Lending approval should be taken carefully to prevent any risk of losses. There are several borrower’s factors to take into consideration. The primary one is financial background, which is why bank transaction analysis holds significant importance. To derive insights into a borrower’s financial condition, conducting transaction analysis based on their Rekening koran over a period of time proved an effective way. Bank transaction analysis helps credit analysts gain a comprehensive understanding of how an individual or business’s financial stability impacts their ability to secure a loan.
In this article, you will learn about the important implementation of transaction analysis in lending underwriting, and get a FREE EBOOK for the complete guide!
The Significance of Transaction Analysis
By analyzing bank transactions in-depth, you will gain valuable financial insights into the borrower’s condition which leads you to make well-informed decisions.
- Evaluate the cash flow health
Transaction analysis allows you to review incoming and outgoing funds more thoroughly. Does the cash flow ratio show a positive value? One indicator of a healthy cash flow is when there’s enough cash to cover day-to-day expenses, yet still maintain reserves to prepare for unexpected events and savings. This information will be crucial to understand the borrower’s financial behavior closely.
- Verify the income sources
Ensure the borrower’s trustworthiness through their income streams, helping you to check whether they are legitimately employed in a reliable job or have a sufficient business. Assess the stability and consistency of the income between periods. Calculate the debt-to-income ratio, where a lower ratio indicates healthier financial standing.
- Understand the debt position
As a form of risk assessment, you can also review the debt level. Discover the amount of ongoing debt an individual or company has to pay back. It includes installment, mortgages, credit card used, loan borrowed, and any other types of financial commitments they may have. Monitoring these obligations helps in understanding their financial health and ability to manage debt repayments.
- Anticipate financial fraud
Transaction analysis can also assist you to stay ahead of deceptive applications that may contain financial fraud. Identify if there’s any financial activity that deviates from the standard norms, such as sudden change in spending patterns, unusual time and amount of transactions, balance discrepancies, and other irregular transactions.
The Future of Transaction Analysis with Artificial Intelligence (AI)
Manual transaction analysis is labor-intensive and prone to errors. AI brings breakthrough solutions to supercharge your efficiency. AI makes it easy for you to analyze copious bank statements in a fraction of time.
Assign the heavy tasks of transaction data processing to AI, so you can be more focused on decision-making. With its intelligent ability, AI derives, enriches, and analyzes transaction records into an easy-to-understand financial summary. AI Analytic today has also advanced with fraud detection. It examines through the transaction records to spot any suspicious document identity and transaction activity against the predefined metrics. This proactive approach helps organizations protect themselves from high risk applicants.
A Complete Guide: How to Leverage AI to Improve Your Bank Transaction Analysis
Unlock business efficiency with our ebook. Discover how the game-changing impacts of AI in evaluating financial records. We’ve collected and curated must-know tips on how to improve your lending underwriting strategy with AI-powered bank statement analysis. Learn the practical use of AI to turn raw transactional data into actionable insights that drives your lending success. Click the banner to download eBook for free.
