A Non-Banking Finance Corporation (NBFC) is a company that carries out the business of a financial institution as per Section 451(c) of the RBI Act. Their functioning falls under the purview of the Ministry of Corporate Affairs and the Reserve Bank of India.
Presently, NBFCs are involved in lending activities, leasing, hire-purchase, insurance, receiving deposits in some cases, stocks, shares acquisition, chit funds etc. They are instrumental in supporting economic activity and meeting credit demands in India.
NBFCs are especially crucial in financial inclusion and reaching the unbanked.
As per a report, NBFCs will see their Assets under management (AUM) grow 11-12% to Rs 13 lakh crore by the end of FY 2023.
However, NBFCs need suitable technology and infrastructure to grow and sustain their upward trajectory. NBFC software and its cutting-edge features could support them in their day-to-day operations and facilitate growth.
Look for These 6 Top Features in an NBFC Software
NBFCs have unique demands from customer, compliance and operational perspective. Some crucial features in NBFC software could make it the right choice. For example:
1. Customer Centric
The ideal NBFC software should be customer-centric. As finance companies provide different financial products, the software should furnish complete customer details and information about the product used by the client at any time.
Therefore, it should be easy to use, ensure smooth business functioning, and provide customers with actionable, accurate, and timely information.
2. Facilitate Lead Generation
Apart from supporting day-to-day operations, the NBFC software should also support lead generation for the company.
NBFCs must acquire additional customers for products like, cards, insurance, loans, mutual funds, investment products, and more to help them grow. The software must help run lead generation campaigns precisely and manage them effectively.
3. Flexibility
Despite offering similar products, each NBFC may have different requirements. The perfect NBFC software should be customisable as per the need of the organisation and customer needs.
Financial products may change due to customer demands, technology or regulatory guidelines, and the software used should be dynamic enough to respond to these changes promptly without much disruption.
The NBFC may want to add products it offers; the software should support such additions seamlessly.
4. A Fast Loan Management System (LMS)
Loans are one of the most important products offered by NBFCs. Traditional banking channels are comparatively rigid, which has led to an upsurge in NBFC growth. NBFCs with better market penetration and more flexibility due to less stringent compliance guidelines drive financial inclusion.
The right technology can help NBFCs recognise their market share and capture it. Loan management starts from onboarding and includes KYC verification, documentation, loan processing, account creation and disbursement.
The NBFC software should have a loan management system that takes care of all these aspects seamlessly and efficiently and ensures that it is functionally sound for all types of loans. Features like Account Aggregator Integration could also help manage the loan origin journey.
Above all, a good LMS reduces manual processing and ensures timely and accurate report generation.
5. Reporting
An accurate and efficient reporting system is necessary for all businesses and, more so, for financial entities, as they have to comply with the rules laid down by various statutory bodies. Reports are required not only for compliance issues but also to cater to customers’ requirements and to assess the performance of the NBFC.
The NBFC software in use should provide all the reports in the required format and on time.
6. Collections
Collections are one of the primary challenges for non-banking finance companies. These could be for any financial service like collecting premiums for insurance, credit card dues, loan EMIs, service charges, late payments and more.
NBFCs follow an integrated approach to collecting dues, including calling, sending emails and employing agents. For the system to be effective, accurate and timely information should be available for the unpaid dues.
The proper NBFC software should support real-time monitoring of used services and send timely and periodic reminders to customers to clear their dues. A well-managed collection system ensures the profitability of the NBFC.
6 Pivotal Benefits of a Suitable NBFC Software
Finding the perfect NBFC software could take time and effort, but once you find it, it offers numerous benefits, such as:
1. Security and Transparency
Safety is a priority for financial companies as they deal with sensitive customer data. As per reports, digital lenders are increasing their spending towards data security technology to prevent fraud and data breaches.
A reliable NBFC software ensures data safety through encryption, allowing the administrator to define accessibility and create operational transparency.
2. Enhances Customer Satisfaction
NBFC software with a user-friendly interface reduces delivery times and improves customer satisfaction. Customers get timely reminders about payments and information about any changes in their products and services.
3. Aids Financial Inclusion
Traditionally lenders use the credit score to screen customers; that excludes many people without any credit history.
Alternative indicators like digital footprints using tools like statement analysers can aid in getting more people to access credit. This aids financial inclusion and also helps the NBFC expand its customer base.
4. Overall Improvement in Efficiency
Automating systems and processes reduces delivery time and errors. The NBFC software can process more requests with better accuracy than would have been possible manually, resulting in improved efficiency.
5. Reduction in Errors and Cost
With e-KYC, paperless documentation and reduced manual hours, the NBFC software helps cost saving. Accurate and timely reporting also aids in lowering expenses. Manual processing often tends to be full of errors, which can prove costly for the NBFC; Automation can be an effective solution.
6. Fraud Prevention and Detection
End-to-end NBFC software usage helps prevent fraud. Even if they do happen, then the software can detect them immediately.
Additional security layers like one-time passwords (OTP) help banking channels like mobile, online, POS and telephonic become safer. Even with extra security, usage is not fraud-proof. Digital wallets that use biometrics go a long way in fraud prevention.
Advanced firewalls integrated with email inboxes and text message boxes help prevent and detect phishing attacks.
Key Takeaways
The growth of NBFCs supports the expansion of the Indian economy and aids financial inclusion. Models like co-lending are helping fuel economic growth and help NBFCs expand their operations.
Technology and digital tools like cutting-edge NBFC software are integral to the sector’s growth, helping them maintain operation efficiency and security.
Precisa offers solutions like Bank Statement Analyser tool and others that can help propel growth for NBFCs. Solutions like cloud-based bank transactions and financial data analytics help improve productivity by 8 times!
Contact us now to learn more.
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