Embracing Responsibility in Lending: Introducing Finorytech's Affordability Assessment API

In an era where financial inclusivity is increasingly prioritized, the responsibility of lending institutions to ensure the sustainability of their lending practices cannot be understated. At Finorytech, we recognize the delicate balance between accessible credit and financial health. Thus, we're proud to introduce a cornerstone feature of our lending solutions: the Affordability Assessment API.

Why Affordability Matters

The landscape of financial regulation is evolving, marked notably by the CCOB’s policy direction which emphasizes the importance of affordability assessments in lending processes. This shift underscores a commitment to curbing the risks associated with over-indebtedness and promoting responsible lending. Unlike traditional credit assessments that focus primarily on a borrower's credit score report, affordability assessments are designed to illuminate a borrower's current financial landscape.

The Challenge with Traditional Assessments

Traditionally, assessing a borrower's affordability has involved cumbersome questionnaires. Not only do these methods often slow down the application process, creating friction, but they also rely heavily on self-reported data, which can be inaccurate or misleading. Lenders are thus placed in a tricky position between needing to comply with new regulations and striving to maintain an efficient customer onboarding experience.

How Finorytech Executes Affordability Assessment

Our approach to assessing affordability is both innovative and efficient, leveraging advanced technology to provide accurate and rapid assessments, thereby minimizing friction in the lending process while enhancing compliance. Here's how we do it:

1. Income Verification

We start the process by verifying a borrower’s income using direct and reliable sources. This can include analysis of bank transaction data, payslips, and EPF statements. The use of machine learning algorithms to authenticate and predict income stability and levels. Through digital means, the verification process is not only faster but also more accurate than self-reported incomes.

2. Analysis of Living Expenses

   Next, we utilize our categorization and enrichment technology to analyze the borrower's transaction data, extracting detailed insights into their regular living expenses. This can range from utilities and rent to groceries and transportation. By precisely understanding monthly expenditures, we can more accurately assess disposable income.

3. Loan Repayment Commitments

Our API also examines existing loan repayments and other financial commitments that impact a borrower's monthly budget. This includes ongoing debts, recurring payments, and other financial obligations that could affect the borrower’s ability to handle additional financial responsibility.

4. Comprehensive Affordability Equation

   Finally, we calculate the affordability by subtracting verified living expenses and existing loan repayment commitments from the verified income. The result gives us a clear picture of the borrower's disposable income and their ability to manage new loan repayments without financial strain comfortably.

Achieving Responsible Lending Through Technology

By automating and streamlining these processes using our advanced API, Finorytech accelerates the lending process and enhances its reliability and compliance. Lenders can make informed decisions quickly, reducing the risk of default while protecting consumers from potentially harmful financial strain.

For more information on our Affordability Assessment API, or to schedule a demo, visit our website or contact our sales team. Let’s make responsible lending the standard, not the exception.