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Why "Evolutionary Architecture"-Based Systems will dominate the Loan Management space

Updated: Jan 24

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

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?

The future of lending tech is bright, and it's powered by Synoriq.

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