auto loan servicing

IS IT TIME TO UPGRADE YOUR AUTO LENDING PLATFORM?

The defi Team defi INSIGHT, defi LOS

auto lending platform

 

If you can’t remember when your current auto lending platform was originally implemented, it’s probably time to consider an upgrade. Technological improvements in recent years deliver functionality that dramatically improves loan origination efficiency, lowers overall processing costs, and supports well-informed lending decisions. To help you determine if you are overdue for an auto lending platform upgrade, we discuss three key capabilities we believe are required to successfully compete in the current market. Any one of these could provide a compelling reason for an upgrade. Together, they provide overwhelming reasons to move to a modern auto lending platform.

Upgrade Non-Cloud Auto Lending Platforms

Cloud computing has radically transformed the way businesses worldwide manage IT infrastructure and software. In the cloud computing model, the costs associated with the procurement, installation, and management of servers, storage, and networks can decrease significantly. Utility costs for electricity and cooling decline. Physical space devoted to IT infrastructure can be reduced or reclaimed for more productive uses. IT professionals focus less on infrastructure management and apply their time and talents on activities that improve efficiency.

 

Cloud service providers supply and manage IT infrastructure more cost-effectively than an individual lender. Cloud also offers greater flexibility, allowing a lender to use only the computing resources they need and to easily scale to match cyclic demand. For banks, credit unions, fincos, and regional lenders, upgrading to a modern, cloud-based auto lending platform lowers costs and opens up opportunities in today’s lending environment.  

Integration with Services

A cloud lending platform provides easy integration with an ever-growing range of cloud-based services, improving efficiency and supporting well-informed lending decisions. Unlike legacy lending platforms that require extensive custom development to integrate with new fintech services, a cloud-based lending platform provides quick integration via configuration menus. Many of these fintech services have been developed in response to lending needs that were non-existent ten years ago.

 

  • Alternative Credit Data allows lenders to use a range of non-traditional data such as monthly utility, rental, and cell phone payments, change of address, and employment history, in addition to traditional credit scores to provide a better picture of an applicant’s financial position.
  • Trended Credit Data allows lenders to review up to 30 months of credit card payments to obtain a more detailed and accurate assessment of a borrower financial strength and spending habits.
  • Fraud Analytics automatically reviews loan applications with the goal of identifying misrepresented income or employment information, false identity, inflated collateral valuations, or straw borrowers— likely predictors of loan default.
  • Compliance and Risk services ensure lenders comply with individual state and federal interest rate regulations and correctly determine loan calculations during origination.

These and other cloud-based services that support paperless loan applications and contracts, employment verification, and accurate vehicle valuations let lenders process auto loan applications more efficiently, with greater confidence. Legacy auto lending platforms lacking these capabilities put lenders at a disadvantage, providing all the more reason for an upgrade.

Analytics Measures Efficiency and Profitability

The wealth of data generated throughout the lending cycle is a giant resource for lenders who have the proper analytic tools. Unfortunately, accessing data in legacy systems may require a detailed understanding of the data schema, the ability to regularly download the data into a CSV file, and the skills to sort, filter, and create reports that provide the required level of summary. That includes details for underwriters, funders, and management. If you’re a large lending institution you may have database specialists in-house. If you’re a smaller lender, a database specialist would be a welcome luxury.

 

Modern auto lending platforms provide fully-integrated analytic capabilities that allow lending professionals to easily create and customize the reports needed to measure process efficiency and lending profitability. Out-of-the-box, self-service reports summarize underwriter productivity, identify process bottlenecks, or provide performance metrics on nearly every aspect of the loan origination process via configurable dashboards. You’ll be able to review portfolio performance for any lending tier or market segment; identify factors that correlate with delinquencies and defaults; and drill down into reports for granular understanding of loan details.  

 

When analytics are fully integrated with the auto lending platform, business professionals can easily explore the data they need to evaluate current performance and historical trends that can influence lending strategies and credit policies. This insight can then be applied to improve process efficiency, modify credit policies to reduce risk, and develop market strategies to expand lending opportunities.

Is It Time to Upgrade?

Compare your current auto lending platform to the three major capabilities described above. If the costs of maintaining your on-premises IT infrastructure continue to increase, your auto loan platform lacks the services needed to successfully compete in the current market, or the ability to analyze the efficiency of your loan origination process and profitability of your portfolio is beyond reach, it’s time.

 

 

Getting Started

defi SOLUTIONS provides a cloud-based auto lending platform pre-integrated with a wide range of cloud services to enhance efficiency and profitability. We welcome the opportunity to design an auto lending platform upgrade that makes sense for your organization. Take the first step by contacting our team today or registering for a demo of defi LOS.

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