How Technology Reduce cost in Bank

How Technology Reduce cost in Bank

 

Retail credit department is connecting with three more main products in the bank. They are Housing Loans, Credit Cards and Personal Loans. I’m handing personal loans with more than one and half year experience in the said department.

Presently we are using manual system to process, evaluate and approve the facilities. In briefly I will describe you about this manual system.

Personal loan is the product that can be obtained, a person who works in the company more than one year in permanent cadre and earns more than LKR 50,000/- of salary in monthly or personal who has a well recognized professional qualification (doctors, engineers, lawyers and lectures..ect). After applying the loan from any branch, within 2 days we will give the feedback to client whether facility is approved or not.

In the branch side, they have to fill the application accurately and collect the required documents from the client and forward it to the Personal Banking unit via Email. Let’s see what the required documents are.

1.       Copy of ID

2.       Salary confirmation / employee confirmation letter

3.       Last three months of salary slips

4.       Last three months of bank’s statements where the salary being credited

5.       Billing proof (utility bill)

These are the final documents that we need to process the loan along with the loan application. We take the salary assignment directly from the company as collateral and exceptionally we accept standing instruction.

In the department, we take print outs all these documents and hand over to personal loan officer to process the loan.

Basically we are checking following steps

1.       What is the company client is working ( there is a approved company list)

2.       Employment period of the client in present organization

3.       Employment status ( permanent and confirmed or not)

4.       Present age of the client with retirement age.

5.       CRIB clearance

6.       Repayment capacity

Most important thing is repayment capacity of the client and we assume that total commitments of the client should not be exceeding 60% of net income. After calculating this repayment capacity we use score card to evaluate the client. We are giving some sort of marks to above criteria’s and calculate credit score to get a decision about the credit facility.

In year 2018, management has decided to implement a new workflow system for the Personal Banking Department to evaluate the facility via workflow, it is the web based application and last six months we have done some developments and made some processes to this system. In the workflow system also we have to the same do the same process to evaluate the client.

Month of April 2018, I have been allocated to do the system testing by head of the department and I have captured so many discrepancies from the workflow with our manual processing. So we have identified the new system was fail.

Reasons to failure

1.       Perceived usefulness

Actually when we doing the workflow testing we felt that system is not developing the personal performance of the staff members.  It means that the system was created in the frame work and we have to do the evolution under frame. Then we captured some technical issues as well.

I.                     There is no any method to divide the facilities by personal loan officer to officer.

All facilities will forward by the branch through the system and they are coming a cue of personal loan officers.

II.                   All security documents will be created by the system and we cannot add some special conditions by loan to loan.

III.                 As I said personal loan would be based on salary assignment and exceptionally if the salary will not be sufficient collateral there is no any method to take another tangible one via the system as we do manually.

IV.                If the provided documents are not enough to process the loan, we can’t request additional things via the system as we do manually.

2.       Perceived easy to use.

When we do the workflow testing, we felt that we have to get some effort to learn the system. Practically it is getting more time than the manually processing. We have captured some technical issues as well according to this topic.

I.                     System is very slow

II.                   Documents reviewing and comparing is very hard

III.                 System has not been given a guideline to evaluate the facility

IV.                Approval authority cannot take the perfect decisions about the facility

System is based on final step of the evaluation criteria, it is score card, we have to evaluate the facility only with the score card. Then we can’t get the perfect picture about the facility rather than the manual processing. As an example, repayment capacity of the client will get automatically and we haven’t any thing to do via system. But the thing is we cannot capture the real picture of the client with automatic calculations.  After the so many times of testing rounds we have given the new method to develop the workflow system.

Month of July 2018 vendor of the workflow has developed the software as we requested and end of the August 2018 we have confirmed to our IT department that  want the software go with live testing. Following developments has been done to willful the perceived usefulness and perceived ease of use.

1.       Created a method to divide the facilities by officer to officer.

Now all the facilities coming to the manager’s cue and manager will transfer the facilities to individual officers to process the loan.

2.       Security documents we can prepare via the system and we can edit the documents whatever we want. (to include the new special condition)

3.       Presently we can request additional documents via the system by transferring the facility here and there. (branch to Personal Banking Unit or Personal Banking Unit to Branch)

4.       We have increased the ram of over server to get fast the system

5.       New options are created to review the documents.

6.       Software has been developed with the checklist like manual processing and now we have guideline to evaluate the facility

After the implementing this new workflow system to the Personal Banking Unit, we will have some advantages as follows,

1.       Paper cost we can reduce

2.       Wasting of time we can reduce

3.       Misplacement of documents we can ignore

4.       All the approved facility details and decline facility details will be informed to the client via SMS and E-mail. Hence we can Reduce additional works such as typing of letters

5.       We can inquire the customer’s complains accurately

We all know as human behavior we do not like to change, first three months we will have to get a simple effort to practice with new system; finally we decided to go with live beginning on month of October 2018.