A Statista report states that Indian banks sanctioned loans worth 30 trillion rupees in the retail sector in 2021. It is also worth noting that a majority of the chunk from that pool, i.e., around 15 trillion rupees was for the home loans segment. As this trend will continue in the foreseeable future, banks and lending institutions should find ways to make lending as easy as possible.
Currently, it is very tedious and time-consuming to secure loans as it involves a lot of paperwork and lengthy processes. So what can banks do to provide seamless customer service?
For starters, they can simplify the approval process on loan applications. This is where a bank statement analyser can help. This article zooms in on how a statement analyser tool helps sanction loans.
What is a bank statement analyser?
A bank statement analyser inspects a company or individual’s expenditures, earnings, and spending patterns by examining their open banking data. Almost all financial institutions evaluate a customer’s creditworthiness through their bank statements, and a bank statement analyser fast-tracks this process.
In the post-pandemic period, the banking industry continues to evolve by introducing new technologies and innovations like bank statement analysers. It is used for numerous applications, including obtaining critical financial data, including account balances, expenses, and income.
More recently, the bank statement analyser has become a favoured tool for lenders to assess the borrower’s financial health before approving loan applications. Further, it can ensure that the borrowed money is spent for the intended purpose and allow lenders to monitor that the borrower does not violate the loan repayment schedule.
Benefits of bank statement analyser while sanctioning loans
Many banks and Fintechs have identified the benefits of a bank statement analyser while sanctioning loans. Some of the key benefits are listed below.
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Automated reviewing of bank statements
A bank statement analyser automates the entire process of analysing bank statements, saving the lender valuable time and resources.
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Better risk assessment:
As mentioned before, a statement analyser offers detailed insights into a borrower’s financial health and activity. Therefore, it enables lenders to determine the risk involved while lending money to a specific borrower.
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Fraud detection
A bank statement analyser helps a lender detect unusual or suspicious activity on a borrower’s account. Therefore, lenders can identify and prevent loan fraud.
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Creditworthiness
A bank statement analyser offers vital information about a borrower’s creditworthiness by analysing different elements such as account balances, expenses, and income.
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Improved loan management
A bank statement analyser can assist lenders in managing their loan portfolio with efficiency and identify potential concerns by automating the process of reviewing bank statements.
Is a bank statement analyser the best way to determine loan sanctioning?
It is crucial to note that although a bank statement analyser is a useful tool for loan sanctioning, it should not be used as the only determinant while approving a loan. Banks consider numerous other factors while handing out loans to borrowers, such as employment history, borrower credit score, income, and debt-to-income ratio.
Please note that a bank statement analyser does not offer insights into a borrower’s financial status. Therefore, the onus is on lenders to perform methodic and rigorous background checks of a borrower’s financial records and credit history to understand how they will repay the loan.
Challenges in bank statement analysis
There are two fundamental problems related to bank statement analysis today. First, the lack of uniformity, and second, the difference in file formats. Let’s examine both these challenges.
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Lack of uniformity
Typically, lenders go through the borrower’s bank statements before sanctioning the loan. However, every bank statement from different banks comes with a different narration, content style, and format. Therefore, it could be inconvenient for lenders.
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File formats
In today’s digital world, one can expect bank statements to come in different formats, including XML files, PDFs, and scanned images. It is not easy to analyse bank statements in various file formats. Besides, it becomes very challenging to consolidate bank statements when they are present in different formats. Further, it takes a lot of time to consolidate these statements manually.
Precisa’s bank statement analyser tool
There is no doubt that banks and other financial institutions need a top-notch bank statement analyser while sanctioning loans.
Precisa’s bank statement analyser is designed to facilitate smooth and hassle-free loan sanctioning. It addresses the current challenges associated with bank statement analysis and makes it easier for lenders to determine the creditworthiness of borrowers.
Sign-up for free to learn more about how our bank statement analyser reduces processing time and improves productivity.
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