Loan Applications using Netbooks

Processing of Loan Applica1ons   Using Net Books  Reggie Ocampo  First Macro Bank  2010 RBAP‐MABS Na.onal Roundtable Conference  Hya= Hotel and Casino, Manila  June 3, 2010 

Credit Scoring System  • In  2005,  in  partnership  with  IPA,  FMB  Implemented  Credit  Scoring  System  in  processing  of  loans  for  its  microﬁnance  opera.ons  par.cularly  with  its  Individual Lending Program (UNLAD).   • Loan  decisions  are  made  through  the  use  of  Computer SoSware‐the System tells whether  a Loan  Applica.on is denied or approved.  • Weights used where based on the interviews among  Bank  Staﬀ  regarding  their  considera.ons  in  approving a loan. 

2009 Second Phase of CSS Study   IPA recommended the use of mobile device in the facilita.on of  the Credit Scoring System.  Ini.al idea is to use PDA’s, but   because of its limita.ons to run   diﬀerent kinds of soSware,   netbooks were used  instead.     Credit Scoring Model is now based on Historical Data of all Loan  Applica.ons from 2006 – 2008, not on percep.on of bank  staﬀ making loan decisions more objec.ve.  

Advantages of doing CSS on Netbooks  • Portability:     ‐ Allow most of loan applica.on to be conducted in field  leading to reduc.ons in travel .me and data entry.  • Data Quality:     ‐ SoSware has checks for most variable and field entries that  can improve consistency and quality of loan applica.on data.  •  Ease in encouraging clients to get documentary  requirements.    ‐ Since Loan Applica.on is pre‐approved, clients are easily  encouraged in ge^ng their loan requirements.  • Expedites Loan Applica>on Process    ‐ In about 30 – 45 minutes client can be able to know the ini.al  result  of loan applica.on    ‐ Hassle Free in filling up of Loan Applica.on Form for clients. 

Advantages of doing CSS on Netbooks  • Loan approval and impact surveys are done at the  same >me  ‐ Interest Rate and Loan Usage Study  ‐    Progress out of Poverty Index (PPI)  • Reduce paper work for field officer   ‐ Loan report are ready to print for each applica.on  • Automated Calcula>ons on Worksheets and  Cashflows.  ‐ Enables account officers to do CI/BI reports faster  • Integra>on of Audio Visual Presenta>ons      ‐ Can be used for promo.onal / financial literacy / cross‐selling    purposes  (regulated and controlled presenta.ons) 

Expected Benefits in doing Credit Scoring  • Reduced Reliance on Credit CommiLees:    Inclusion of credit score component makes objec.ve assessment  of candidates based on specific characteris.cs. Reduces reliance  and .me spent by supervisors and credit commi=ees in reviewing  new loan applica.ons.  • Improved Approve/Deny Decisions:    Credit score model should help to increase the actual quality of  approve/deny assessments.  • Improved Produc>vity of Account Officers    By having a reliable Credit Scoring System, AO’s can  concentrate  more on marke.ng, helping the bank to generate more clients.  • Gives a complete informa>on on who your clients are    All loan applica.ons are recorded on a database 

Loan Process Flow   Field Marke.ng  Interested?  YES NO Ask and Validate  Market Other Bank  Eligibility Criteria  Products  Conduct Interview using  Netbook  APPROVED DENIED Hand in Authoriza.on le=er and  Inform the applicants that s/he could  Discuss the Required Documents  re‐apply aSer 90 days.  Conduct Background Inves.ga.on and  Field Valida.on  Loan Disbursal 

Screenshots of the Credit Scoring  SoSware 

Log – in Window  List of CSS  IDs 

Warning and Display Messages   Response options for fields that have dropdown options, type the corresponding number of the answer and click “Enter”  Entered value is not in the given options or beyond the set values  Important field that should be filled in. Cannot proceed to the next field unless the current field has been filled in.  Displays at the end of each form. Allows the AO/AS to review the information before going to the next form.  Displays when AO/AS entered an applicant’s name that has been recorded already.  Displays at the end of the application. Need to press “F8” to save the application.  Warning message when AO/AS tries to enter a previously denied client within less than 90 days.  Warning message in cash flow section if a field is left missing.

Personal and HH Informa.on 

Business Informa.on 

Cash Flow and Loan Result 

AO doing CI/BI using Netbook 

Feedbacks from AO’s  Pros  Cons  • Doing paper work is reduced  • If the applica.on is denied,  giving us more .me doing  clients are suspicious about  other tasks.  the correctness of the data  • I‐rate helps us encourage  entered.  prospected clients to take up  • It is hard to explain to client  loans, especially when they  get a lower interest rate.  why their applica.on is  denied.  • Clients are impressed with the  net books, a=rac.ng other  • Risk of being robbed.  prospected clients for a trial. 

Limita.ons  • Credit Scoring System cannot replace a skilled  and responsible Account Oﬃcer. The result of  a  Loan  Applica.on  relies  on  the  correctness  and  truthfulness  of  the  data  being  entered.  The  system  only  helps  in  expedi.ng  the  loan  process  and  guides  us  with  the  level  of  risk  involved  in  lending  to  a  par.cular  kind  of  client. 

THANK YOU! 

Loan Applications using Netbooks

by MABSIV on Jun 11, 2010

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Loan Applications using Netbooks — Presentation Transcript

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