In an economic environment where interest rates are low and funding costs vary, credit providers need to be able to introduce measures that lower operating costs, increase competitiveness and lower the cost of credit across multiple channels.
The SME sector lending environment is a complex one. It is constricted by multiple issues that range from low profitability and high non-performing assets to strict regulations and high transaction costs, despite the fact that the target audience of this segment is, more often than not, from the economically weaker sections of society.
In addition to this, the complex processes of sanctioning and monitoring large number of low value loans is both time consuming and manpower intensive. All these translate to the remarkably low profitability that banks make in this sector. In such a scenario, investments in innovative and scalable technologies will ensure a tight rein on high transaction costs.
Today, more often than not, banks' legacy credit limit frameworks are fragmented with multiple limits for the same customer. In such a scenario, it’s tough to get a consolidated view of exposures. Only a real-time, comprehensive and accurate risk picture can settle the imperatives of security and profitability.
The need of the hour is a single system that caters to the entire gamut of lending operations of the bank with plug in plug out functionalities and customer capability based repayment with flexible interest based on multiple segments.
Managing debts has become more than complex during challenging times especially when there is an economic downturn and Regulatory intervention.