eLAP transforming the loan process for Bangladesh’s SME

Accessing a loan in Bangladesh’s banking industry may often feel like navigating a maze of endless paperwork. Business owners and entrepreneurs face a time-consuming journey to secure financing, a long list of documents, paperwork, and multiple visits from Relationship Officers (ROs) for signatures—a process that can stretch over weeks.

BRAC Bank decided it was time for a more innovative approach.In 2022, the bank introduced the Electronic Loan Application Proposal (eLAP), a digital platform designed for faster and more efficient loan applications. By December 2023, eLAP had been rolled out across 556 SME Unit Offices nationwide, transforming SME banking in Bangladesh.

And it has indeed turned things around.Before eLAP, the loan process involved multiple stages, from business initiators to credit approvers, each requiring manual data entry and document handling, which was both time-consuming and error prone. Developed by Veefin Solutions Limited, eLAP offers a user-friendly interface that’s accessible to users with varying levels of technical skill and complies fully with local regulations.

For BRAC Bank, eLAP has delivered substantial gains in operational efficiency.Reducing the processing time was a top priority: Traditional SME loan applications took an average of 15 working days, primarily due to document handling and approval stages. With eLAP, this has been cut down to 13 days, speeding up the process while preserving thoroughness.

Document handling has become far more efficient. Loan applications now involve digital submission, with only a final physical signature needed, reducing paperwork and minimising repeated visits from Relationship Officers (ROs).

Real-time tracking takes transparency to a new level. With OLAP, bank staff can monitor each loan application’s status in real time, displaying which officer handles it and at what stage. This tracking ensures accountability and speeds up the overall process.

For repeat applications, eLAP removes redundancy: The System Enquiry feature retrieves data from previous applications automatically, eliminating the need for manual re-entry and reducing time and errors.

And improved employee mobility brings added flexibility and efficiency. eLAP is accessible on mobile devices, so ROs and Business Development Managers can serve clients remotely. BRAC Bank has equipped 2,237 field staff with electronic tablets, allowing them to assist customers from any location and improve service delivery.

Cost savings have also been significant, especially on declined applications. Previously, every loan application was printed, even if declined later. Now, documents are only printed upon approval, eliminating waste and cutting unnecessary printing costs. Automation within eLAP has reduced data entry errors, allowing the Credit and Operations teams to handle documents more accurately.

The platform’s impact is far-reaching, benefiting 556 SME unit offices and more than 3,700 BRAC Bank employees involved in loan processing.

eLAP isn’t just saving time—it’s cutting costs too. Processing times have decreased significantly, with the overall turnaround time (TAT) reduced by two days and customer service time by six days. This translates to an annual time savings of ten days per staff member. eLAP has also saved BDT 5.85 crore in onboarding costs during the first half of 2024 and reduced courier expenses by 25%.

For customers, eLAP offers a genuinely transformative experience.Instead of the traditional weeks-long wait and multiple visits, loan applications are processed in a fraction of the time. The platform generates clear, system-produced sanction letters, ensuring transparency and minimising misunderstandings and complaints. eLAP’s query management feature streamlines inquiries, reducing the need for back-and-forth communication and creating a smoother experience for customers and bank staff.

Connecting with the Core Banking System takes efficiency even further. As of July 2024, BRAC Bank integrated eLAP with its Core Banking System, enabling real-time processing for tasks such as EMI calculations and fund disbursement. This integration has eliminated delays associated with manual calculations, ensuring a faster and more seamless loan disbursement process.

OLAP is more than technological advancement; it’s a pivotal shift for SME banking in Bangladesh. With over 100,000 loans disbursed, totalling more than BDT 17852 crore, eLAP has already made a tangible economic impact, empowered SMEs, and supported grassroots growth.

In line with Sir Fazle Hasan Abed’s vision of uplifting Bangladesh’s “missing middle,” eLAP enables BRAC Bank to expand its support for underserved businesses, fuelling economic progress at the local level.

eLAP exemplifies BRAC Bank’s commitment to innovation and customer-centric solutions in a fast-paced world where time is money. For Bangladesh’s SMEs, it is not just a technology solution but a gateway to opportunity, offering more accessible and faster access to credit, propelling the engine of national economic growth.

Source: The Business Standard | 17 December 2024