#WEDNESDAYINSIGHT: "What Is Bank Statement Analysis in LOS: Why Is It Important?"
Mani Parthasarathy
Creating a Digital Lending Infrastructure for a Seamless Fintech Ecosystem | Co-founder - CloudBankin | Fintech Enthusiast | CloudBankIn | Loan Origination | Loan Management | Digital Lending
India’s digital lending has witnessed a staggering growth of 12 times from financial years 2017 to 2020. The total lending disbursement was INR 21.6 lakh crore in 2022 and it is expected to reach a remarkable INR 47.4 lakh crore in the next couple of years.
For Financial Institutions (Banks, NBFCs, Fintech, etc.), embracing Loan Origination Systems (LOS) in this booming environment is of utmost importance. The most crucial role within a LOS is played by the Bank Statement Analysis. Primarily it helps gauge the borrower’s ability to repay loans in its analysis, which is the most important to check before lending to any business or individual.
A borrower evaluation is typically needed to be carried out by lenders before loan approval and disbursement to gauge their creditworthiness and financial well-being. Bank Statement Analyzers do a pretty good job in offering insights into their cash flow, spending and saving patterns and their overall financial position from bank statements, which give reliable evidence of a borrower’s sources of income and expenditures and also their withdrawals, credit repayments, and all sorts of financial transactions over a period of time.
What else can bank statement analysis help lenders with? It assists in fraud prevention and money laundering patterns in line with the AML-CFT guidelines, decreasing drop-offs and default rates, and increasing how many loan approvals can be given with the use of automation.
Why is all this necessary? To assess the borrower’s financial standing and their creditworthiness. And for achieving a higher credit underwriting accuracy, giving you confidence in the lending process.?
And for achieving a higher credit underwriting accuracy, giving you confidence in the?lending process.?
How Does Bank Statement Analysis Work in LOS? 7 Steps
Bank Statement Analysis typically comprises the following seven steps:?
?Step 1: Data collection
To begin assessing a borrower’s financial standing, the LOS has to collect their bank statements. This forms the first step of the bank statement analysis process and it typically asks the borrower to submit their statement for a specific period of time, anywhere between 6 to 12 months.?
?This collection is done in 3 ways:
1) Uploading bank statements: Here, the applicant manually uploads their bank statements for analysis.
2) Net banking credentials: Users provide the login information for their account. This enables automated and secure retrieval of statements.
3) Via Account Aggregator: It is a secure framework that performs seamless continue reading..,
How Does an LOS Analyze Borrowers’?Bank Statements? Key Factors
A Loan Origination Software, in essence, through its bank statement analysis, gauges the borrower’s creditworthiness, financial standing, and their ability & intent to repay the loan. The key variables, based on which it performs this analysis depend on whether the borrower owns a business or is an individual. However the overarching goal is to give lenders a complete report of their financial profile and help reduce potential risks in granting them the loan amount.
Opt for CloudBankin’s LOS for Robust Bank Statement Analysis
Before making crucial lending decisions, thorough bank statement analysis plays a critical role for any financial institution. CloudBankin’s Loan Origination System (LOS) offers a holistic solution while adhering to the regulations set down by RBI, to streamline and enhance this process, and give you a competitive edge.
?What’s more? Get in-depth analysis of borrower’s bank statements, gauge their creditworthiness, and get assistance with making data-driven decisions about loan disbursement.
?Our intuitive user-friendly interface also guarantees a seamless experience for the borrower in applying for loans, uploading relevant and required documents, and easing the onboarding process further enhancing the trust they place in your institution.
?It’s time to upgrade your existing loan origination system (LOS). Here’s what you get with CloudBankin’s bank statement analysis:
? 1) Cost-efficiency through automation
2) Scalable solution for your growing business needs
3) Support with informed lending decisions.
Banking Domain Consultant & Trainer | Specialises in Corporate Credit | Business Analyst | Consumer Banking | Payment Systems | Trade Finance | Foreign Exchange | Independent Director | Expert Professional at Antwalk
2 个月What is the most importance part of analysis of Bank Statement. Is it txt date, Dr/Cr amount or the frequency of such Debits and Credits OR Transaction Narration!!!!