Dynamic rules: The business rule engine solution for multi-lender stacks

Aparna Chandrashekar   /    Content Specialist    /    2023-01-13

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We live in a country of consumer diversity - shoppers with different credit profiles make a variety of purchase decisions. So why offer a one-size-fits-all credit solution? Be it a purchase financing product, overdraft facility, or credit line - there is undoubtedly a case for diverse offerings tailored to the relevant audience sets within your network of borrowers. But how can a business make this happen when they have only one lender onboard? 

Let’s understand this further with an example of launching and offering a BNPL solution.

Imagine an e-commerce platform like Amazon, Flipkart, and Tata Cliq  - consumers can access everything from candles and batteries to iPhones and furniture. And more often than not, not all lenders will be willing to fund loans for a big ticket purchase like a Macbook, but others might be willing to. 

Besides, as widely understood earlier, BNPL isn’t just for GenZ. One report showed that the “26-35 age group is the prime segment of BNPL users, with ~40% of market share of the total Gross Merchandise Value ("GMV"); 26-35 Years bachelor population in metro cities with recent employment, lack of credit line and frequent e-commerce users in metro cities are the earliest adopters of BNPL services.”

However, this is likely to shift, and it must. To fund diverse needs and even more diverse age groups and population cohorts, having a one-size-fits-all BNPL solution is counterintuitive.

What if a 40-year-old woman from a smaller town, who falls in the same income bracket as a 25-year-old woman in urban India,  chances upon a television on Amazon she wants to buy? The underwriting factors change, but superior underwriting models (usually powered by alternate data) can determine if both the women are indeed equally creditworthy.However, if the platform’s partner bank doesn’t serve that age/geographical cohort yet, it loses out on a customer and, possibly, millions of others similar to her.

We’ve already seen how offering the right credit options such as purchase financing (or BNPL) can boost a platform’s business metrics - in some cases even doubling its Average Order Values and Customer Lifetime Value. 

But this kind of impact can only happen when platforms serve various borrower cohorts with tailored financial solutions. This is where having a multi-lender marketplace helps. A multi-lender ecosystem broadens the lending potential. FinBox’s multi-lender stack casts a wider net for consumers when seeking out the right lender and terms. It helps borrowers access the right credit products from relevant lenders without necessarily having to be rejected because of not fitting a single lender’s criteria or policy.  

How do approval rates fit in here? 

It all boils down to the power of financial flexibility and choice! Multiple lenders improve the odds of a customer being approved for a credit product - by diversifying the policy eligibility and spread on the platform. This means that overall, approval rates climb up and bring more business and revenue for the distributing platform. 

While it’s a seamless experience for the customers, building a multi-lender partnership ecosystem could be resource-intensive and fraught with operational and strategic hiccups.

These include: 

  1. Running a Fintech is capital intensive; sourcing funds from suitable lenders at reasonable rates is challenging.

  2. Aligning with the right lender's w.r.t regulatory requirements like KYC, SOPs, disbursement, and product and credit policies is tedious. 

  3. Every organization works within a stipulated time frame to achieve partnership goals; however, scaling the number of partnerships with multiple lenders is resource intensive and time-consuming. 

  4. Every partnership then requires a one-on-one integration, with respective negotiating terms across products, customer segments, and payouts- leading to a rise in the average overall integration time. 

  5. Integrating with different lenders for straight-through processing (STP) is another mammoth task.  Whether the system fits into what currently exists or programs in place get upgraded, STP must fully integrate to be responsive. Divergent systems can cause unnecessary conflicts as the information needs to be seamlessly shared.

Any fintech looking to integrate with a bank/NBFC needs to put aside a team and about 6-12 months for it to come to fruition. So even if you have the right intentions to build new products, integrations to fund these products are resource and time intensive. 

FinBox Product Suite

FinBox brings together dozens of lenders across different products, serving various geographies and customer profiles - on a single platform. As a result, a distributor FinTech or an anchor platform can access multiple lenders with just one integration rather than having to integrate each lender and build workflows individually.

We’ve written about our Multi-lender marketplace here

The one-stop-shop marketplace offers a tech stack that addresses business rules alignment woes -

  1. Dynamic Business Rule Engine: Once you’ve onboarded into the FinBox ecosystem, you need no resources or engineers to write additional code to get new lenders. The Dynamic Business Rule Engine aligns your business goals with a vast pool of qualified and verified lenders. Every new application can seamlessly and automatically pass through multiple lenders. A dynamic BRE needs to move quickly - add, delete, modify rules, and evolve with your business.  We’ve written about the makings of a modern, dynamic business rule engine here and here!

  2. Parallel Business Rule Engine: If you look at the flow in Fig 1, you’ll understand that every application is passed through multiple lenders for eligibility checks and offers are generated in parallel. Not only does this save time, but our RiskEngine ensures accuracy and security.

  3. Escrow facility:  One of the building blocks of Ant Group’s Alipay when it just started out was building trust with an Escrow account. Merchants’ and sellers’ money would go into an escrow account to ensure maximum security in every transaction. FinBox’s in-built escrow facility ensures the same security, and what’s more? You and your lenders can count on instant disbursals and instant repayment.

  4. LMS Bridge: One-time integration with FinBox means seamless integration with all major LMS systems through an overlay FinBox integration layer. Irrespective of what LMS a lender uses, the FinBox layer turns it into a digital credit-ready system. 

In-built reconciliation system:  The FinBox dashboard helps managedisbursals and repayments through a single dashboard. It also allows you to track, report, and analyse every loan ticket and provides a window for resolving any discrepancies.

Partner with FinBox 

FinBox has a network of banks, NBFCs, and alternative lenders to provide a competitive landscape for fintech to cater to consumers across the credit spectrum. Our robust infrastructure deepens product customization, faster scaling, and rapid prototyping, which otherwise remain locked in legacy systems. 

Diverse risk profiles of lenders mean higher approvals for your customers. And aligning with multiple lenders is now as easy as just getting in touch with us today!