Automated bank statement analysis enables income estimation when underwriting users for digital platforms. Income estimation and classification are straightforward in the case of salaried borrowers whose bank statements clearly reflect the salary credited to them on a monthly basis. 

However, in cases where income sources aren’t fixed and payment cycles unpredictable, automated bank statement analysis might not be enough to determine the exact gross, net, and net disposable income – all of which are necessary to peg the affordability of a loan or a borrower’s ability to repay it. What we need in these cases is an intelligent bank statement analyser . 

How FinBox BankConnect conducts income classification

FinBox BankConnect has been designed to compute comprehensive income classification for salaried and non-salaried borrowers. Here’s how it works:

1. Keyword analysis

Our bank statement analyser follows the industry-wide practice of performing keyword analysis for words denoting income like ‘salary’ or ‘income’ in the transaction note. 

2. Credit profile analysis

BankConnect performs a holistic credit profile analysis, even without obvious and regular transactions. It determines the top sources of credit in terms of frequency, listing expressly the top five sources of such credits. This gives additional cues to the credit risk assessment teams about the borrower’s financial profile and whether they can comfortably pay the loan back on time.

3. Imputed income

Based on insights gleaned from the bank statement, BankConnect provides an estimate of the imputed income for non-salaried borrowers. The imputed income is determined by estimating the borrower’s gross income, then deducting expenses from this figure to arrive at the net income. 

It sharpens income classification for such borrowers further by evaluating the net obligations and fixed expenses to decide whether or not their net disposable income is higher than their net income. BankConnect considers all these factors to also recommend the ideal EMI amount for each borrower based on their affordability. 

Configurable computation 

Our bank statement analyser comes with a range of configurations that enable underwriters to adjust the leniency of logics used for income classification for non-salaried borrowers. They can also define the number of credit transactions that qualify as income.

Confidence score

FinBox BankConnect not only conducts an in-depth analysis of income for borrowers, but also gives a confidence score for the income classification of each profile. The score ranges between 50% and 100% – an expression of our confidence level in BankConnect’s ability to categorise income sources. This adds objectivity to the analytics and helps lenders make more precise decisions based on the parameters presented by BankConnect.

Advanced risk assessment for the non-salaried is more critical than ever

In the wake of the great resignation and quiet quitting, more and more workers are seeking jobs in India’s booming gig economy . They are trading the stability, security and clarity that comes from being payrolled for the freedom of working on their own terms – either as self-employed professionals, freelancers, or proprietors of their own business.

Even as their income patterns become more erratic, one thing doesn’t change – their financial needs. Small business owners, non-salaried gig workers, freelancers and their ilk still need financing solutions. But the challenge is, it’s extremely difficult to assess the risk presented by such borrowers – their bank statements do not reflect plainly their income source or amount. 

Automated and intelligent bank statement analysis makes underwriting for non-salaried borrowers easier, faster, and more effective. It allows lenders to easily tap into this growing customer base and grow their loan books, bringing more borrowers into the fold of formal credit. The key here is to deploy a bank statement analyser that is advanced and modern enough to detect income sources and dynamically compute affordability even from non-conventional parameters. 

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