With technology developing rapidly, automation and cloud-based computing are changing the way businesses work—and driving better outcomes. Innovative automation is also driving changes in loan processes, helping lenders simplify consumer loan servicing.
Borrowers want convenience, which requires moving from paper-based processes to real-time digital servicing capabilities. Balancing borrower expectations against compliance and risk management requirements can be challenging, but there are ways to ease the burden off you and your team.
Common Challenges Auto Lenders Face and Tips to Overcome Them
The finance industry has become increasingly difficult for lenders. Borrower volume has skyrocketed, compliance regulations are getting stricter, and there simply aren’t enough resources to manage all aspects of loan servicing in-house. The following three criteria examine issues that lenders often face and tips for simplifying the process.
Compliance Needs and Core Competencies
In the last few years, consumer loan servicing has become tricky work. Lenders are now required to file loads of paperwork in various formats to state and federal compliance regulators. These formalities can be burdensome and time-consuming if you don’t have the right resources to complete the task. Taking help from experienced loan servicing professionals will ensure that all the necessary paperwork is filed on time and is 100 percent compliant.
Amid all this additional work and regulatory obligations, lenders can’t focus on core competencies. Growth is difficult when you’re constantly dealing with bulk information day in and day out. Taking non-core activities to a specialized BPO service provider like defi SOLUTIONS can ease the load and allow you to focus on your customers as well as business expansion.
Loan Servicing Life Cycles
In a world where consumers expect an immediate confirmation of transactions, the loan servicing process of many lenders falls short. Being unable to respond quickly to a loan submission drives consumers to competitors, harms your reputation, and ultimately reduces revenue.
From end-to-end, loan servicing is a drawn-out system. Beginning with the down payment, ending with the payoff, and all the administrative upkeep in between is tedious. The paperwork alone is perhaps one of the biggest hindrances to a fast and efficient operation. Forms and applications, mailing, faxing, printing, and handling on the receiving end all prolongs the loan origination life cycle. Not to mention, it’s more likely there will be a discrepancy in the data.
Lenders who are still set back by software that doesn’t support digital consumer loan servicing limit their ability to compete in today’s market. In addition to losing lending opportunities and efficiency, operational costs will be greater, and profitability will be lower.
Leading-edge loan origination and service solutions tackle this problem in three ways:
- Borrower information is captured digitally via desktop and mobile UX to expedite the accurate entry of borrower details and allow digital images of required documents to be submitted throughout the process.
- They deliver offers with e-contracts capable of e-signatures for convenient review and acceptance of terms and conditions.
- Monthly payments, balances records,following up on delinquencies and virtually anything monetarily relevant processes in real-time at the click of a button.
Using loan software helps lenders make consumer loan servicing a fast, efficient process for everyone involved. From start to finish, defi’s seasoned professionals and top-of-the-line solutions will take on your loan portfolio volume with ease, enabling your business to speed up its transaction processing and earn more revenue.
Process Efficiency and Portfolio Management
Most lenders cannot provide an in-house team equipped with the breadth and depth of experience an established BPO service can. No matter the size of your business, situations will arise that could negatively impact your portfolio and overall performance as a lender.
A well-established outsourcing provider has the resources needed for better portfolio management. For example, many use predictive analytic tools to identify borrowers most likely to have issues making timely payments. An outsourcing provider can positively impact loan portfolio health by reaching out to borrowers before any indications of financial stress arise and providing options to remain current.
Lenders who judiciously apply the power of analytics to their consumer loan servicing process and portfolios see the following improvements:
- Simplified processes that reduce decision time and improve decision quality.
- Greater productivity and cost-effectiveness for loan origination, especially when processes are fine-tuned to accommodate market changes or new regulations.
- Better correlation of risk and effort to yield savings in processing time and costs.
- Early detection of risk potential and intervention in subprime loans.
Lenders can achieve optimized consumer loan servicing and portfolio management by working with an outsourcing provider who offers innovative technology, experienced servicing agents, and best practices that focus on efficiency and compliance.
Loan Process Improvement Made Easy
Outsourcing lending processes can increase quality, productivity, and improve the consistency of products and services. Auto lenders can take advantage of the innovative technology and forward-thinking that defi SOLUTIONS has to offer. Choose a provider that delivers the level of service that today’s borrowers expect.
defi SOLUTIONS is a leading provider of auto lease and loan servicing and portfolio management outsourcing, as well as configurable software solutions for lease and loan origination, servicing, analytics, and reporting. If you’re struggling with the limitations of your consumer loan servicing in-house, take the first step in realizing the benefits of working with an experienced outsourcing provider. Contact our team today or register for a demo.