Snehal Fulzele - Implementing Fintech Best …blog.lendit.com/wp-content/uploads/2016/10/Snehal...15 a 9 a 8 a 1 a 2 a 27. w1 + a 2. w2 + … 4 Data Scientist 2 “Credit risk has

© 2016 Cloud Lending Inc. Confidential - Internal Use Only.

FinTech Best Practices for Traditional LendersPossibilities….

External Presentation

By Snehal Fulzele CEO, Cloud Lending Solutions


“What is FinTech (in lending)?”

2

FinTech is a breed of companies who bring (innovative?) lending products to consumers and businesses, much like BANKS, with a single-minded focus on

Borrower Experience Data Science Automation


But Incumbents are busy with & Investing in Compliance

3

Incumbents can turn compliance as a competitive advantage using RegTech

RegTech is use of new tech such as cloud, data science and machine learning to solve regulatory and compliance requirements more efficiently and effectively


RegTech

© 2016 Cloud Lending Inc. Confidential - Internal Use Only. 4


Which product is best for me?


Which product is best for me?



Guide the borrowers to the best fit solution based on their inputs

6



Financial Product Borrower

Borrowers

Manual Processes (inefficient & expensive)

FICO based Risk analysis

Financial product A,B,C …

Automate, wherever applicable

Risk analysis based on ▪ FICO

(backward looking) ▪ Big data ▪ Predictive models

(forward looking)

Most incumbents’ DNA Desired state



Ability to analyze data to mine actionable insightsData Science?

8


Credit Score,

Financial Analysis and a ton

others

Cash Flow Analysis

macro-economic factors

Bankruptcy likelihood

Bank Transactions

Predictive Models

Approved? & Pricing

Desired

Credit Score,

Financial Analysis

Traditional

Scorecard

Approvals

.

.

.


Use data and machine learning to predict credit riskData is a key competitive advantage for incumbents

9

Data bricks

V = Volume V = Veracity V = Variety

3Vs

1

Deep Learning (Machine learning

algorithm)

3

a10

Predictive ModelW1

W2W3

W4W8

WC

a27

a2

a15

a9

a8

a1

a2 a27 . w1 + a2 . w2 + …

4

Data Scientist

2“Credit risk has some co-relation to following factors…”

Attribute Weight

Zip Code (a1) ?

Income Group (a2) ?

Designation (a3) ?

Education Level (a4) ?



Traditional Loan Onboarding Processmulti-step, multi-people, multi-approval, manual

ApplicationContract

Approvals

Borrower☐

Underwriter☑

Insurance Agent ☑ Loan Officer ☑

Appraiser☑

Generate Pricing

Assign Credit Band

Run Scorecard

Scoring Rules

Income stat

Identity Check

Credit Bureau

Bank



Acceptance

Offer

Web BorrowerAuto Decision Process

Web Services

Application

Generate Pricing

Assign Credit Rating

Run Scorecard

Data Aggregation

Contract

Scoring Roles

Social Score

Identity Check

Credit Bureau Bank

Automate, wherever possibleAuto KYC, Verification and Decisioning



RegTech Cuts Across All Lending Processes

Possibilities

12



RegTech

Acceptance

Offer

Web Borrower

Application

Contract

Perform auto KYC and AML

Avoid Discriminatory Lending Practices. e.g. prevent manual errors and comply with Equal Credit Opportunity Act, Fair Housing Act, Civil Rights Act etc

RegTech allows lender to …

Proactively and automatically lists the federal/state laws lender agreed to comply with and notifies the lender when any of the reg changes


Use data and machine learning to predict credit riskData is a key competitive advantage for incumbents

14


Data bricks

V = Volume V = Veracity V = Variety

3Vs

Data Scientist

1

“Credit risk has some co-relation to following factors…”

Attribute Weight

Zip Code (a1) ?

Income Group (a2) ?

Designation (a3) ?

Education Level (a4) ?

2

Deep Learning (Machine learning

algorithm)

3Predictive ModelW1

W2W3

W4W8

WC

a27

a2

a15

a9

a8

a1

a2

a10

a27 . w1 + a2 . w2 + …

4

RegTech

Avoid using discriminatory

attributes


About Cloud Lending Solutions Cloud Lending Solutions is a cloud-based, end-to-end lending platform delivering innovation to the global lending community. Unlike legacy technology platforms that are expensive to maintain and prevent agile response to market conditions, Cloud Lending Solutions’ clients take back control of their business by quickly implementing, extending, and digitizing the entire lending lifecycle. Cloud Lending Solutions’ single system of record is the market leading cloud solution supporting both consumer and commercial lending that scales for the needs of lenders of all sizes. Clients include banks, traditional finance companies, online lenders, and marketplace platforms.

Copyright © 2016, Cloud Lending Inc. Confidential - Internal Use Only.

Thank you+1-(650) 918-0499 | [email protected] | www.cloudlendinginc.com

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Snehal Fulzele - Implementing Fintech Best …blog.lendit.com/wp-content/uploads/2016/10/Snehal...15 a 9 a 8 a 1 a 2 a 27. w1 + a 2. w2 + … 4 Data Scientist 2 “Credit risk has