Overview

Founded in 1986, Nucleus Software is a provider of lending and transaction banking solutions to the global financial services industry. Its software drives the operations of more than 200 financial institutions across 50 countries, covering retail banking, corporate banking, cash management, internet banking, automotive lending, and other business areas.

NCML Finance Private Ltd. (NFin) is an RBI-registered NBFC with a focus on rural and agri-business finance. NFin is a wholly owned subsidiary of National Collateral Management Services Ltd. (NCML). They have a presence in over 50 locations across India while their parent company, NCML’s footprint spreads across 18 states with approximately 175 warehousing locations.

The project was critical for NCML Finance’s digital transformation and future growth plans. The company decided to go with Nucleus Software due to its unique combination of more than three decades of domain expertise, product roadmap-based approach and proven track record of delivering complex projects in the industry.

Implementation

Till 2019, NCML Finance was facing challenge lack of automation in lending and paper-based transactions, especially in collateral management and loan management for their Warehouse Receipt Financing (WHR) line of business. The lending technology platform requirement for NCML Finance was operationally complex due to a wide variety of agricultural commodities that they dealt with.

The service activation was achieved within a period of 6 weeks post project initiation. The project team comprised members from both Nucleus Software and NCML Finance. The Nucleus team included members from the product management, program management, implementation, and infrastructure teams, and the NCML team consisted of members from the business, IT, finance, operations, risk management functions of the organization.

For the project, a joint team was constituted to understand the complexities involved and recommend optimized process flow. Accordingly, the processes were tailored to the needs of NCML Finance and carefully validated by various functions using a rigorous project review cycle.

The added complexities of the nature of their operations involved storage, testing and release of commodities, multiple phases of disbursement and repayments and price fluctuations. Hence, robust technology was required to address the risk and operational challenges.

Benefits

Nucleus’s solution offered complete digitization and automation of the front-end and back-end processes across the loan lifecycle including servicing and collaterals/inventory management. This included marginal call functionality based on collateral prices. The module of collaterals is very tightly integrated to manage the commodity price linkages with respect to the loan receivables and capable of managing nuances such as price fluctuations and perishability of the commodity. Using the Warehouse Receipt Functionality, NCML has also been able to manage commodity financing at one place.

Other benefits include:

• 75% reduction in time for pre-lab disbursement with digital processing
• 75% reduction in time for post-lab loan disbursement
• Achievement of 100% automation in credit risk monitoring by tracking changes in real-time in the price of commodities and corresponding changes in the value of pledged collaterals against loans. This helped track the associated credit risk in real-time and triggered a corrective action to cover the gaps in collateral value and mitigate the risk.

Conclusion

Nucleus’s platform has hence enabled NCML Finance’s business to enhance its customer base and diversify into other segments.

Key Facts
Vendor Name: Nucleus Software
Vendor HQ: India
Founded: 1986
Solution Implemented: FinnOne Neo Corporate
Timeline: Go-live in Q4 2019