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 (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:

: Our LMS isn’t just a platform, it’s a living entity. It constantly learns and adapts, ensuring your operations are always future-proof.

: 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.

: Dream big, lend big. Synoriq’s robust infrastructure handles any loan volume with ease, so you can focus on growth, not limitations.

: Navigate the ever-changing regulatory landscape with confidence. Synoriq’s LMS stays laser-focused on compliance, giving you peace of mind.

Great user : Forget clunky interfaces and frustrated borrowers. Synoriq champions user-friendliness and mobile-first design, making lending a breeze for everyone.

: 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:

✅ ,+ AUM serviced: Empowering leading lenders across the spectrum.

✅ + : Trusted by the best in the business.

✅ + : 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.