The banking industry is not complacent, especially when non-performing loans (NPLs) are emerging. It’s reasonable to extend credit to those who require it, especially during periods of low demand. However, banks are recognizing that a modernized lending solution is needed to meet these credit extensions safely.
NLPs—loans where borrowers have not made payments in 90 days—rose significantly in the last quarter of 2023. The four largest US lenders, JPMorgan Chase, Bank of America, Wells Fargo, and Citigroup, saw a combined increase of $24.4bn, according to a Bloomberg analyst consensus reported by the Financial Times.
In response, banks reorganize their operations, the EU cracks down on regulations, and technology increasingly becomes a bridge to support lenders and merchants in cost-effectively managing their point-of-sale loan programs.
Jifiti, a multinational embedded lending technology company, while able to integrate with any LMS, has recently introduced its own LMS Add-On. It serves banks and lenders that want to offer an end-to-end embedded lending experience without the significant IT investments that come with complex builds and integrations.
With access to more data on borrowers, banks can make more accurate credit risk assessments and approve loans to more creditworthy individuals. This capability is where embedded lending programs shed some light, as they allow for real-time monitoring of borrower behavior and financial data, enabling banks to detect potential problems early and take corrective action. If a borrower defaults on a loan, banks using embedded lending platforms can facilitate faster collections with direct access to the borrower’s financial information.
Nevertheless, embedded lending programs often require specific functionalities that a standard loan management system may need to address fully. They must integrate with platforms such as e-commerce websites, mobile apps, or point-of-sale systems and often require real-time credit decisions and loan approvals to ensure a seamless customer experience. Moreover, their flexible loan structures, such as buy now, pay later (BNPL) or point-of-sale financing, require specialized features to manage, so it’s crucial that a bank’s LMS can handle this.
Banks can benefit from Jifiti’s LMS Add-On in several ways. One is by using it as a sub-ledger and then pushing the originated loans into their main ledger. With its sub-ledger capabilities, every component required for embedded lending, including loan servicing, debt management, and reporting, can be managed and fed into the lender’s General Ledger.
Another option is for merchants, who have their own financial services arms but don’t require a full-blown LMS for their purposes, to deliver Jifiti’s lightweight LMS Add-On as their solution.
Jifiti’s white-labeled platform empowers banks to offer numerous financing options seamlessly across multiple channels, including online, in-store, call center, and assisted in-store or at-home setups. Its customizable features let banks tailor financing solutions with a user-friendly platform that simplifies offering and managing financing programs for customers, banks, and merchants.
Yaacov Martin, CEO of The Jifiti Group, explains that “there is a recurring need for a supplementary loan management system that can enhance existing LMS capabilities to support the unique nature of embedded lending programs. Jifiti’s LMS Add-on answers this challenge for banks, lenders, and enterprise merchants.”
The comprehensive embedded lending solution supports a wide range of industries and customer types, from retail to heavy equipment, OEM financing, and beyond. Its LMS Add-On features and customization options raise the stakes for banks looking to offer a complete, tailored lending experience.
