Automating the lending chain: guarantying the future of Moroccan banks
In a country with a young population less and less inclined to branch bank, the ability to digitise a loan application across all channels is a significant differentiating factor. Maryem Moustakim, Head of Customer Engagement at Sopra Banking Morocco, explained “Even if the process cannot yet be fully automated from start to finish, banks can take the first steps”.
In Morocco, where 60% of the population is under 30, automating loan origination is a key digital transformation workstream for banks. The country is one of the most developed in Africa in terms of mobile use and, today, customers assert their preferences on financial institutions. Young customers who go to branches are few and far between and this behaviour will remodel the lending market. It’s up to banks to adapt themselves to this new playing field by automating their loan origination process.
Goal: reduce the ‘time to yes’
In other words the time it takes to process an application before a bank issues an approval. This involves three different streams. Firstly, improving knowledge of customer, a key component in order to make an offer that fits with both parties’ capacities and expectations. Next, all documents in a loan application are digitised and must be accessible via any channel. Finally, the back office is optimised, in order to accelerate the application, check compliance, and issue a loan offer. Traditionally, this process, which combines loan application preparation and approval on various levels in order to grand an initial agreement to the customer, required a week to ten days. With an automated process we can provide the customer with an agreement in a day.
Regulations: progress, and areas for improvement
This remains a key area of focus for all banks in Morocco. Banks are targeting both private customers and corporates, who like stay put and work with fully digital processes. As with the general public, a bank’s ability to provide a swift response to an application is seen as a differentiating factor. All the more so in the corporate market where applications are managed manually and it can take two or three weeks to prepare an application.
From a regulatory standpoint, certain automation pre-requisites are already in place and this means banks can make tangible progress in this workstream. For the Moroccan central bank, a telephone number associated with a PIN code is a recognised identifier, which helps to iron out authentication and security issues and documentary exchanges. This said, there is still areas for improvement: for example, to date, government approval is still required to legalise a loan agreement. This can only be obtained in person. We are thinking about how to streamline this part of the process, and this involves connecting external IT systems, in this instance the state’s IT, with the bank’s. In other words, it’s a question of automating processes within an ecosystem. This model can also be applied to insurance, where there is currently no automatic connection. In two to three years’ time, we could imagine technical integration in the ecosystem with these stakeholders.
Reducing the ‘time to yes’
This thinking has not stopped nearly all the banks on the market from starting the lending chain automation process, step by step. Offers already exist, even if they do not yet cover the full process from end to end. All institutions are working on the time it takes to approve an application, i.e. the ‘time to yes’. This usually involves aligning loan origination software, like Sopra Banking’s product, and the back office. What's more, our product is based on an open architecture and is also fully multi-channel.
Works on automating the lending chain also benefits internal operations because it encourages financial institutions to continuously improve their IT infrastructure and processes. Automation makes it possible to reduce the time customer advisors spend on administrative tasks (inputting applications, hierarchy approval etc.), and, as such, increase the time they spend listening to customers. Another important factor is that this automation implies better knowledge of customers (KYC, or Know Your Customer). Automating this process also facilitates work on the back-office which no longer needs paper archives to put together a loan application. With even the first process automation projects rolled out there are clear gains.
By Maryem Moustakim, Head of Customer Engagement at Sopra Banking Morocco