Optimizing Your End-to-End Loan Service Approach: Your Customers Will Thank You

Loan Origination Automation: A Business Case for Adopting Better Lending Technology

Positive customer contact is a must for optimizing your end-to-end loan service approach. This is particularly true for auto lenders looking to ensure loyalty in the form of repeat business. So how can auto lenders increase positive customer experiences? What’s the best method to find and retain buyers or leaseholders?

One of the most common methods lenders use to drive business can be established by looking at a series of customer touchpoints.

Optimizing Your End-To-End Loan Service Approach: Customer Touchpoints

A touchpoint describes an interaction between a consumer and a seller of any type. Touchpoints vary according to which stage the customer is at in their journey.

With auto lending, initial touchpoints are found on websites, social media apps, ads, referrals, or in person. For example, a consumer may see an ad on Facebook that piques their interest. This is the first touchpoint. The second might be when that same consumer responds to the ad by confirming interest in a specific vehicle and submitting an application. This could occur at a dealership or from any location, and interactions could take place via text, email, or voice.

Other initial touchpoints include company blogs, customer reviews, social media, digital ads, and referrals.

Additional touchpoints happen after approval. Buyers may be asked to complete a customer satisfaction survey or a CSAT. They also gain access to a lender-managed vehicle-related community forum and virtual newsletters.

It sounds like a lot of work, doesn’t it?

Dealers and lenders expend a tremendous amount of effort to ensure their customers have positive buying experiences that lead to repeat business. Yet, few lenders are fully equipped to manage all touchpoints involved in end-to-end loan processing.

What Are the Challenges Lenders Face?

The devil is in the details. To properly consider customers’ needs and improve their experiences, a lender must eliminate information silos. Silos cause bottlenecks and are one of the most common pitfalls that occur when lenders manage their end-to-end loan service approach in-house. No lender intentionally creates information silos. Rather, they emerge when information is prevented from being shared between different groups or departments within an organization. This often results in duplication of effort, redundant roles within an organization, and other inefficiencies. The more access is restricted, the greater the chance of faulty decision-making and a failure to meet goals.

When seeking to gain and retain new business, the ultimate goal is to optimize your end-to-end loan service approach by offering better customer experiences. When a lender attempts to manage their core business processes and all of the touchpoints within the end-to-end loan service, there’s a good chance that they’ll lose focus.

Lenders have different teams and systems for handling different processes. For example, one team might handle originations while another handles servicing, with each having its own unique system for storing and sharing information. The exchange of information between these two teams can result in delays, especially if their systems aren’t compatible.

These two unique teams and systems are siloed.

The problem with silos is that the two systems aren’t synchronized, and information can’t pass easily between them. When this involves an outsourcing partner, it can add to the communication difficulties.

The defi end-to-end platform (with outsourcing for certain servicing phases) eliminates these siloes by allowing all stages of the lending lifecycle to exist on a single platform.

Optimizing Your End-To-End Loan Service Approach for Better Customer Experience

A key goal of every lender is to improve the customer experience. When optimizing end-to-end services, the objective is to streamline the process to speed up every aspect from application to the final disposition of the vehicle.

Two options exist for optimizing end-to-end loan service: Handle these services in-house, or outsource certain services to a third-party provider. Both approaches involve digitally transforming the process.

  1. Lenders can choose to purchase loan origination software, a fairly straightforward option that involves using software to manage decision-making, underwriting, and all stages of disposition. In this case, it means that a loan’s lifecycle is wholly controlled in-house by the lender.
  2. The second alternative involves engaging an outsourced third party to maintain and operate the software and its processes. Using software that helps handle all aspects of the lending process, the dedicated team utilizes the platform to enable the progression of approvals, payments, collections, repossessions, or end-of-lease remarketing of used vehicles.

When an outsourcer manages the process externally, every detail of the customer experience flows through the system, led by a trained team of auto lending experts. While developing an in-house team to maintain new software may seem like the simpler option, it tends to lead to more silos and delays. Additionally, training existing or new staff for this task will take time and additional expense. When lenders choose an in-house solution, though their software may be upgraded, improvements often progress in a piecemeal manner.

To fairly evaluate these two end-to-end loan service approaches, costs must be considered for both. So let’s compare in-house processing with outsourcing to gauge where savings are most likely to occur.

In-house processing offers the following potential savings:

  • Lenders decide how much to spend on hardware, software, and staff to stay under budget.
  • If lenders already have sufficient in-house loan servicing staff and programmers, they may maintain and retrain staff cost-effectively.
  • If lenders typically have the same loan volumes year after year and rarely scale up or down, sufficient training time may be scheduled to coincide with slower periods.
  • Lenders with an efficient end-to-end loan service approach may only require upgrades to further improve response and processing time.

What do outsourcing options offer?

  • Lenders need to purchase fewer hardware and software licenses to manage auto loans.
  • Third-party providers bear the brunt of costs related to hardware maintenance, depreciation, and software patches.
  • There’s no need to hire an in-house programmer to create proprietary auto loan servicing software.
  • Lenders spend less time and resources hiring and training loan servicing staff.
  • Results in fewer wasted resources when loan volumes are low.
  • The entire auto loan servicing system is more efficient as information silos are eliminated, making it easier for borrowers to schedule and make payments on time.
  • Account closeout is a fast and efficient process, meaning that lenders can quickly change titles or liquidate vehicles before incurring steep storage costs.
  • Greater efficiency and streamlined workflows allow lenders to run a lean business with lower overhead costs.

Lenders should carefully assess their assets, budgets, and timelines to decide which method best suits their needs. Both in-house processing and outsourced auto loan servicing can be viable and cost-effective options for lenders.

Details to Consider When Optimizing

In-house processing costs can fluctuate depending on factors like loan volume, budget, and staff turnover rates, along with hardware and software maintenance. The cost of an in-house auto loan servicing process may vary as well, being low one year yet higher than anticipated the next. Depending on economic conditions, lenders could experience lower or higher loan volumes than usual, forcing them to downsize or hire more staff—a potentially costly process.

Outsourcing end-to-end loan servicing removes much of this financial uncertainty, with a set contract with agreed-upon rates. This set fee helps lenders budget accordingly and eliminates unexpected costs related to servicing hardware and maintaining software.

The advantages of both systems depend on a lender’s needs. When a cohesive, high-functioning in-house system simply requires an upgrade, adding new software may be a sufficient solution. In other cases, managing optimization in-house may work out to be less effective, so outsourcing would be the better option. With either choice, optimizing your end-to-end loan service approach will help lenders achieve the goal of making customers happy. Satisfied customers are repeat customers. Problem solved.

Getting Started

defi SOLUTIONS provides end-to-end auto loan servicing solutions for auto lenders, banks, credit unions, and fincos. Our streamlined, efficient end-to-end loan service approach and customer care services effectively manage auto loans while keeping overhead costs as low as possible. If you’re interested in outsourcing your loan servicing process, contact our team today or register for a demo.

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