Tavan Bogd Group success story
Digitizing lending operations for
Mongolia’s largest conglomerate
Mongolia’s largest conglomerate
We joined forces to transform Tavan Bogd Finance’s lending infrastructure with an automated and
scalable loan management system.
The LMS provided flexible repayment options, automated restructuring features, and branch-level
management, enhancing operational efficiency and risk mitigation.
Urnukhjargal Badam,
Branch Manager at Tavan Bogd Group
Challenge
Key obstacles in scaling financial
services in a growing market
Tavan Bogd Finance, a subsidiary of Tavan Bogd Group, sought to implement a scalable fintech
platform to cater to the evolving financial needs of its customers. The company aimed to
streamline its loan origination and management processes to offer faster and more flexible
financial services, including consumer and commercial lending. The platform also needed to
integrate a loyalty points system, an e-wallet feature, and various lending products to enhance
customer engagement and operational efficiency.
The main challenges included the need for automation of loan decisions, improving service speed
and quality, expanding their target customer base, and reducing operational costs. Additionally,
Tavan Bogd Finance required a seamless transition from their existing non-banking loan software,
with minimal disruption and complete data migration.
Approach
Customer verification flow
Our solution for Tavan Bogd Finance includes a customer verification flow that evaluates
individual borrowers before initiating the loan application process. To ensure connectivity with
Tavan Bogd Finance's app, we provided the necessary endpoints and back-office infrastructure to
seamlessly connect our HES LoanBox system to their mobile application and middleware. The
middleware, acting as an intermediary between our solution and over 20 Mongolian service
integrations, was responsible for direct connectivity with those services.
The developed loan application process is highly efficient and automated. Customers share their
personal information with the mobile app, initiating a verification process. This process
includes multiple automated checks, such as income verification and credit history review,
ensuring a swift and accurate evaluation without manual intervention.
Within two minutes, the system automatically calculates and provides loan limits based on the
applicant's personal information. The decision-making process is fully automated, ensuring no
manual intervention from back-office users is required. Once calculated, these limits are valid
for 24 hours, after which they expire and must be recalculated. If the customer is approved,
they are presented with eligible loan products tailored to their financial profile. Should the
customer fail any criteria (such as age or blacklist status), they receive an immediate push
notification.
For Tavan Bogd Finance employees, the entire verification process, including ranges, values, and
scores, is accessible within the borrower's profile, providing complete transparency and control
over loan decisions.
Approach
Loan origination and management
process
In developing the Loan Management System (LMS) for Tavan Bogd Finance, we addressed the diverse
needs of Installment Loans (LeaseOn), BNPL (Buy Now, Pay Later), Pledged Loans and Trusted
Pledged Loans. Each loan type required unique handling, which we streamlined through a tailored
approach.
For Installment Loans (LeaseOn), borrowers started with a detailed loan application. After the
system calculated the loan terms, the borrower could add co-borrowers (references) for
additional support. Contract signing was made convenient, offering two methods: OTP confirmation
or a signature uploaded via image. This ensured a fast and seamless experience for both the
borrower and the institution.
With BNPL loans, the system integrated directly with the merchant portal, automatically pulling
invoice data to verify the loan amount and status. This seamless connection reduced the need for
manual input, speeding up the process and increasing accuracy.
Pledged Loans, being more complex, required multiple layers of manual intervention. A processing
fee was introduced upfront, and the loans underwent a series of thorough review stages to ensure
compliance and mitigate risk. These stages included reviews by CIAT, LAAT, the Credit Committee,
the Relationship Manager, the Branch Manager, and the Accountant. This comprehensive, multi-step
review process allowed for careful handling of more sensitive loan products, ensuring that every
aspect of the loan was scrutinized before approval.
To ensure secure and efficient operations, we implemented clear user permissions. These
role-based permissions controlled access to sensitive information, preventing unauthorized
actions and ensuring that only qualified personnel could handle key loan management tasks.
Additionally, we introduced branch management functionality, which allowed the company to
organize different user departments based on their region, with each region assigned to a
specific branch. Loan applications were automatically assigned to branches according to regional
and other parameters, which streamlined operations. The system also provided the ability to
filter loans and applications by branch, a crucial feature for a large company like Tavan Bogd
Finance. This segregation of duties, combined with branch-specific management, enhanced both
security and operational efficiency.
The system automated the calculation of repayment schedules based on the loan type and the
borrower’s preferences. Both annuity and differentiated repayment options were supported:
- Annuity repayment allowed for equal payments throughout the loan term, simplifying financial planning for borrowers.
- Differentiated repayment involved higher initial payments, with decreasing amounts over time, providing borrowers with the flexibility to reduce their loan balance faster.
Additionally, the system allowed for various payment frequencies—monthly, biweekly, quarterly,
or end-of-term. A special calculation logic was developed to accommodate quarterly payments,
accounting for the varying number of months in each quarter, which was a critical requirement
from Tavan Bogd Finance.
To support effective risk management, we introduced features like the provision rate and
on-balance/off-balance parameters, which were regularly reviewed by accountants. This enabled a
better understanding of potential risks, as loans in delinquency would trigger a provision rate
that increased with the number of overdue days. The system automatically adjusted the loan’s
status based on the length of the delinquency period.
We also implemented 11 different restructuring options, allowing Tavan Bogd Finance to offer
flexible repayment solutions to their large-scale clients. These restructuring features provided
an additional level of support for high-value customers, ensuring their needs could be met
without disrupting the overall loan management process.
For BNPL loans, while they typically have 0% interest, we accounted for the risk of delayed
payments. If a BNPL loan was overdue by more than 93 days, it was reclassified and managed as an
installment loan, with appropriate late fees and interest calculations applied, ensuring
effective risk mitigation.
The LMS also supported the ability to handle past-date repayments and payment cancellations,
automatically recalculating affected repayment schedules and amounts. This flexibility ensured
that the company could manage its loan portfolio with precision, even when adjustments were
needed after the fact.
Additionally, we developed a system to manage transactions from multiple channels, including
bank statements. This system automatically sorts and allocates these transactions while
simultaneously detecting and eliminating duplicates. Such a mechanism added a layer of
reliability, making transaction management smoother and more efficient for Tavan Bogd Finance.
$63M+
Loan portfolio
268,000+
Customers served
2 min
Loan limits calculation
Result
Creation of advanced systems for
streamlined loan management
Our collaboration with Tavan Bogd Finance, a subsidiary of Mongolia’s largest and most
diversified conglomerate, Tavan Bogd Group, led to the successful creation and implementation of
entirely new systems: a Loan Origination System (LOS) and a Loan Management System (LMS). These
systems were built from scratch, presenting a significant challenge but ultimately transforming
the way the company handled loan processing and management.
A key aspect of this project was the simultaneous development of both the mobile application
(handled by Tavan Bogd Finance’s team) and the back-office system. Beyond delivering our
solution, we actively consulted with their development team, sharing best practices, offering
guidance, and ensuring alignment between both teams. This collaborative approach helped keep
both projects on track and demonstrated our ability to successfully manage the coordination of
multiple teams, a capability Tavan Bogd Finance had specifically inquired about during the early
stages of the project. This experience further highlights our strength not only in development
but also in facilitating effective teamwork across various stakeholders.
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