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LAPS - a new approach
to lending
Today's lending institutions face competitive challenges that were
unheard of a few short years ago. Loan departments are often working
with existing systems which are slow, inefficient, or both. Salem
Associates, Inc. is aware that successful competitors need top quality
tools, and we have responded by developing LAPS which is our Lending
Automation Processing System. Our technical analysts spent time
carefully observing and documenting the loan-processing workflow.
Based on input from functional experts in the banking industry we
have incorporated many new and innovative features into this exceptional
loan-processing product.
Our functional architects conceived and developed the solution that:
- Reduces risk
- Speeds-up Lending
- Increases Customer
Satisfaction
- Expands Market Size
- Helps in Management and Control of Lending
LAPS provides an integrated & comprehensive
solution to all the needs of a lending institution. It is scalable
and provides a good fit for any size of organization - from small
community banks and credit unions to multilevel, nationwide lending
institutions. All this can be accomplished without the need to touch
a line of code.
This automated lending solution features:
Comprehensive Application Forms for Personal and Commercial Loans
- Workflow automation that expedites the flow
of loan applications through various stages seamlessly within
time frames provided
- Risk management tools that allow underwriters
to automatically evaluate loan packages and alerts that draw attention
to doubtful situations. A Personal Risk Management facility evaluates
applicants for Liquidity, Collateral and Credit History. Commercial
Risk Management assists users in analyzing financial data, financial
ratios and comparing them with industry standards
- Document scanning that enables digital storage
and transmission of loan documents.
- Document Facility that allows the organization
to define the documents to be submitted by the applicants and
those to be generated by the bank officers.
- Voice Messaging for exchange of notes between
loan officers to facilitate better communication while reviewing
loan applications.
- Outstanding reporting capabilities that facilitate
performance review of loans & personnel across various levels
& structures of the organization
- Internet loan application module that allows
borrowers to apply for loans from the onvenience of their homes.
- Loan repayment & monitoring module that
enables early identification of non-performing loans so that corrective
action can be taken
- Operational controls which support various
levels of lending authority
- Comprehensive security ensures that users
access and manipulate information, only based on data and navigation
rights set by the lending institution.
LAPS is a versatile product which can be implemented as a whole
loan processing solution, or installed as a series of integrated
modules. This flexible approach makes the power of workgroup loan
processing available to organizations of all sizes.
This electronic form captures the information that most lending
institutions obtain from an individual for a personal loan. It also
provides the ability to capture information on co-applicants. Screen
forms have been designed for collecting and processing information
related to various types of assets & liabilities as well as
financial obligations of the borrower and the co-borrowers. Credit
reports from major credit reporting agencies can also be integrated
into this application to score and evaluate the overall credit worthiness
of the borrower & co-borrowers. The product is "web enabled,"
to allow prospective borrowers to complete these forms and submit
them for processing via the Internet. "What If" calculators
are provided, allowing prospective borrowers to see the effect that
different down payments or repayment terms would have on their loans.
Commercial loan processing is much more complex and requires careful
evaluation of the financial standing of the prospective customer.
Potential borrowers are typically rated on their financial performance
and compared to similar companies in their industry. This module
is designed to capture the required financial data, analyze it against
preset ratios and deliver to the reviewer a comprehensive picture,
which leads to a well-informed decision.
The commercial application form captures all the details typically
collected regarding the loan product, interest rate, amount requested
and other items such as the duration of the loan, principal loan
amount, and the financial standards against which the borrowers
standing will be compared. The comparison can be made with bank-defined
ratios or with industry specific ratios. When industry norms are
used, the bank can view excellent, average and poor performing companies
in the industry.
The module captures details of current assets, fixed assets, current
liabilities and long-term liabilities to enable the system to perform
a thorough risk analysis of the borrower. Data can be collected
for 3 years and projections can be made for up to 6 years.
A loan processing cycle typically involves movement of information
from one reviewer to another. As the value of the loan amount increases
the workflow gets more complex. Physical movement of the application
and supporting documents has been a required part of the process
in the past. With LAPS the entire flow of information can be electronic.
Each function in the processing chain is defined as a "flow
point" and the application package is sent to the next person
in the chain upon completion of a particular action. The time allowed
for each action can be set and the designated supervisor is alerted
in case of delay at any of the "flow points". In this
way, the system assures that there are no delays in the processing
of the loan. Efficiency reports can be generated to reveal any recurring
delays at specific "flow points" so that corrective action
can be taken.
The work flow module facilitates electronic processing of the loan
application between several "work flow points" which can
be set up to meet the unique needs of every organization depending
on their size, structure and review/approval methodology. It provides
the capability to review any application at whatever stage it may
be and ascertain reasons for the stage at which an application is
presently in. Reports can be run to identify performance of employees,
products, branches in any combination, which can be a useful tool
to reward productivity as well as in staffing decisions.
Understanding and rating risk is one of the key success factors
in lending. The risk associated with personal borrowers is mainly
assessed through their ability to repay and is based on their discretionary
income. Their Credit Bureau rating has a direct bearing on the risk
involved. LAPS can be configured to apply the business rules of
the lending institution with respect to the liquidity, liability
and the credit standing of the borrower. Based on data captured
in the application form, the reviewer is presented with an electronic
analysis, to assist in their decision process.
The applicant's collected financial data is used
to calculate predictive financial ratios. These ratios are measured
against benchmark ratios that may be defined by the bank. Optionally,
these are compared against industry standards. A view of the ratios
clearly identifies the acceptable ratios and highlights any out-of-range
or unacceptable numbers. The analysis can be displayed graphically
for easy reading. What is normally a time-consuming effort can be
done quickly and efficiently using LAPS.
This module gives lending institutions the ability
to digitally capture and store various documents that may be required
as part of the loan package. LAPS accepts documents input from industry
standard graphics devices which run in the MS Windows environment.
These digital documents can then be reviewed as necessary and transmitted
to the next "flow point" resulting in considerable savings
of time and money. It becomes easier to transfer the loan package
to the next point in the process without the need for stacks of
paper work to accompany the application.
This module uses the amortization schedule of
the loan and compares it to actual remittances. It is also designed
to generate alerts in the event a payment is not made on time or
for the appropriate amount. Loan servicing can also be set up to
send personalized reminders or letters of suitable requests/warnings
according to the situation. It also provides the ability to review
details of any particular loan payment over the life of the loan
and after.
Verbal annotations can be recorded and stored
by the reviewers during the application process. Comments of reviewers
can then be called up and replayed anytime during the lifetime of
the application.
One very valuable feature of LAPS is the number
and variety of data and graphical reports that can be generated
for review and analysis. From product popularity and processing
efficiency, to application status, there are large numbers of reports
available for each level of the organization. Graphical reports
enable different types of analysis for strategic management and
presentation of data for review by senior management.
LAPS has been designed and developed using the
latest hardware and software technologies. The system is based on
runs on the operating systems and protocols of the Internet and
is well suited to a local intranet environment. With an appropriate
web server in place, installation of the Internet module allows
applicants to apply for loans from their homes.
LAPS has been developed using Java, JSP and EJB components and conform
to J2EE standards. Program execution is carried out on the server
side and can be run using Web Application Servers such as Weblogic,
J-Run or Websphere. It has been designed with the understanding
that banking of the future will rely heavily on networked systems.
Although we understand that no technical environment lasts forever,
this system is, and will remain competitive for many years.
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