New Era in Microcredit Solutions For Latin America

Read the PDF: How Kata Software Streamlined Credit Origination with DecisionRules

About Kata Software

Kata Software is dedicated to making financial services accessible to everyone in Latin America. Specializing in mission-critical software for financial institutions, Kata Software focuses on credit origination flows, particularly microcredit. With a presence in Mexico, Colombia, Peru, and El Salvador, Kata Software is committed to its ambitious goal of enabling its clients to grant 250 million financial solutions between 2022 and 2025.

Kata Software’s ideal clients are financial institutions offering credit and microcredit products that seek to innovate their management processes. These institutions benefit from Kata's expertise in microcredit origination, credit approval, and collection, all of which are optimized through cutting-edge technology like DecisionRules.

Insights from the Kata Team

We spoke with David Anacona, Technical Leader for the implementation phase within the customer success area, and Deibi Cortés, the Product Onboarding Consultant at Kata Software, about their experience using DecisionRules.

David oversees the design, review, and technical process improvements across various projects. His role extends to providing crucial support during the implementation phases, ensuring that each project leverages the full potential of DecisionRules.

Deibi is responsible for defining the logic and creating rules within DecisionRules. He also manages the process of change management, ensuring that the system adapts smoothly to evolving business needs.

Deibi Cortés

Product Onboarding Consultant

"When deployed on the platform, the user-friendly interface and the ability to integrate through APIs make DecisionRules an ideal tool to optimize processes. In addition, the tool offers functionality to test rules, facilitating debugging and streamlining during implementation"

How Kata Software Uses DecisionRules

Kata Software utilizes DecisionRules to optimize credit origination, management, and collection processes for various companies. DecisionRules allows Kata Software to define and implement rules for various financial products swiftly and efficiently, enabling financial institutions to deliver better services to their clients. The implementation of DecisionRules has been particularly beneficial for the following prominent projects: 

• Promujer: For this case, DecisionRules is used to implement the definition of loan products, using input parameters such as income, expenses, economic activity, and whether the client is new. Based on these criteria, DecisionRules identifies the credit product that best fits the client's profile.
• Artec: For this client, DecisionRules was employed to create rules to define vehicle loan product definition. Helping to standardize vehicle loan products, establishing eligibility criteria, and ensuring compliance with regulatory requirements. 

Deployment Process

The entire process at Kata Software, from deployment to rule creation and beyond, was fast, taking a total of 3–5 days. Following the initial setup, the team spent a few days defining the rules for each environment. The final deployment to production was completed within approximately two more days. 

Designing individual rules varied in time depending on their complexity, it took the team anywhere from 2 to 6 hours per rule. Overall, the process was faster than anticipated, allowing the team to validate and move rules to production seamlessly.

Measuring Success

Kata Software measures the success of using DecisionRules through several key metrics:

1. Loan Issuance: The primary measure of success is the number of loans disbursed each month. A steady or increasing number of disbursements indicates that the system is effectively supporting loan origination and approval processes.

• Since the implementation of DecisionRules, the Promujer project, overseen by Kata Software, has effectively disbursed 83% of solicited microcredits.

2. Microloan Processing Efficiency: The average time required to process a loan from application to disbursement is a critical metric. A reduction in processing time reflects greater operational efficiency, directly impacting customer satisfaction and business growth.

• From the beginning of using DecisionRules, the number of applications processed increased more than 100 times. 

3. Credit Risk Indicators: Kata Software monitors month-over-month changes in delinquency rates as a key performance indicator. A decrease in delinquency rates over time demonstrates the effectiveness of DecisionRules in improving lending decisions and risk management. One way this is measured is through the tracking of active credits, which are classified as non-delinquent. 

• The increase in the percentage of active credits rose from 13% at inception to an average of 32% within six months. This serves as a strong indicator of success in reducing risk and fostering more sustainable credit performance.

Looking Ahead

Kata Software plans to expand the use of DecisionRules across new projects, particularly with larger clients who may take a more autonomous approach to rule management. While the tool is selectively integrated into existing projects based on specific needs, its success so far suggests a bright future for DecisionRules in Latin America's financial sector.

Hector Obregon

Co-Founder

"Decision Rules has enabled us to reduce the implementation times of our Kata Engine origination platform by 20% to 30%. Thanks to the flexible and agile definition of rules, we are able to significantly reduce the volume of code required for each implementation. We have also reduced maintenance costs and complexity, benefiting all our customers."

By empowering financial institutions with advanced rule management tools like DecisionRules, Kata Software is not only enhancing operational efficiency but also making financial services more accessible to underserved populations across Latin America.