Our Viewpoints

Our Viewpoint

Using Technology to Enrich the Consumer Borrowing Experience

September 10, 2015

The overall value of a lender's loan products and services is determined by many factors, including speed of service, loan policies, flexibility, ease of access and more. Creating and executing these lending components properly can greatly enhance the possibility that consumers will want to do business with your institution, and lending technology can play a major role in making this happen. Lenders that use antiquated technology and lending practices tend to provide slower service to borrowers, have less consistency in their processes and offer fewer avenues for consumers to do business with them.

Modern lending technology, such as an end-to-end loan origination and processing system, can help lenders improve many aspects of their lending operations in a variety of ways:

Automated decisions – Using a loan origination platform that can automate loan decisions is a big factor in increasing the speed of service and borrower satisfaction. Different lenders have different comfort levels when it comes to automated underwriting, but most of them would agree that some percentage of loan applications can be safely underwritten using rules based on solid criteria such as borrower credit score, debt to income ratio, age of credit file, and income. The best borrowers, those with excellent credit, are usually the easiest to underwrite. Even those lenders that are reluctant to auto-underwrite all of their applications will find it possible to decision approximately 25 percent of their applications in an automated fashion, and in doing so, they can deliver fast service to their best borrowers.

Increased processing efficiency – Lending software makes it possible for managers to oversee the flow of applications more efficiently. This is especially true in financial institutions that use a centralized lending strategy where applications flow to a central point for analysis and underwriting. Work-flow management is a key advantage of using a loan origination system, and it helps to keep speed of service high, while helping keep labor costs low.

Servicing multiple application channels – With modern lending software, lenders can increase access points for consumers to use. For example, effective lending software allows the lender to process applications through multiple channels with the same speed and consistency. This includes applications originated through a website, smartphone, tablet computer, call center, branch office or from a third-party dealer or merchant. Opening up new channels that offer fast, consistent service increases the number of customers who can find and take advantage of a lender's services

Process refinement – Implementing a new loan origination system gives the lender the opportunity to review existing policies, procedures and documents. Often, these have been developed internally over a period of years and sometimes contain processes, documents or requirements that are out of step with today’s lending needs. Reviewing these in the context of a new loan processing platform can result in important improvements being identified and implemented.

Interfaces with other systems – Loan origination systems provide the lender with the ability to interface with other in-house or third-party systems to increase application flow (as from dealers and merchants), enhance loan application processing and transfer information to core systems and loan servicing platforms.

Effective lending software can help lenders build value across the entire lending platform, enabling them to better compete with other institutions, both large and small, in regards to service speed, channel access, automation, and consistency. Lenders that are burdened with manual or obsolete systems will see great improvements by effectively implementing a technology platform specifically designed for loan origination. This technology investment typically generates a clear and measurable return in terms of increased loan volume, increased speed of service, reduced errors, and increased processing efficiency. In today’s competitive market, lenders with antiquated systems will be at a significant disadvantage.

D+H helps financial institutions of all sizes better serve their customers across multiple channels with its market-leading, end-to-end lending solutions. This enables banks and credit unions to do more lending with less—and to exceed the ever-increasing needs and expectations of borrowers.

Author

Marianne Franks
Lending Solutions Marketing Manager, D+H

https://www.linkedin.com/in/mariannefranks

Marianne Franks is a lending solutions marketing manager for the consumer lending solutions at D+H. She has been part of the D+H marketing team since 2008 and has gained extensive insight into the consumer lending industry. Prior to joining D+H, Marianne worked for over 25 years in consumer and commercial lending at financial institutions in Oregon and California.

Marianne Franks