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success story

Global Singapore bank achieves 40% cost savings by transforming its secured loan processing

With Virtusa-led Pega BPM solution

A leading Singapore bank wanted to transform its loan operations with Straight Through Processing (STP) capabilities to achieve long-term cost efficiencies, paperless processing, and multi-channel service extension. Secured loans like mortgage loans, term loans, bridging loans, etc., generally have long tenures with intensive document processing. Automation and digitalization of the process are imperative for sustained operational advantage. Moreover, loan processing needs to be in sync with payments, collections, collateral insurance, property valuation, and document management processes across the loan lifecycle. The client thus wanted to streamline its loan ecosystem.

Virtusa’s Pega BPM solution delivered a paperless loan processing with 90% STP capabilities that resulted in 40% cost savings, improved turn-around time, and reduced manual errors. The solution helped expand service channels to internet banking and mobile apps and unlocked potential for analytics with decisions-based value-adds.

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The Challenge

The loan operations department incurred huge overheads due to the increased volume and bank-wide focus on customer experience.

Outdated technology, manual processing, data integrity issues, and higher turn-around time were the inhibitors directly impacting the profitability and scalability of the operations. With the dis-joint process, users had to access 8+ systems and several screens to execute loan processes like disbursement, loan maintenance, payments to partners, repayment, repricing, and redemption. Manual processes and interventions led to audit and data integrity issues with overall process inefficiency.

Other key challenges:

  • Operation risk
    • Risk of limited application support for existing MS-Access-based application supporting loan process tracking
    • Manual error due to multiple systems involved and lack of system-driven controls, validations, and audits
  • Operational inefficiency
    • Turn-around time was higher due to unnecessary hand-off and data transcription
    • Toggling between systems, repeated data inputs, and repeated maker/checker process at each layer created time and cost overheads
  • Manual processing
    • Paper-based processing induced additional costs in scanning, tracking, and safekeeping of documents
    • Physical paper-based processing also limits channel outreach and customer self-service capabilities through internet banking and mobile apps
The Solution

Virtusa partnered with the bank to digitally transform its loan processing using Pega Business Process Management (BPM) framework.

We conducted extensive workshops with stakeholders to streamline processes, UX, case lifecycle, and interfacing requirements. Several POCs were built and showcased to have substantial buy-ins on the proposed solution and finalize requirements. The aim was to achieve up to 90% STP across Singapore and Malaysia loan operations, covering both local and overseas secured loan products and spanning across consumer and corporate lines of business.

The solution created a seamless layer on top of the legacy core banking system, file management system, electronic loan file, collateral management system, loan onboarding system, and payment operations to deliver STP value-proposition and scalability.

BPM Solution For Loan Processing

Key highlights

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Automated:

  • Fund disbursement process
  • Loan account maintenance 
  • Payment of fees (solicitor, valuers) 
  • unds reception (SWIFT, MEPS, CASA, CPF, CO, Cheque)

Scalable system:

  • Post the initial digital transformation of the loan operations, and the platform allows extensions to many loan servicing features for the end-user using online banking and mobile applications
  • The current transformation in Pega enabled the next phase of analytics and decisions-based to cross-sell and service opportunities

Enabled paperless processing for:

  • Inbound and outbound documents reception, batching, and tracking
  • Two-way integration with electronic loan files
  • 250+ outbound document and email generation embedded in case flow

Other implementation highlights:

  • 120+ business and system audit reports for internal/external built using Pega out-of-the-box report browser tool to enable user self-service and maintenance capabilities
  • Micro-services-based integration with core banking, file management, collateral management, payments system, and loan origination system with 300+ APIs to enable STP and paperless processing
The Benefit

Transforming entire loan operations enabled the bank to create substantial cost efficiencies, a better customer experience, and a scalable process primed for future innovation and automation.

  • 90% STP in loan operations
  • ~40% cost savings through 45 FTE resources, cross-geo hubbing, and process automation
  • Enhanced customer experience 
  • Faster turn-around time
  • Improved accountability of task through data integration, audit, and system controls
  • Shortened processing time with increased operational efficiency with the paperless operation
  • Scalable platform for building on automation, data, and analytics with smarter AI models 

 

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