All legacy lending softwares at the banks, NBFCs and FinTechs will be replaced in next 15 years with "Evolutionary Architecture" based systems.
This is a strong statement. Why do you say so?
Lets understand the problem first
Its difficult to incorporate changes with changing landscape
Changes are continuously required in LMS due to evolving loan products, need for automation and regulatory compliances
Current model of incorporating changes is through lenders writing a BRD document for the change and paying for the change request
The above model works okay for first 5 years but then the problem of legacy tech starts hitting
Problem of legacy tech
Systems age in terms of their underlying tech stack. Its starts getting difficult to maintain legacy systems
There are several changes specific to the customer built on top of the product, hence upgrading the product gets difficult
Developers change on the project
The tech-stack starts getting older. Even compiling the code successfully gets difficult.
New developers don't like to work on the old-stack.
Software providers slow down on changes due the legacy tech.
Changes become too risky - they have risk of breaking the existing flow too
Manually testing of the application for thousands of test scenarios gets difficult for every change made
and ensuring nothing breaks in production is a difficult promise
Changes become too costly
For every small change the amount of testing and deployment diligence required and hence the costs
Limited evolution due to limited ability to think
In the current landscape - all the thinking job has to be done by the customer themselves
Product is as good as your ability to think - Each customer is differently positioned in terms of their in-house product's teams ability to think
Those who don't think don't get any improvements
Those who think a bit get little bit improvements
Those who think a lot get more improvements
Upgrades are largely absent OR they take really long if offered
Most of the software vendors don't provide product upgrades other than the paid change requests
If they do then its a long 3 to 12 month long project with enough stability risks
All their customers are on different versions
Product upgrades mostly require complete data migration - posing risks of stability
Product upgrades require long testing and fixing cycles similar to new product installations
With direct + indirect costs - upgrades turn out to be costly
Bulky avoidable IT costs: leading to lack of competitive advantage
Total Cost of Ownership is on an average 2X to 3X the application license cost
(a) Direct cost of licensing of the application +
(b) Cost of licenses of underlying software packages used - for e.g. database license, server license, licensing for tools etc.
(c) Costs of Infra
In the current model, software providers are not incentivised to optimize the infra
There is usually an over-budgeting of infra to the tune of 2X to 3X of the required infra
(d) Cost of team to support the infra, security and change management
An LMS on an average would have 5 to 10 folks on customers payroll just to manage the show
(e) Direct cost of changes and maintenance charged by the vendor
Unclear responsibilities leading poor service levels
If system slows down, whose responsibility is this?
Software vendor would blame it on the infra team and request for infra increase
Bank would blame the software vendor to optimize the performance
If something breaks in production then whose responsibility is this?
Software vendor would expect UAT sign-off from the customer for each change
Customers would have to put in their own testing mechanisms to provide sign-offs
If anything goes wrong in production, it would be responsibility of the customer
If there is a Security breach, whose responsibility is this?
Software vendor would expect banks to highlight the security observations
They would fix the observations identified by the banks
There is no incentive to the software provider to proactively improve security management
How does "Evolutionary Architecture" solve the problems?
Defy the ageing in software world
Living softwares - Continuous improvements every month
Always a clear roadmap for product evolution
Thinking hat is worn by the vendor
filtering and prioritising the crowd-sourced the ideas
Product simply evolves on its own with much efforts of customers
Tech stack upgrades are regularly undertaken by the vendor
Upgrades are seamless with way lower risks
Softwares on Evolutionary Architecture put strong focus on testing automation
Thousands of test cases automatically figure out if anything is breaking due to code changes
Upgrades don't need customers time and efforts - monthly upgrades are seamless
Lower costs
Usually "Evolutionary" softwares offer an all-inclusive pricing and hence their is a clear incentive for the vendor to optimise on underlying costs
They prefer using matured open-source databases and servers to save big time on the third party license costs
They continuously optimize on infra costs to improve their margins
They build infra automation to minimise the people costs
Better security
"Evolutionary Architecture" softwares offer softwares as a service - hence the responsibility is much larger for the vendors
Vendors in this architecture foresee security breach as a major reputation risk. Hence they invest in better security
They constantly rollout improvement in security
Time-to-act for any new identified vulnerability is way much faster due to its underlying evolutionary nature
Better performance
Due to complete ownership of infra management, evolutionary softwares witness some of the highest loads
To combat the possible slowness they optimize on their code and infra to offer high performant experience
Better scalability
Evolutionary softwares are built on micro-services model offering close to unlimited scaling
Lower hassles
Its far far hassle free for the customers with evolutionary softwares taking up significant responsibilities on their own i.e.
Change management
Infra management
Security management
Performance management
Ok understood "Evolutionary Architecture" is better, but is it strong enough to make the switch?
Kunal Shah had proposed a Delta 4 theory to predict permanent change in customer behaviour. Reference video https://www.youtube.com/watch?v=4px19xzK7zI
Kunal Shah's Delta 4 theory posits that a startup's product or service must be four times better or more efficient than existing solutions to bring about a significant and lasting change in consumer behaviour.
Evolutionary architectures are able to generate a delta 4 difference for the below reasons
Great product for current needs
This holds true for Synoriq LMS - its feature richness makes it a great product today
Future proof - Ensures future improvements so future is in safe hands
Lesser hassles - outsourced the major hassles - Security, Performance, Infra, Improvements, Compliances
Lower costs - effective costs including direct+indirect costs is at least 50% lower
About Synoriq's Evolutionary LMS
At Synoriq, we believe the future of lending isn't static, it's alive. That's why we built our 𝗘𝘃𝗼𝗹𝘂𝘁𝗶𝗼𝗻𝗮𝗿𝘆 𝗟𝗼𝗮𝗻 𝗠𝗮𝗻𝗮𝗴𝗲𝗺𝗲𝗻𝘁 𝗦𝘆𝘀𝘁𝗲𝗺 (LMS) on a dynamic core, constantly adapting and improving to keep you ahead of the curve.
Think of it as your lending co-pilot, not just a clunky software.
Here's why leading NBFCs and FinTechs choose Synoriq:
👉 𝗘𝘃𝗼𝗹𝘂𝘁𝗶𝗼𝗻𝗮𝗿𝘆 𝗔𝗿𝗰𝗵𝗶𝘁𝗲𝗰𝘁𝘂𝗿𝗲: Our LMS isn't just a platform, it's a living entity. It constantly learns and adapts, ensuring your operations are always future-proof.
👉 𝗙𝗲𝗮𝘁𝘂𝗿𝗲 𝗣𝗼𝘄𝗲𝗿𝗵𝗼𝘂𝘀𝗲: We don't do feature fatigue. Synoriq's comprehensive suite caters to every lending need, from term loans to credit lines, colending, subvention, and beyond.
👉 𝗦𝗰𝗮𝗹𝗶𝗻𝗴 𝗪𝗶𝘁𝗵𝗼𝘂𝘁 𝗟𝗶𝗺𝗶𝘁𝘀: Dream big, lend big. Synoriq's robust infrastructure handles any loan volume with ease, so you can focus on growth, not limitations.
👉 𝗖𝗼𝗺𝗽𝗹𝗶𝗮𝗻𝗰𝗲 𝗖𝗼𝗺𝗽𝗮𝘀𝘀: Navigate the ever-changing regulatory landscape with confidence. Synoriq's LMS stays laser-focused on compliance, giving you peace of mind.
👉 Great user 𝗘𝘅𝗽𝗲𝗿𝗶𝗲𝗻𝗰𝗲: Forget clunky interfaces and frustrated borrowers. Synoriq champions user-friendliness and mobile-first design, making lending a breeze for everyone.
👉 𝗦𝘂𝗽𝗽𝗼𝗿𝘁 𝗦𝘆𝗺𝗽𝗵𝗼𝗻𝘆: Don't go it alone. Our team of 150+ experts is your lending success partner. From implementation to optimisation, we're here to guide you every step of the way.
The results speak for themselves:
✅ 𝟯𝟬,𝟬𝟬𝟬𝗖𝗿+ AUM serviced: Empowering leading lenders across the spectrum.
✅ 𝟯𝟱+ 𝗖𝗹𝗶𝗲𝗻𝘁𝘀: Trusted by the best in the business.
✅ 𝟭𝟱𝟬+ 𝗘𝘅𝗽𝗲𝗿𝘁𝘀: A force of expertise at your fingertips.
At Synoriq, we're not just building a loan management system, we're building a better lending landscape.
Ready to join the lending revolution?
Explore the LMS: https://www.synoriq.com/
Book a personalized demo: https://www.synoriq.com/#contact
The future of lending tech is bright, and it's powered by Synoriq.