End to end lending process

CRITICAL POINTS IN THE END-TO-END LENDING PROCESS AND HOW IT’S CHANGING

The defi Team defi INSIGHT

Critical Points in the End-To-End Lending Process and How It’s Changing

The manual financing processes of the 20th century made lending both difficult and costly. Today’s financial technology (fintech) has helped relieve lenders of this burden, decreasing delays and largely eliminating human error. Integrated into a lender’s digital platforms, such decision-making technology uses artificial intelligence (AI), machine learning, and data analytics to enhance loan originations and automate decision-making. 

Today’s personal finance industry uses technology to simplify applying for a loan while also cutting approval times down to minutes. Cloud-based software has provided lenders with greater flexibility while allowing them to easily scale their operations as needed. Automating the end-to-end lending process makes it easier for borrowers and lenders alike by making operations more efficient, speeding decision-making, and enhancing customer experience.

Steps in the End-To-End Lending Process 

Fintech companies have been integral in automating the end-to-end lending process, leveling the playing field for lenders of all sizes. Many consumer lenders now rely on digital lending platforms that make the key points within the process easier and simpler for consumers while also enabling better vetting of borrowers. With these new digital tools, automating most of the end-to-end lending process, including loan originations, underwriting, risk assessment, loan servicing, and collections is possible.  

Loan Originations

Arguably nothing is more important to automate in the end-to-end lending process than loan originations. It includes everything from the customer’s initial loan application to the point at which funds are dispersed, or the loan is declined. As such, digital origination platforms need to be simple to use for applicants while also being easily configurable for lenders.

Origination software should offer:

  • Automated approval process that backs human decision-making with data. 
  • Automatic email or text communications sent out when a specific event occurs or is about to happen, such as past-due notifications, payment reminders, interest rate changes, or other triggers.
  • Data analysis capabilities that enable more reliable credit scoring. 
  • Forms that are specifically tailored for the loan product and which can be easily adjusted to meet regulatory requirements.
  • Online applications that are easy to use, allowing borrowers to edit and verify their details quickly.

Above all, loan origination platforms must be up-to-date, user-friendly, and flexible. 

defi’s Originations Solutions

In the last financial quarter of 2021, defi SOLUTIONS announced its cutting-edge originations system, which takes advantage of new technologies and the latest digital architecture. As a third-party partner in the end-to-end lending process, defi’s originations platform looks to meet the needs of borrowers while making decision-making easier for lenders.

Third-party partners assisting with loan originations should have:

  • A history within the consumer lending sector with an established reputation that can be confirmed. 
  • The capabilities to rapidly implement and customize their loan origination platform for a lender. 
  • A configurable digital platform that meets a lender’s specific needs.  
  • Integrated digital solutions that allow access to sources of financial data to ensure lenders make well-informed decisions. 
  • Strategies for reducing operational expenses and improving efficiency. 
  • Technology that enhances lenders’ functionality while enabling future scalability. 

With the consumer data gathered in the loan origination process, defi can assist lenders in determining risk. 

Underwriting and Risk Assessment

Using advanced machine learning algorithms, automation used in underwriting loans helps lenders better evaluate and manage risks. This reduces the chance of future defaults, which in turn improves yield within a lender’s portfolio. As each lender often has its own criteria for credit scoring, however, such automation also needs to be readily customizable. 

In order to approve, deny or send back a loan application, these automated systems analyze the huge amount of data gathered during the application process. Even though humans still need to make the final decision, automation helps provide decision-makers with the data and insights to make informed decisions.  

defi’s Underwriting and Risk Assessment Solutions

Data-centric solutions are particularly useful when underwriting a loan. The amount and quality of data available today helps lenders make better decisions, though this requires that this data be incorporated into the underwriting process. Lenders can more easily verify identity and consider alternative credit information by utilizing the available commercial, customer, and industry data sources. 

Automating underwriting services allows lenders to:

  • Create tallies for applicants that offer precise and comprehensive information.
  • Lower the risk of identity fraud. 
  • Mitigates risk that could jeopardize compliance efforts. 
  • Provide a record of communications between lenders and their customers that can be easily reviewed. 
  • Set up loan terms that reduce risk for both the borrower and lender.

The services and data sources that are pre-integrated into a loan origination platform allow lenders to automatically access relevant data while underwriting a loan. Additionally, automating this portion of the end-to-end lending process helps lenders meet regulatory requirements by using hard data to drive decision-making.

Loan Servicing

Automating the servicing of a loan lowers costs and makes the end-to-end lending process run more smoothly. While tracking customer communications should be done throughout a loan’s lifecycle, collecting data on customer contacts during this period will help the lender retain customers. Automated servicing solutions should retain a detailed and easily accessible log of all a customer’s interactions with the lender, along with information like the borrower’s payment history.

Digital statements sent out automatically to a borrower are much less expensive to store while utilizing cloud-based databases also makes them more secure. Additionally, automatic updates by credit bureaus keeps lenders abreast of any changes to borrowers’ credit score. This allows lenders to offer additional add-on services that are relevant to their customers or to be able to mitigate challenging situations that could lead to default. 

defi’s Loan Servicing Solutions

The solutions defi offers for servicing allow lenders to automate many core functions while also providing expertise in managing customer relations. As a third-party provider of business process outsourcing (BPO) services, defi combines its expertise with intuitive digital tools to streamline lenders’ operations. 

The servicing solutions defi offers include:

  • BPO services that include customer care functions handled by defi’s experienced personnel allow lenders to deal professionally with complaints and fulfill customer requests. 
  • Handling customer accounts through the use of automated tools for workflow management. 
  • Managing accounts through the performance of closeouts, maintenance of general ledgers, posting payments, and sales functions.  
  • Overseeing functions like balloon payments, closing out leases, managing titles, and remarketing of vehicles for auto loans.

Having a holistic loan servicing strategy that includes BPO services makes the entire end-to-end lending process simpler for borrowers and improves your bottom line.  

Collections

When borrowers are notified about forthcoming or delinquent payments, they’re less likely to default on a loan. However, using automation to conduct this part of the end-to-end lending process allows lenders to keep abreast of accounts more efficiently and with much less human error. This also allows lenders to focus on growing their portfolios rather than collecting debts. 

defi’s Collections Solutions

When defi approaches automating default-related tasks like bankruptcies, collections, and repossessions, it does so with the support of several expert partners. Partnerships assist defi with providing lenders with services that include inspections, repossessions, vehicle grounding, and monitoring for bankruptcies and deceased borrowers. 

Future defi Solutions for the End-To-End Lending Process

The products and services that defi SOLUTIONS provides help lenders serve their customers throughout the lifecycle of a lease or loan. These end-to-end lending solutions satisfy borrowers by providing service quickly and efficiently while also enhancing trust between lenders and their customers. Able to supply hardware, software, systems, and support for business processes, defi helps lenders establish stronger relationships between lenders and their customers.As a trusted brand within the automotive and consumer lending sector, defi SOLUTIONS looks for ways to make the end-to-end lending process quicker, while helping lenders scale and speed their operations. Continuously innovating, defi looks to provide an increasing number of products and services to further simplify the end-to-end lending process. Along with their state-of-the-art origination and servicing platforms, defi does much more than just fintech. It also has the expert personnel to make the most of these digital tools with its BPO managed services. Offering flexibility with scalability in its solutions, defi gives lenders the tools they need to compete in today’s rapidly changing lending environment.

Getting Started

defi SOLUTIONS offers a total solution for a lender’s complete loan or lease lifecycle. Partnering with captives, banks, credit unions, and finance companies, defi’s market-leading solution helps lenders exceed borrower expectations. From digital engagement through the end-to-end lending process, defi sets new standards for flexibility, configurability, and scalability in originations and servicing (by your experts or ours). defi SOLUTIONS has the backing of Warburg Pincus, Bain Capital Ventures, and Fiserv. For more information, please visit www.defisolutions.com.

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