Credit growth in times of declining markets

Credit growth in times of declining markets

11 July 2019

The credit market is extremely competitive - this phrase can be heard in various variations from all quarters and now KfW has also lowered its thumbs in its most recent outlook with regard to credit growth. Despite this, new market participants are trying to gain market share, direct banks are trying to increase their market share and even long-established market participants, such as Deutsche Bank recently or Commerzbank a few years ago, are returning to their core business and concentrating on lending to private and business customers. However, this focus is made more difficult by the new mentality of customers, who are increasingly conducting their financial transactions online and without visiting a branch bank. In a study published by YouGov on 24.07.2018, only 43 % of those surveyed stated that they conclude their financial transactions exclusively or predominantly offline. In contrast, as many as 23% of the respondents stated that they conclude their financial transactions exclusively or predominantly online. For established banks with branch business, this means that existing customers must not be lost sight of, but that the growing number of online closers must not be neglected under any circumstances. This is all the more important because the monthly net household income of these customers is generally higher than that of offline customers. In addition, this customer group is more willing to take risks and have an affinity for technology, but is also willing to change if there are better offers elsewhere.

In order to reach this customer group, new interactive end-to-end system solutions are required that cover the entire process, from the loan application via the Internet to the loan application process and the management of the loans. Today's online customers in particular expect not only a favorable price for the loan but also a simple and fast process with simultaneous transparency and comparability of the offer. For credit providers, this means that the entire process must become digital - the only way to reduce costs, increase speed and increase customer satisfaction.

With its products Loan Application Portal, Loan Underwriting and Loan Management, COLLENDA offers solutions for the entire credit process. Consumer loan applications can be submitted via the Loan Application Portal within a few minutes - construction financing takes little longer. The portal not only enables a direct check of configurable rules, such as the ability to service debt, but also an initial check of the uploaded credit documents. Additional services for online identification of the customer, verification of the applicant's account turnover and digital signature can also be integrated. Monitoring and evaluation of portal usage also takes place, allowing the application process to be further optimized. Our portal serves as a bidirectional channel between bank and customer and thus offers further digitization options.

The granting of credit can be completely automated with the freely configurable workflows in Loan Underwriting until disbursement. The integrated rule and scorecard engine enables the immediate credit decision to be made without the intervention of an employee - but also to identify borderline cases and to submit these directly to employees for processing. For the bank, this means fast, automatic processes with low unit costs and a higher number of processable loans than in traditional branch business - a clear competitive advantage over competitors. After successful verification, the documents calculated and generated by the system, such as the contract, repayment schedule and ESIS document, can be sent directly to the portal for signing. If the signature is executed, the account creation and payment are executed as well as the archiving of the transaction. At any time, the system can contact the customer automatically via the workflow or manually by the employee via e-mail. Loan origination and loan decision are completely covered.

Loan management is fully integrated and allows the administration of consumer loans, construction financing and other types of loans with an extensive mix of conditions such as variable interest rates, various repayment types, payment breaks and much more. The Collenda calculator core calculates interest, repayments and fees, enabling the application to replace a core banking system for credit accounts. All processes are fully digitalized, such as automated repayment by direct debit or bank transfer, automatic posting of unscheduled repayments and the fully automatic interest rate change process. The disbursement process offers all relevant features such as full and partial disbursements, release dialogs, the calculation of provision interest and a convenient status overview, while the subledger accounting enables a freely configurable chart of accounts and the flexible administration of posting rules.

All solutions can be operated in the cloud, making them reliable, secure and easily scalable.

Detailed information on the individual product features of our application can be found in our whitepaper.

Are you interested in the advantages of our solutions and do you want to be well prepared for the battle for the credit market? Talk to us!