Large lending institutions often have personnel dedicated to analytics. These professionals have backgrounds in statistics, knowledge of SQL query language, and can mine volumes of data for insights to improve lending performance. Smaller lenders rarely have such luxury. Often, analytics for smaller lenders is limited to an employee who has Excel skills, knows how to download data from the lending system, summarize a few key metrics for the month or quarter, and produce a report for the executive team.
Configurable Analytics for Smaller Lenders
Modern loan origination solutions have removed analytics disparities between large and small lending firms. Today, configurable analytics for smaller lenders is tightly integrated with loan origination software. No need to incur the expense of custom integration of an “add-on” analytic tool. No need to learn SQL. No need to rely on a single person to conduct the analyses. When analytic tools are tightly integrated with a loan origination software, configuration menus let lending professionals explore the data and create dashboards and reports relevant to interests of underwriters, loan officers, funding, and executives.
Once configured, these self-service reports can be generated on-demand, updated with the latest analyses to quantify lending performance. Even though reports summarize volumes of lending data, employees can easily drill down to obtain view the details on individual loans.
Integrated, configurable analytics give smaller lenders detailed insight into two of the most important areas of their business: Loan origination processes and portfolio performance.
Analytics for Loan Origination Process Improvement
Modern loan origination solutions give lenders loan origination process metrics that identify areas for improvement. They also let lenders track historical and developing trends in support of continuous process improvement. Analyses of loan origination processes can:
- Calculate weekly, monthly, quarterly, and yearly loan volumes to help in resource planning and staffing;
- Rank loan sources—dealers, direct, mobile, to determine where to invest future marketing efforts;
- Identify average response times based on the credit tier, dealership, or channel.
- Determine which underwriters are the most/least efficient in handling subprime applications and see if productivity correlates with years of experience;
- Explore any unique applicant attributes or deal structures that correlate with loan bookings, in comparison to loans that were not captured; and
- Uncover manual underwriting steps that delay decisions and implement decision rules or automated calls to cloud-based lending services to eliminate those delays.
Analytics help smaller lenders increase their productivity and loan capture ratios while monitoring every step of the loan origination process,
Analytics for Portfolio Performance
Configurable analytics can be equally powerful in helping to understand portfolio performance and the lending decisions that drive it. Every lender needs to balance risk and profit. Portfolio analysis lets lenders adjust their credit policies continuously to reduce risk and maximize profitability. Detailed loan portfolio analysis can reveal:
- Applicant attributes—dealers, models, LTV, PTI, etc.—that strongly correlate with delinquencies and defaults. Using this insight, lenders can fine-tune credit policies and modify lending decisions to minimize future risk;
- Identify borrowers who are likely to become delinquent and proactively offer them options to avoid delinquency; and
- Determine if any particular underwriters are especially skilled at structuring profitable loans and help other underwriters learn from their knowledge.
Loan portfolios hold a wealth of insight for lending professionals equipped with the right analytic tools and disciplined enough to conduct formal portfolio analyses regularly.
Analytics for Smaller Lenders: Configurable and Powerful
Fully-integrated, configurable analytics let smaller lenders realize the same benefits as financial firms with full-time in-house analytics professionals. With analytics, loan origination processes can be carefully monitored to identify areas of efficiency and inefficiency. Portfolio analysis is equally important in reducing risk and improving profitability. For smaller lenders, analytics is essential for maintaining an efficient and profitable lending practice.
defi SOLUTIONS‘ loan origination and analytics software experts welcome the opportunity to discuss how we can help improve process efficiency and portfolio performance. Take the first step toward realizing the benefits of a fully-integrated, configurable analytics solution by contacting our team today or registering for a demo of defi LOS.
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