efficiency. TruCap has leveraged M2P’s technology and successfully implemented 17 co-lending programs.During our candid session, Mr. Vishal delved deeper into the practicality of implementing a co-lending program, the challenges &amp; complexities, how tech can solve them, etc. And further extended his expertise in outlining the industry from an enterprise vantage.Q1: What’s your experience in launching a co-lending program at TruCap?&nbsp;A: : I started my journey with TruCap in 2019, right about the time when co-lending was gradually gaining attention from multiple stakeholders in the ecosystem. We started co-lending programs in June 2020. Today, it covers 22% of our entire book. At TruCap, we generally carry out two types of co-lending: Upstream and Downstream. When we partner with another NBFC, it's called a downstream partnership, where we provide our balance sheet, and the partner NBFC serves as a Loan Service Provider (LSP). When we get into a co-lending agreement with a Bank, it's called an upstream partnership, where the Bank provides the balance sheet, and we serve as their LSP. In both types of partnerships, we agree upon a hybrid product (with/without tweaks) that serves the borrowers efficiently. Over the years, we have built a remarkable co-lending journey with leading public/private sector banks and NBFCs. Between June 2020 and March 2022, we signed up with 17 partners and built a 200-crore book with them.Q2: What setbacks did you encounter in launching a co-lending program?A: The primary impediment to any co-lending program is how well both lending partners' systems and processes can work. It's obvious! Any co-lender would contemplate what goes into their partner's loan cycle and how their organization can understand and accommodate that loan cycle. Well… I would say finding a middle ground to adapt and accept each other's processes and tech is easier in a downstream partnership. Because as an enterprise, we partner with smaller NBFCs who are driven by the ethos of sustainable growth by catering to underserved borrowers to keep them afloat in the business. Their readiness to amend their tech to align themselves to the processes and technology of the co-lender is always high.Once the product integration is sorted, the next stumbling block is the integration of processes and technology. Whether you want a bulk upload via SFTP, or manual inputs varies from partner to partner and depends on the tech-readiness of the partner and stage of business at which technology can truly impact sustainable scaling to play a role of an enabler.<blockquote class="block-node" id="7l0sk8wn7">“Using First Principles in the brainstorming sessions with a strong bias toward action and avoid paralysis by analysis – Vishal Miglani.”</blockquote>Q3: Can you elaborate on the practical challenges in scaling a co-lending program and how did you overcome them?A: The biggest challenge today the industry is facing is handling loan management and collections. Not all customer journeys are happy and smooth. Some customers do not pay on time; some miss an EMI or two; some make a part payment; some pay upfront, and others might not pay at all. We can resolve this issue in one of the following ways: Either the partner NBFC should adapt the system logic of the NBFC that provides the balance sheet or vice versa. So, what happens here is both parties sit down for a mutual discussion to decide. And this is where major disconnect/recon happens in any co-lending relationship.For example, let's consider the ICP logic. Each NBFC has a different rule book for delayed payments, penal charges, etc. Some NBFCs allow customers to pay their EMI beyond the due date without any penal fees, while others apply penal charges from day one. Depending on the type of arrangement we sign up, the systems must be aligned and integrated to minimize and address the complexities to effectively gauge risk.Q4: How do you handle collections?A: When it comes to a downstream partnership, we maintain a mirror image of the partner's book in real-time. Say I have a demand for 1,000 customer repayments. The partner NBFC meets the demand and keeps the books. Of these, 5 or 6 customers may miss repayments, and we tag these customers in real-time as the partner NBFC puts a tab on them. Only when we do this in real time can risk be managed effectively. Waiting for a partner to report after the customer becomes an NPA could make the situation dire. This is where tech support comes into play.Q5: You have executed several successful partnerships. What is your secret sauce in selecting your co-lending partners?A: As highlighted earlier, we work with sustainable and growth-oriented stakeholders in the co-lending ecosystem. We have invested substantially to create an infrastructure that allows for ease of business while making credit accessible and affordable for the underserved MSMEs. Our SoPs guide us in selecting co-lending partner(s) whose vision is aligned to ours. However, it is essential to conduct specific due diligence to ensure a successful partnership. At TruCap, we have a set of criteria, and we carry out extensive due diligence, including financial due diligence, product due diligence, team due diligence, branch network spread, ability to collect, geography, and more.Further, we only partner with NBFCs that maintain a similar ecosystem of products or in the line of products we offer. For instance, we are an MSME business loan company, so we will do a downstream partnership with an NBFC that is into business loans, not those offering personal loans. The ethos of what we want to do is standard, and we don't divert from it.Q6: In the line of the previous question, what does a typical P&amp;L discussion entail in a partnership?A: I firmly believe in using First Principles in the brainstorming sessions with a strong bias toward action; avoid paralysis by analysis. We have been quite clear that these partnerships need critical levers of business and metrics to be addressed appropriately at the beginning of the association to avoid post integration pangs and duplication of efforts. We strictly adhere to the Discuss—Implement—Understand method for going live with a program. In line with this approach, we built standardized SoPs to partner with stakeholders. We follow those SoPs for any partner onboarding, from log-in settings to disbursements to collections and thereafter. The SoPs details multiple scenarios and how to handle them effectively and efficiently. But one needs to bear in mind that these SoPs and processes have been established and refined through our learnings over the years. The SoPs are dynamic and subject to periodic updates in line with market developments.Q7: What’s the role of tech in this journey?A: Technology, of course, is doing its bit as a business enabler, playing a pivotal role in making credit accessible. The co-lending relationships and levers driving the business remain unchanged, whether the relationship is upstream or downstream co-lending. Hence, tech accounts for a significant role in enabling business objectives through co-lending relationships. It enables transparency and helps the parties understand customer challenges in real time to address ground challenges more effectively.But with time, we are also beginning to understand its limitations and the risks associated with it. As there are no one-size fits all solution, there are certain situations that still require manual invention.Q8: Where do you see co-lending’s future?A: Today, the co-lending industry is close to 25-30K crore book across India, perhaps even more. With more and more FIs joining the bandwagon, the growth potential is high.That brings us to the end of this wonderful session packed with tons of practical insights. Here is a quick summary of the practical challenges.1. The main hurdle in any co-lending program is the compatibility of both lending partners’ systems and processes. Both systems should communicate with ease. This calls for middleware to enable transparent and smooth communication.2. The next biggest challenge is managing the edge case loans. There is a need for effective tools to address the loans that divert from the regular repayment cycles. Co-lenders should find common ground to tackle such situations.3. Finally, insight into customer behavior at the ground level will facilitate the balance sheet providers to make informed decisions.Looking for a co-lending solution designed for your business?<a class="link" href="https://m2pfintech.com/contact-us/">Schedule a demo</a> with us today and discover how our co-lending platform can meet your needs.<h3 class="heading-node" id="f1egncsnb" style="text-align: left">About Vishal Miglani</h3>Mr Vishal Miglani is one of the key leaders driving TruCap towards excellence. He got on board with TruCap in 2019, before which he was a highly successful entrepreneur in the fiercely competitive automotive industry. With his illustrious career spanning over 23 years in both the Financial and Automotive industries, he brings a wealth of experience in operations, sales, and marketing. Mr Miglani has remarkable expertise in team building, project management, financial analysis, and developing a new product from the ground up. He is a proud alumnus of the esteemed University of Mumbai.<h3 class="heading-node" id="8k7lgxuod" style="text-align: left">About TruCap</h3><a class="link" href="https://www.trucapfinance.com/">TruCap Finance Limited</a>, also known as TRU, is an omnichannel, RBI-registered lender listed on BSE &amp; NSE. TRU empowers MSMEs by providing tailored credit solutions through a network of 75+ branches across India. By leveraging technology, TRU has disbursed 1,25,000+ affordable loans, supporting borrowers' growth ambitions. Additionally, the NBFC has established co-lending/co-origination tie-ups with leading public and private sector banks and other financial institutions to expand its offerings. (TruCap Finance Limited was formerly known as Dhanvarsha Finvest Limited.)<a class="link fui-Link ___1idfs5o f3rmtva f1ewtqcl fyind8e f1k6fduh f1w7gpdv fk6fouc fjoy568 figsok6 f1hu3pq6 f11qmguv f19f4twv f1tyq0we f1g0x7ka fhxju0i f1qch9an f1cnd47f fqv5qza f1vmzxwi f1o700av f13mvf36 f1cmlufx f9n3di6 f1ids18y f1tx3yz7 f1deo86v f1eh06m1 f1iescvh ftqa4ok f2hkw1w fhgqx19 f1olyrje f1p93eir f1h8hb77 f1x7u7e9 f10aw75t fsle3fq f17ae5zn" href="https://m2pfintech.com/newsletter/" target="_blank" rel="noreferrer noopener">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox.Follow us on&nbsp;<a class="link fui-Link ___1idfs5o f3rmtva f1ewtqcl fyind8e f1k6fduh f1w7gpdv fk6fouc fjoy568 figsok6 f1hu3pq6 f11qmguv f19f4twv f1tyq0we f1g0x7ka fhxju0i f1qch9an f1cnd47f fqv5qza f1vmzxwi f1o700av f13mvf36 f1cmlufx f9n3di6 f1ids18y f1tx3yz7 f1deo86v f1eh06m1 f1iescvh ftqa4ok f2hkw1w fhgqx19 f1olyrje f1p93eir f1h8hb77 f1x7u7e9 f10aw75t fsle3fq f17ae5zn" href="https://www.linkedin.com/company/m2pfintech/mycompany/" target="_blank" rel="noreferrer noopener">LinkedIn</a>&nbsp;and&nbsp;<a class="link fui-Link ___1idfs5o f3rmtva f1ewtqcl fyind8e f1k6fduh f1w7gpdv fk6fouc fjoy568 figsok6 f1hu3pq6 f11qmguv f19f4twv f1tyq0we f1g0x7ka fhxju0i f1qch9an f1cnd47f fqv5qza f1vmzxwi f1o700av f13mvf36 f1cmlufx f9n3di6 f1ids18y f1tx3yz7 f1deo86v f1eh06m1 f1iescvh ftqa4ok f2hkw1w fhgqx19 f1olyrje f1p93eir f1h8hb77 f1x7u7e9 f10aw75t fsle3fq f17ae5zn" href="https://twitter.com/m2pfintech" target="_blank" rel="noreferrer noopener">Twitter</a>&nbsp;for insightful fintech bytes curated for curious minds like you.

Vishal Miglani's Blueprint for Building & Scaling Co-lending Programs

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2024/11/5-Crucial-Drivers-of-Digital-Lending-Expansion-02-1.webp" alt="M2P Fintech" title="" width="100%" height="317">In a world where time is money, waiting weeks for loan approvals can stifle growth and limit opportunities for businesses and consumers alike.Fortunately, digital lending platforms, particularly those equipped with <a class="link" href="https://m2pfintech.com/loan-origination-system/">Loan Origination Systems</a> (LOS) and <a class="link" href="https://m2pfintech.com/loan-management-system/">Loan Management Systems</a> (LMS), have reshaped the industry by automating the entire lending process to deliver quick, accurate, and seamless experiences.As financial institutions adapt to these innovations, key considerations emerge:Is the platform intuitive enough?Will onboarding be smooth and efficient?To proactively address these challenges, investing in robust digital lending technologies is essential for organizations to strengthen their competitive advantage and meet the evolving expectations of their clientele.Let’s explore five crucial factors that organizations must prioritize to drive the growth in digital lending.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2024/11/5-Crucial-Drivers-of-Digital-Lending-Expansion-04-1.webp" alt="M2P Fintech" title="" id="9kw976tz2" width="100%" height="253"><h2 class="heading-node" id="oajthazp7" style="text-align: justify">1. Ease of Configuration</h2>As demand for agile financial solutions grows, Loan Management System and Loan Origination System empower lenders to swiftly set up and launch services, significantly reducing time-to-market.By automating critical stages such as application submission, credit evaluation, and decision-making, these platforms reduce manual errors and accelerate the overall loan processing cycle. Moreover, they allow lenders to customize their operations according to specific business requirements without heavy reliance on technical teams.This flexibility enhances the ability to launch new loan products quickly, addressing credit gaps and aligning services with customer preferences. Ultimately, these adaptable platforms ensure seamless integration into the lender's operational model, improving customer satisfaction and helping lenders remain competitive and responsive in an ever-evolving market.<h2 class="heading-node" id="7gtbescbt" style="text-align: justify">2. Scalability</h2>A robust digital lending platform must accommodate a wide range of scenarios that can occur throughout the lending process, such as managing events like foreclosure, supporting different loan disbursement structures, staggered disbursements, etc.If a platform lacks these essential capabilities, it risks inefficiencies, manual interventions, and potential errors. A truly scalable Loan Management System should offer a comprehensive range of loan servicing options, allowing lenders to efficiently manage diverse loan products without redundancy or system limitations. This completeness enables businesses to scale their operations smoothly and adapt to market demands without compromising on service quality.<h2 class="heading-node" id="7zjmz2afe" style="text-align: justify">3. Compatibility with Other Systems</h2>Lenders typically rely on a range of tools, such as CRM systems, accounting software, and lead sourcing channels. However, when these systems fail to communicate effectively, it can lead to data inconsistencies, inefficiencies, and an increased risk of errors.Ensuring compatibility with other software is essential for driving operational efficiency and delivering a unified lending experience. A well-integrated Loan Origination System enables lenders to access consistent, accurate insights across their operations, minimizing errors and enhancing decision-making.For digital lending platforms to be truly effective, they must integrate seamlessly with existing systems, such as Loan Origination System and Loan Management System, to ensure smooth data flow.<h2 class="heading-node" id="9a115dazl" style="text-align: justify">4. Compliance</h2>In today’s fast-evolving regulatory landscape, with the RBI continuously updating its framework to address new challenges in lending, staying compliant is more important than ever. Hence, it is crucial for digital lending platforms to be flexible and compliant.A stable Loan Management System should have the capability to seamlessly incorporate ongoing regulatory changes without requiring frequent overhauls or complete process revisions. This adaptability ensures that lenders remain compliant with minimal disruption to their operations, reducing the need for repeated adjustments.A robust digital lending platform should be designed to accommodate dynamic regulatory shifts, offering the flexibility to integrate these updates effortlessly and ensuring long-term operational stability.<h2 class="heading-node" id="p01b1450y" style="text-align: justify">5. Innovative Operating Models Driving Financial Inclusion</h2>With the rise of new-to-credit customers, millennials, and priority sector borrowers, there's a growing need for innovative lending models to drive financial inclusion. Co-lending platforms, for instance, enable multiple lenders to pool their resources. This allows for the provision of customized loans tailored to the specific needs of borrowers. Furthermore, aggregator partnerships and peer-to-peer (P2P) lending platforms are transforming digital lending by streamlining processes and diversifying lending options, all while enhancing customer satisfaction through value-added services.These innovative operating models are essential for advancing financial inclusion. Digital lenders should seek Loan Origination and Loan Management systems designed to support modern lending use cases, helping them maximize revenue opportunities while prioritizing financial inclusivity. Advanced Loan Origination and Management Systems enable lenders to assess creditworthiness using alternative data sources—such as utility bills and mobile usage—thereby expanding financial access to underserved individuals and businesses. Additionally, these systems allow lenders to efficiently manage high volumes of loans, reducing operational costs through automation and supporting new-age lending models that foster sustainable financial inclusion.<h2 class="heading-node" id="s0j4k3kiw" style="text-align: justify">The Way Ahead</h2>Currently, digital lending is poised for significant advancements, focusing on speed, accessibility, and customer-centric experiences. Trends like automated decisioning, no-code platforms, and mobile lending solutions are driving operational efficiency and flexibility. Meanwhile, the use of alternative credit data and enhanced cybersecurity measures ensure broader access to loans while safeguarding sensitive information. As the industry continues to evolve, these trends underscore the importance of embracing technology to stay ahead in a rapidly changing financial landscape.To learn more about our products and how they can support your digital lending needs;<a class="link" href="https://m2pfintech.com/contact-us/?activeKey=1">Schedule a demo</a> today.<a class="link fui-Link ___1idfs5o f3rmtva f1ewtqcl fyind8e f1k6fduh f1w7gpdv fk6fouc fjoy568 figsok6 f1hu3pq6 f11qmguv f19f4twv f1tyq0we f1g0x7ka fhxju0i f1qch9an f1cnd47f fqv5qza f1vmzxwi f1o700av f13mvf36 f1cmlufx f9n3di6 f1ids18y f1tx3yz7 f1deo86v f1eh06m1 f1iescvh ftqa4ok f2hkw1w fhgqx19 f1olyrje f1p93eir f1h8hb77 f1x7u7e9 f10aw75t fsle3fq f17ae5zn" href="https://m2pfintech.com/newsletter/" target="_blank" rel="noreferrer noopener">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox.Follow us on&nbsp;<a class="link fui-Link ___1idfs5o f3rmtva f1ewtqcl fyind8e f1k6fduh f1w7gpdv fk6fouc fjoy568 figsok6 f1hu3pq6 f11qmguv f19f4twv f1tyq0we f1g0x7ka fhxju0i f1qch9an f1cnd47f fqv5qza f1vmzxwi f1o700av f13mvf36 f1cmlufx f9n3di6 f1ids18y f1tx3yz7 f1deo86v f1eh06m1 f1iescvh ftqa4ok f2hkw1w fhgqx19 f1olyrje f1p93eir f1h8hb77 f1x7u7e9 f10aw75t fsle3fq f17ae5zn" href="https://www.linkedin.com/company/m2pfintech/mycompany/" target="_blank" rel="noreferrer noopener">LinkedIn</a>&nbsp;and&nbsp;<a class="link fui-Link ___1idfs5o f3rmtva f1ewtqcl fyind8e f1k6fduh f1w7gpdv fk6fouc fjoy568 figsok6 f1hu3pq6 f11qmguv f19f4twv f1tyq0we f1g0x7ka fhxju0i f1qch9an f1cnd47f fqv5qza f1vmzxwi f1o700av f13mvf36 f1cmlufx f9n3di6 f1ids18y f1tx3yz7 f1deo86v f1eh06m1 f1iescvh ftqa4ok f2hkw1w fhgqx19 f1olyrje f1p93eir f1h8hb77 f1x7u7e9 f10aw75t fsle3fq f17ae5zn" href="https://twitter.com/m2pfintech" target="_blank" rel="noreferrer noopener">Twitter</a>&nbsp;for insightful fintech bytes curated for curious minds like you.

Factors Propelling Digital Lending to New Heights

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2024/10/Blog-Banner-Defining-Modern-Lending-Software-05-3.webp" alt="M2P Fintech" title="" id="zpvt6wy9d" width="100%" height="317">The lending market is booming at an incredible pace. According to research by the Business Research Company, the global lending market is projected to reach&nbsp;<a class="link" href="https://www.thebusinessresearchcompany.com/report/lending-global-market-report">$15,283.24 billion</a>&nbsp;by 2028, growing at a CAGR of 7.8%.Modern technology solutions like Loan Origination System and Loan Management System are no longer an option—they’re a necessity. Modern borrowers want their financial products customized from scratch and available at a moment’s notice. This can be achieved by leveraging modern lending management software.But with so many options available, how do you choose the right lending management software for business?That’s what we will cover in this blog, the 5 must-haves in a lending technology software.<h2 class="heading-node" id="y3dptky5q" style="text-align: justify">Customization</h2>Customization is the key to enhancing customer experience and engagement. The level of customization depends on how easily a loan origination system and <a class="link" href="https://m2pfintech.com/loan-management-system/">loan management system</a> can be tailored to meet a lender’s specific needs.A lender can achieve customization with loan product configuration, incorporating multiple repayment scenarios, origination journeys from multiple sources, define the go-to-market speed and customer experience for the borrowers.By leveraging these solutions, lenders can:<ul class="list-node" id="ni3en96yc"><li>Enhance Customer Experience:&nbsp;Offer customized products and services that meets the unique needs of customers.</li><li>Increase Flexibility:&nbsp;Adapt to changing market conditions and regulatory requirements quickly.</li></ul><h2 class="heading-node" id="zmg1d6inc" style="text-align: justify">Integration</h2>Integration is another crucial feature of modern lending management software. It enables seamless communication and data exchange between various systems, such as credit bureaus, payment processors, and accounting software. This interconnectedness ensures efficient data flow and provides lenders with a comprehensive view of borrower data.For instance, there was a time when customer onboarding &amp; underwriting were performed by two separate systems, thereby contributing to inefficiencies. However, today due to the wide number of available integrations, both the&nbsp;<a class="link" href="https://m2pfintech.com/loan-origination-system/">loan origination system</a>&nbsp;&amp; the&nbsp;business rule engine&nbsp;can effortlessly communicate with each other, thereby making the entire process faster &amp; more efficient, thus making integration the second most important feature you should look out for.Integration enhances lending operations by:<ul class="list-node" id="husglqj4c"><li>Improved Data Accuracy and Consistency:&nbsp;Ensures that the data is synchronized across different systems, reducing errors and inconsistencies.</li><li>Holistic Data View:&nbsp;Offers lenders with a comprehensive view of borrower information, enabling more informed decision-making.</li><li>Reduce Costs:&nbsp;Optimize operations and minimize manual intervention.</li><li>Seamless Customer Experience:&nbsp;Integrated systems provide a more cohesive and personalized experience for borrowers, from application to loan servicing.</li><li>Regulatory Compliance:&nbsp;Helps banks meet regulatory requirements by ensuring data accuracy and facilitating audits.</li></ul><h2 class="heading-node" id="p28m1uje1" style="text-align: justify">Regular Updates</h2>Timely product updates are vital to deliver newer versions and features to customers consistently.&nbsp; These updates are essential to keep your system up-to-date and secure. Regular updates enhance your lending operations by ensuring<ul class="list-node" id="quhwwnxte"><li>Enhanced Security: Security patches are automatically implemented, protecting sensitive borrower and financial data from evolving cyber threats.</li><li>Minimum Downtime:&nbsp;Allows lenders to service their customers 24*7.</li><li>Scalability: Offers scalable infrastructure that grows with the business, making it easier to manage increasing demands.</li><li>User Experience: Updates often focus on enhancing the user interface and overall experience for both lenders and borrowers, making the lending process more intuitive and efficient.</li></ul><h2 class="heading-node" id="y8d3fs2h6" style="text-align: justify">Automated Processes</h2>The chain of seamless automations in the loan origination system and&nbsp;loan management system&nbsp;not only decreases the turnaround time of the complete lending process but also ensures that the system is performing at peak efficiency, contributing to higher profit for the lender.By automating various aspects of the lending process, from application to approval, lenders can significantly reduce manual workload, minimize errors, and improve the overall customer experience. It enhances lending operations by<ul class="list-node" id="jzkh4xuus"><li>Faster Loan Approvals: Speeds up the entire loan cycle—from application review to disbursement—drastically reducing approval times.</li><li>Reduced Human Error: Automated data input and validation minimize manual errors, ensuring more accurate and consistent decisions.</li><li>Enhanced Efficiency: Routine tasks like document verification, credit checks, and compliance screening can be automated, freeing up valuable time for teams to focus on more complex tasks.</li><li>Cost Savings: By reducing the need for manual intervention, automation cuts down on operational costs, allowing for more efficient resource allocation.</li><li>Better Customer Experience: Faster, more accurate processes translate into a smoother, more satisfying experience for borrowers, leading to higher customer satisfaction.</li></ul><h2 class="heading-node" id="64cvvw9rd" style="text-align: justify">Configuration</h2>Last but not the least, a key feature you should be eyeing in a modern lending management software is the extent of configuration it supports.Much like the earlier shared pointer of customizability, your loan origination system and loan management system should come with a wide range of configurations right out of the box and the vendor should make more available upon request. This will ensure the lending management software is configured to meet your unique business needs and that of your customers in the long run.Unlike rigid systems, configurable lending software offers flexibility, empowering lenders to adapt quickly to changing business environments without the need for significant development effort.<h2 class="heading-node" id="4ks2ifh72" style="text-align: justify">Conclusion</h2>By embracing these key features, lenders can make faster, smarter decisions, prioritize the borrower experience, ensure compliance and security, enhance customer experiences, and drive sustainable growth.Investing in modern lending management software not only future proofs lenders but also empowers to respond swiftly to market demands while maintaining a competitive edge.<a class="link" href="https://m2pfintech.com/contact-us/">Schedule a demo</a>&nbsp;to explore more about our product features.<a class="link fui-Link ___1idfs5o f3rmtva f1ewtqcl fyind8e f1k6fduh f1w7gpdv fk6fouc fjoy568 figsok6 f1hu3pq6 f11qmguv f19f4twv f1tyq0we f1g0x7ka fhxju0i f1qch9an f1cnd47f fqv5qza f1vmzxwi f1o700av f13mvf36 f1cmlufx f9n3di6 f1ids18y f1tx3yz7 f1deo86v f1eh06m1 f1iescvh ftqa4ok f2hkw1w fhgqx19 f1olyrje f1p93eir f1h8hb77 f1x7u7e9 f10aw75t fsle3fq f17ae5zn" href="https://m2pfintech.com/newsletter/" target="_blank" rel="noreferrer noopener">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox.Follow us on&nbsp;<a class="link fui-Link ___1idfs5o f3rmtva f1ewtqcl fyind8e f1k6fduh f1w7gpdv fk6fouc fjoy568 figsok6 f1hu3pq6 f11qmguv f19f4twv f1tyq0we f1g0x7ka fhxju0i f1qch9an f1cnd47f fqv5qza f1vmzxwi f1o700av f13mvf36 f1cmlufx f9n3di6 f1ids18y f1tx3yz7 f1deo86v f1eh06m1 f1iescvh ftqa4ok f2hkw1w fhgqx19 f1olyrje f1p93eir f1h8hb77 f1x7u7e9 f10aw75t fsle3fq f17ae5zn" href="https://www.linkedin.com/company/m2pfintech/mycompany/" target="_blank" rel="noreferrer noopener">LinkedIn</a>&nbsp;and&nbsp;<a class="link fui-Link ___1idfs5o f3rmtva f1ewtqcl fyind8e f1k6fduh f1w7gpdv fk6fouc fjoy568 figsok6 f1hu3pq6 f11qmguv f19f4twv f1tyq0we f1g0x7ka fhxju0i f1qch9an f1cnd47f fqv5qza f1vmzxwi f1o700av f13mvf36 f1cmlufx f9n3di6 f1ids18y f1tx3yz7 f1deo86v f1eh06m1 f1iescvh ftqa4ok f2hkw1w fhgqx19 f1olyrje f1p93eir f1h8hb77 f1x7u7e9 f10aw75t fsle3fq f17ae5zn" href="https://twitter.com/m2pfintech" target="_blank" rel="noreferrer noopener">Twitter</a>&nbsp;for insightful fintech bytes curated for curious minds like you.

5 Key Features to Elevate Lending Operations

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2023/06/MicrosoftTeams-image-2.webp" alt="M2P Fintech" title="" width="100%" height="370">The microfinance industry has been witnessing stellar growth over the last decade. The sector grew&nbsp;16.5 times, from ₹ 17 thousand crore in 2012 to ₹ 2.85 lakh crore in 2022. With a market share of&nbsp;37.53 %, NBFC-MFIs stand as the leading financial provider in this sector.Thanks to the proven model of&nbsp;Joint Liability Groups (JLGs), the Microfinance Institutions (MFIs) witnessed phenomenal growth in the past decade. This model enabled doorstep access of financial services to the underserved population, mainly women.In addition to the JLG model, the Government of India initiatives listed below have also aided the growth of MFIs.•&nbsp;Pradhan Mantri Jan Dhan Yojana (PMJDY) - This&nbsp;government scheme was the primary reason for millions of Indians to have a bank account.•&nbsp;Jan-Dhan Aadhaar-Mobile (JAM) trinity -&nbsp;Helps Indians to link their Jan Dhan account, Aadhaar card, and Mobile number.•&nbsp;India Stack -&nbsp;Comprises of paperless, cashless, and consent layers that help lenders to collaborate with Fintechs and create products based on customer needs.•&nbsp;Aadhaar Penetration -&nbsp;Aided the shift of the traditional banking system to a digital model for enabling technology players with&nbsp;electronic Know Your Customer (eKYC) and authentication services.<h2 class="heading-node" id="q0wu2iefn" style="text-align: justify">Challenges Amid Growth</h2>The above factors are accelerating the microfinance penetration. But the industry is witnessing cracks due to the challenges in the current model of borrower engagement – the&nbsp;High Touch Model (HTM).In contrast to the&nbsp;Low-Touch Model (LTM), the&nbsp;HTM&nbsp;has high engagement level between the loan officer and the borrower. This may look encouraging from an aerial view. But this model is one of the main reasons for the&nbsp;high attrition rate of the loan officers&nbsp;and the increase in Operational Expenses (OPEX). According to a KPMG report by MFIN, this model does not offer borrowers the necessary value proposition to attend group meetings and maintain group dynamics post-adoption of the cashless collections.This led the <a class="link" href="https://m2pfintech.com/micro-finance/" target="">microfinance</a> players to move towards a more efficient model – the&nbsp;Tech-Touch Model (TTM).<h2 class="heading-node" id="awrgve7ov" style="text-align: justify">Tech-Touch Model – Amalgamation of Low-Touch and High-Touch Models</h2>The Tech-Touch Model strikes a perfect balance between the&nbsp;efficiency and cost savings of a low-touch model and the personalization and support that high-touch model offers. In addition, it is an advanced version, extending the best of both worlds – automation and self-service tools from the low-touch model and customer engagement from the high-touch model.Many MFIs are gradually adopting the tech-touch model to digitize their loan sourcing, management, and collection processes. By leveraging the benefits of the TTM, lenders are on the path to&nbsp;Digital Microfinance.<h2 class="heading-node" id="bxz4bwal3" style="text-align: justify">What does Digital Microfinance Entail?</h2>Digital <a class="link" href="https://m2pfintech.com/blog/how-technology-is-revolutionizing-microfinance-lending/" target="">Microfinance</a>&nbsp;is the hot, new buzzword in the microfinance realm. As the name suggests, it is the use of digital technologies to disburse micro loans to low-income individuals.With TTM at its core, digital microfinance can&nbsp;digitize, automate,&nbsp;and&nbsp;streamline&nbsp;the loan processes such as loan disbursement, loan management, and collections. By digitizing these processes, MFIs can significantly reduce the time and cost associated with traditional loan origination methods.Usually, loan sourcing is the primary step before loan origination. First, the loan officer responsible for loan sourcing goes to the self-help groups and collects the borrower’s details. Then, he collects all the requisite borrower information and takes it to the branch office, consolidates the borrower details, and assesses the borrower's creditworthiness.&nbsp;All these steps can take up to 3 days. Not to forget the vast volume of paperwork they handle.It can be seen that the conventional way of loan sourcing can be time-consuming and inconvenient. That is why it is crucial for MFIs to opt for digital methods and start exercising digital microfinance.<h2 class="heading-node" id="ktaa2g4jl" style="text-align: justify">Digital Microfinance – Road to Productive &amp; Effective Loan Originations</h2><a class="link" href="https://m2pfintech.com/loan-origination-system/" target="">Loan origination</a> is a critical process for lenders. From initial credit assessment, approving/denying loan applications, to disbursing the right loan amount to the right borrower, <a class="link" href="https://m2pfintech.com/blog/top-5-loan-origination-software/" target="">loan origination</a> can be quite tricky. It is even trickier to originate accurate loans in a matter of minutes/seconds.Digital Microfinance accelerates loan originations by employing digital methods for&nbsp;<a class="link" href="https://m2pfintech.com/blog/know-your-customer-kyc-the-need-for-authentication/" target="">KYC</a> verification, bank account verification, borrower credibility check, borrower credit assessment, performing Compulsory Group Training, etc.<h3 class="heading-node" id="7unu5k1rx" style="text-align: justify">Expedite Loan Sourcing via Digitization</h3>With digital tools like our&nbsp;LoanBook application, loan sourcing becomes a piece of cake for the loan officers.Here’s how.The LoanBook application comprehensively digitizes all the work carried out by the loan officer, starting from loan sourcing to management and collections.Using the application, the loan officer adds every member of the JLG into the system along with their details. After entering the basic information, the officer can verify the borrower's details.In<a class="link" href="https://m2pfintech.com/blog/5-key-factors-for-selecting-an-ideal-loan-origination-system-los-partner/" target=""> loan origination,</a> the LoanBook application can help the MFIs expedite the following:<h4 class="heading-node" id="4l1ebhq7t" style="text-align: justify">✔&nbsp;EKYC Verification</h4>EKYC verification for the borrower can be done either by validating their fingerprint or through OTP verification or Iris scan.<h4 class="heading-node" id="mm2hs7a2h" style="text-align: justify">✔&nbsp;Penny Drop Verification</h4>The credibility of the borrower’s bank account is verified by dropping a penny into their bank account.<h4 class="heading-node" id="smh6cnj2g" style="text-align: justify">✔&nbsp;Geo-tagging</h4>At the time of sourcing, the field officers can use this feature to tag the location of the borrowers and the self-help groups (where center meetings are conducted). Geo-tagging also eases the loan collection process by quickly pointing to the borrower's location.After completing eKYC, the loan officer adds the details of the borrower’s family members and specifies the loan amount required by the borrower. This is where our inbuilt Embedded Business Rule Engine (BRE) comes into the picture.With LoanBook, the time taken for loan decisions reduces to 3 minutes from 3 days.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2023/06/MicrosoftTeams-image.webp" alt="M2P Fintech" title="" width="100%" height="467">Many enterprise MFIs are working closely with us and are already on the road to Digital Microfinance. They have simplified their loan origination process, reduced the Turn Around Time (TAT) from weeks to days, and mitigated their OPEX. These MFIs have unlocked a new model for optimizing their loan sourcing process, scaling their profitability, and increasing financial access to women in rural and underserved markets.Do you want to originate faster loans?<a class="link" href="https://m2pfintech.com/contact-us/?activeKey=1" target="">Schedule a demo</a>&nbsp;with us.<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a> to our newsletter and get the latest fintech news, views, and insights, directly to your inbox.&nbsp;Follow us on <a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a> and <a class="link" href="https://twitter.com/m2pfintech">Twitter</a> for insightful fintech tales curated for curious minds like you.&nbsp;

Digital Microfinance – The Next Wave in MFI

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/11/co-lending-blog-02.webp" alt="M2P Fintech" title="" width="100%" height="661">Co-lending has been the buzzword in the BFSI sector since the RBI announced its new <a class="link" href="https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11991" target="_blank" rel="noopener">Co-lending Model</a> (CLM) in November 2020. While CLM was principally designed to bridge the gap between geographical limitations and lending opportunities, plus to expand credit distribution for priority sectors, financialists reckon it might just be the answer to the country's multi-trillion-dollar liquidity issue.&nbsp; Before we jump into why co-lending can be the solution, here is a quick intro to co-lending.&nbsp; For beginners, co-lending is an arrangement between two or more lenders to jointly loan out money to their target audience. RBI's guidelines necessitate banks and NBFCs to share the risk in a ratio of 80:20 (i.e., 80% of the loan with the bank and 20% with the non-banks). So, banks will lend to the NBFCs, and the NBFCs will lend to the priority sectors. And fintechs will serve as the cardinal technology layer for banks and NBFCs to achieve their co-lending objectives.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/11/co-lending-blog-04-1.webp" alt="M2P Fintech" title="" width="100%" height="502"><h2 class="heading-node" id="2w795jbxr" style="text-align: justify">Co-lending backstory</h2>Although co-lending has been in the Indian market since 2012, it’s the disruption of BFSI by fintechs and new-age NBFCs between 2018 and 2022 that turned co-lending into a well-heeled business. Today, every leading business wants a piece of this pie.&nbsp; MSMEs play a pivotal role in India's socioeconomic development. According to the <a class="link" href="https://www.ibef.org/industry/msme/infographic" target="_blank" rel="noopener">Ministry of MSME</a>, India is home to about 7.9 million MSMEs and account for about 29% of the GDP. However, with the pandemic curbing the global market and slowing down domestic trade, the sector was one of the most impacted by the capital crunch, high-risk perception by banks, and all-time high inflation rates. Subsequently, over 65% of MSMEs were temporarily shut down for three or more months in FY21, and more than half of the companies witnessed a decline of about 25% in revenues. These circumstances made it clear that the MSMEs needed a helping hand in surviving the impact. What's more?&nbsp; A sizeable chunk of India's population falls outside the purview of formal financial systems. This population comprises self-employed small-scale entrepreneurs, women entrepreneurs, farmers, and other small borrowers. According to recent reports, the country has a 365 million underbanked/underserved population, creating an 8 lakh crore market for small-ticket loans. Wherefore, the government was obliged to set up a robust economic model to reach and cater to the monetary needs of this population, who serve as the backbone of the country's economy.&nbsp; In the wake of this condition, the RBI re-christened its co-origination framework as the Co-lending Model in 2020, with the prime objective of enabling frictionless collaboration of banks and NBFCs to increase the flow of credit in the MSME (Micro, Small, and Medium Enterprises), EWS (Economically Weaker Sections), LIG (Low-Income Group), and MIG (Middle-Income Group) categories, where banks take a backseat in lending owing to higher operating costs and credit risks.<h2 class="heading-node" id="kuxw2jr3b" style="text-align: justify">Why Co-lending?</h2>The priority sector has embraced economic hardships due to the pandemic and its repercussions. Industry experts believe the renewed co-lending model has great potential to significantly transform the sector. For one, banks can leverage the market outreach, loan origination, and servicing acumen of NBFCs, and NBFCs can bank on improved liquidity and profitability. In addition, per RBI's circular, NBFCs are the single point of interface for customers. They are responsible for loan origination, fund routing, servicing, and collection. Given their extensive reach at the grassroots level, better last mile connectivity, and customer relationship, NBFCs have established themselves as being more effective than banks in handling loan recovery/collection. Therefore, this approach is expected to augment the timely servicing of debt by the borrowers.Under the renewed co-lending model, the banks' finances and NBFCs' (customer reach and) capabilities meld with fintechs' technology. If exercised in the true spirit, RBI can score a hat-trick. 1. Render tailor-made and affordable financial solutions at the grassroots level 2. Catalyze the upraise of the priority sector from its economic hardships 3. Drive financial inclusion and accelerate the overall economic development of the country Learn more about the features of co-lending and why it is the future <a class="link" href="https://finflux.co/blog/co-lending-is-the-future-heres-why/">here</a>.<h2 class="heading-node" id="m5m618l46" style="text-align: justify">Advantages of Co-lending</h2>The fundamental goal of the co-lending model is to act as a seamless medium for large banks to extend their services to borrowers and MSMEs in the remotest regions, which are otherwise inaccessible. Further, the co-lending model opens up unique liquidity windows for market players, boosting their confidence, and enabling sustainable growth. For customers, co-lending helps build their portfolio. Under the co-lending guidelines, FIs can loan to many potential businesses that banks reject due to the absence of credit history. This facilitates them to rebuild a good credit history and qualify for other loans. Besides, NBFCs increase financial literacy among their underserved/unserved customers by educating them about co-lending and its terms and conditions.<h2 class="heading-node" id="5s7psfhby" style="text-align: justify">What's in it for Lenders?</h2>Extended reach&nbsp; NBFCs have a broader customer portfolio. They are capable of reaching out to potential customers in rural/remote areas who are underserved in banking and digitalization. NBFCs usually collaborate with fintechs to set up digital platforms that help them cater to the needs of borrowers across multiple geographies. Banks can take advantage of this to widen their customer base and provide the economically weaker strata with the funds they require. NBFCs have the advantage of having increased access to funds. Operational efficiency The digitalization and robust technology layer have led to superior quality services. As the entire co-lending process, from application to disbursal, is fully automated, it reduces the human effort and time consumed in processing a loan. This, in turn, strikingly lowers turnaround time for all processes. The digital approach has helped banks expand their scope into new segments while reducing the cost of capital for NBFCs. This implies low customer acquisition cost, more loan applications, lesser underwriting costs, disbursing more loans, and gaining more market share. Hence, the boost in operational efficiency. Shared risk&nbsp; CLM gives banks the opportunity and flexibility to partner with one or more lenders. According to the model, the risk is divided between the entities in the agreement. In this setting, banks benefit from an added sense of security and minimize the effects of loss. On the other hand, the primary challenge of NBFCs in India is the lack of established mechanisms to reduce the risk of defaults. Under the co-lending partnership, the losses on the loans/bad debts are shared between the partner banks and NBFCs. Thereby incurring a lesser loss. Improved credibility New-age companies looking to enter the lending business can build credibility for their brand through partnerships with major banks. Similarly, banks can tie up with established NBFCs to instill brand awareness. Want to implement a seamless automated lending process tool? Look no further. M2P’s core lending suite is what you need. Our core lending system takes care of the entire lending lifecycle without requiring any manual intervention.<h2 class="heading-node" id="dfkrvinwm" style="text-align: justify">How will NBFCs benefit from M2P’s Core Lending Suite?</h2>We are the only player in the industry to have a comprehensive product suite required for lending under one roof. Our core lending suite helps manage the entire loan lifecycle, including <a class="link" href="https://m2pfintech.com/loan-origination-system/" target="_blank" rel="noopener">loan origination</a>, <a class="link" href="https://m2pfintech.com/loan-management-system/" target="_blank" rel="noopener">loan management</a>, financial accounting, marketplace integration, app-based lending, <a class="link" href="https://m2pfintech.com/blog/steps-in-credit-underwriting-why-using-an-alternative-source-of-data-and-behavior-metrics-will-be-of-help/" target="_blank" rel="noopener">alternative data-based credit scoring</a>, dashboards, reporting, and analytics. <a class="link" href="https://m2pfintech.com/" target="_blank" rel="noopener">M2P’s lending program</a> is composable and built on Open API infrastructure, enabling you to develop customized programs and applications. We help you disburse credit in any form– cards, line, check-out EMI, embedded form, OD form, regular EMI, and asset-based​. In addition, our lending program has a robust LOS that allows you to configure custom workflows and change parameters on-the-fly without altering the code. With optimized TCO at all stages, constantly upgraded (quarterly) system, and bank-grade security, be market ready with our core-lending suite in a trice. To get down to the brass tacks of our system or for a demo, write to us at <a class="link" href="mailto:business@m2pfintech.com">business@m2pfintech.com</a> We will deep dive into how co-lending programs can be implemented using the Finflux platform, in the upcoming blog. Watch out this space for more insights.<a class="link" href="https://m2pfintech.com/newsletter/" target="_blank" rel="noopener">Subscribe</a> to our newsletter and get the latest fintech news, views, and insights directly to your inbox.  Follow us on <a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a> and <a class="link" href="https://twitter.com/m2pfintech">Twitter</a> for insightful fintech tales curated for curious minds like you. &nbsp;

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