A thorough evaluation of the applicant’s credit health is integral to the lending process. Lenders use multiple tools to assess an applicant’s creditworthiness, with bank statement analysis being one of the most crucial.
While the Indian banking sector has seen a significant improvement in asset quality, with the gross non-performing asset (GNPA) ratio falling to a multi-year low of 2.6% by September 2024, lenders still grapple with payment defaults, underscoring the necessity for a robust credit evaluation process.
Let’s explore how Precisa’s Statement Analysis Tools help lenders improve the credit evaluation process and reduce default rates.
10 Reasons Why Lenders Prefer Precisa’s Bank Statement Analysis Tools
Bank statement analysis is a cloud-based solution that helps banks and other financial institutions make informed lending decisions. Here are ten reasons why lenders prefer this tool:
1. A Streamlined Lending Process
Manual analysis is time-consuming; automation removes the bottlenecks, helping lenders streamline loan processing.
Bank statement analysis tools accelerate the review of financial statements, reducing the time and effort needed compared to manual analysis.
Automated bank statement analysis also improves overall efficiency and profitability. Precisa’s analysis tool helps lenders reduce processing time by 5x.
2. Provides Accurate Risk Analysis
Compared to manual analysis, an automated solution provides a more comprehensive analysis. It reduces errors and provides a more accurate and in-depth view of the applicant’s credit health.
The bank statement analyser also allows lenders to identify patterns and red flags that might get overlooked in manual analysis. This tackles the issue of non-repayments.
3. Built on Cutting-Edge Technology
Technology has made a profound impact on lending functions. Statement analysis tools that leverage technology are helping FIs improve their productivity and profitability. Here’s how:
Artificial Intelligence
- The bank statement analysis tool leverages artificial intelligence (AI) to automate data extraction. It offers key insights into a borrower’s financial health.
- Lenders can compare data across various sources, using AI tools. They can flag and identify anomalies, reducing fraudulent loan applications.
Machine Learning
- Machine learning algorithms help predict borrower creditworthiness by evaluating historical credit data, loan repayment patterns, and defaults. As a result, lenders can better identify risk factors and minimise human bias and subjectivity.
- Precisa offers ML-driven detection of irregularities, comprehensive categorisation of bank transactions, and counterparty detection.
4. Aids Fraud Detection
Banking fraud cases in India surged 27 percent to 18,461 instances in the first half of the financial year 2024-25, compared to the previous level of 14,480 cases in the same period last year.
Lenders can identify circular transactions and tampered documents with the help of the statement analyser, reducing the chances of fraud.
The software evaluates bank statements, categorises data, analyses it, and assigns a creditworthiness score called the Precisa Score within minutes.
5. Robust Data Security
As lenders handle large volumes of sensitive data, ensuring data safety is crucial to protect their customers and earn their trust. The bank statement analysis tool from Precisa ensures data safety in the following ways:
- It has adequate security and safety protocols to protect the data from unauthorised access, modification, or exposure.
- Only authorised users can access information.
- The personally identifiable information is not accessible to any third party.
- Regular review of the policy according to regulatory requirements.
6. Integration with Other Financial Systems
Lenders can improve their decision-making by accessing data from different sources to get a 360-degree view of the borrower’s financial health.
Depending on their requirement, lenders can use the bank statement analysis as a stand-alone tool or integrate it with APIs for real-time and deeper analytics.
The GSTR analysis tool generates GST compliance ratings based on GST filing status, extracts data, detects cyclical transactions and other anomalies, and assigns an overall creditworthiness score.
7. Predictive Analytics
Predictive analysis offers lenders a futuristic view of their portfolio, beyond credit scores. FIs can improve the quality of their portfolios and prevent fraud in the following ways:
- Predictive analytics evaluates diverse datasets to forecast a borrower’s future creditworthiness.
- Applicants without a traditional credit history often find it difficult to access credit. Lenders can use predictive analytics to assess the credit health of such borrowers and personalise loan offers to suit them.
- It helps anticipate the borrower’s ability to repay a loan in various market scenarios, minimising lender risk.
8. Customisation per User Requirements
Even though the loan application process is broadly similar across financial institutions, lenders may sometimes customise solutions per the borrower’s requirements.
Standardised solutions or reports in such scenarios may not be the best choice for lenders. FIs can get tailor-made modules from Precisa to suit their requirements.
Their bank statement analysis tool relies on artificial intelligence to provide personalised credit scoring systems adaptable to the needs of specific borrowers.
9. Benefits Borrowers
Using Precisa’s bank analysis tools offers benefits to lenders as well as borrowers. Applicants gain in the following ways:
- The lending process is hastened by automated statement analysis, ensuring they access timely credit when they need it.
- Customised credit profiles promote fair lending practices, especially for those with unconventional credit histories or limited records, and promote financial inclusion.
- Promotes transparent and explainable decisions so applicants know the cause of the lender’s decision.
- Lenders can provide clients with clear, data-backed feedback on their financial standing.
10. Supports Regulatory Compliance
Regulatory compliance is crucial for all financial institutions, and the bank statement analysis tools facilitate regulatory compliance. Lenders can identify potential risks by conducting a detailed transaction analysis.
Precisa’s bank statement analyser helps comply with KYC guidelines and also adheres to RBI guidelines and data protection regulations.
To Sum It Up
Bank statement analysis helps lenders improve their decision-making and reduce defaults and fraud. It facilitates better client servicing, aids regulatory compliance, and leverages state-of-the-art technology to help lenders streamline their operations.
Financial institutions can explore other products to strengthen their lending process. Here is a brief on a few of them:
- Precisa’s AML Analysis empowers law enforcement agencies and financial institutions with cutting-edge tools to investigate cybercrime and money trails.
- The credit report analysis gives a holistic view of active loans & EMI obligations by matching loans in the credit report with bank transactions.
Contact us now to learn more.
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