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The often-overlooked tech. in digital credit originations

April 28, 2021 at 2:00 PM

With the large drive in account origination towards digitisation and automation, in our experience much focus has been on bedding down omni-channel capability. But the real unsung hero of an originations’ project is the API hub. In this blog I unpack API hubs and APIs available in originations. 

As much as 2/3rds of the cost of an originations’ project can come from integration. Reducing integration cost is critical. The use of an API hub provides the opportunity to do just that.

To find out more about Principa’s API hub, BridgeSmart, featuring two dozen APIs, click here or get in touch with us.

Without an API hub, for each API service, integration needs to be built with the loans origination system and the API service. With the use of the API hub, integration with the loans origination system is built once. As well as this, the API hub should be enabled with a variety of common features required of APIs.

API hub comparison

Features to look out for

Apart from enabling the service call, deploying service credentials and mapping the input and output data, the API hub should be equipped with other features too. Some of the features to look out for include the following:

  1. SOAP/Rest - ability to manage both SOAP or Rest APIs receiving Xml and JSON object types.
  2. Encryption – the ability to manage both encrypted and unencrypted data with different encryption methods.
  3. Data types – the ability to manage the transfer of data, files and images.
  4. Data cache – the system should feature a data cache to prevent unnecessary multiple calls to a bureau. The user should control the retention period for the data.
  5. Workflow/process flow capability – some ability to manage the API call process or control the flow of actions and results.
  6. Sequential/parallel calls – ability to order multiple calls in a sequential or parallel manner, potentially triggering multiple API requests in parallel then waiting on response on all of them before continuing.
  7. Conditional processing – ability to interpret values from received responses in order to determine whether following API calls should be executed. This could save unnecessary network traffic (data) and even cost.
  8. Extensive call failure management – this will control what should be done if a call fails.

Services available

In the last five years several APIs have become available to be consumed especially in the credit originations space. Some of them are very product-specific and some can be used across products. Some of them are listed in the diagram below and are explained:

API services

  1. Credit bureau management – with a host of credit bureaus available, links to credit bureaus are critical and many lenders have multi-bureau strategies.
  2. Customer verification (KYC) – these services automate the customer verification process ensuring that the customer identifiers captured (e.g. ID, passport) match the actual number on the document itself. This is traditionally done manually, but with automated services now available this has changed.
  3. Digital signature – the signing of documentation is a laborious manual process. Enabling digital signature through one-time-pin has made document signature process more seamless. There are multiple services out there that enable this.
  4. Vehicle bureau – the vehicle bureau holds data on vehicle valuations and details as to whether a vehicle has been stolen or is currently under credit agreement.
  5. Property evaluation – this allows the valuation of properties for mortgage applications.
  6. Debit orders – setting up of debit orders including Debicheck.
  7. Account verification – ensuring that a customer has entered a correct bank account number is done through the account verification API.
  8. Proof of income – a variety of banks share bank statements data in a closed-user-group. There’s an API for this.
  9. Dealership/originators – dealer networks are point-of-entries for vehicle credit applications. Originators do the same for mortgages and unsecured loans.
  10. Fraud prevention - application fraud is on the increase and lenders need to check to see whether an application is on a fraud list, money laundering or terrorist list. Multiple services are available here.

When we work with our clients in originations, we usually deal with multiple stakeholders. There’s the business owner whose focus is in driving business value and innovation as well as managing the operational processes. There are the analysts who focus on enabling decisioning complexity. There’s the IT-exec who concerns herself with the tech-stack, cloud or on-premise deployments and where the project will fit in amongst the endless line of IT projects. Discussion around APIs ten years ago was a technical discussion with the IT-exec; these days all stakeholders are involved.

The cost of a project can be dramatically reduced if an effective API hub is used. As such the ROI on an API hub is easily and rapidly realised.

 

To find out more about Principa’s API hub, BridgeSmart, featuring two dozen APIs, click here or get in touch with us.

 

 

Thomas Maydon
Thomas Maydon
Thomas Maydon is the Head of Credit Solutions at Principa. With over 17 years of experience in the Southern African, West African and Middle Eastern retail credit markets, Tom has primarily been involved in consulting, analytics, credit bureau and predictive modelling services. He has experience in all aspects of the credit life cycle (in multiple industries) including intelligent prospecting, originations, strategy simulation, affordability analysis, behavioural modelling, pricing analysis, collections processes, and provisions (including Basel II) and profitability calculations.

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