Loan origination best practices benefit both consumers and lenders. To implement loan origination best practices, you must ensure your lending software is the most up-to-date. Technology improvements facilitate better processes and lending decisions. Today, modern cloud-based lending platforms are helping credit unions and banks implement best practices more efficiently than ever before.
Modern lending platforms support the entire lending cycle—from loan origination to final payment—to provide continuity of information and processes. For credit unions and banks struggling with poorly integrated or aging software, here are key ways that a modern lending system facilitates loan origination best practices.
Convenience Is Prioritized
Today’s consumers have become accustomed to transacting business via mobile devices—loan origination shouldn’t be different. Loan origination via a mobile device positively impacts both consumers and lenders. Consumers can initiate a loan or lease application anytime, anywhere, and lenders benefit from a completely digital application that accelerates decisions and reduces operational costs.
Whether they’ve been researching vehicles for months and are now ready to visit the dealer, found the classic car of their dreams in an advertisement, or are scrambling to get a much-needed second vehicle, consumers can apply for a loan in minutes.
Key capabilities that make it convenient for consumers to apply for a loan or lease include:
- A user-friendly design with a logical presentation of prompts based on loan type and previously-entered information to seamlessly guide the applicant through the process.
- Information verification functions and services that minimize incorrect information that could delay application review and approval.
- The digital capturing of documents via the device’s camera to eliminate delays associated with paper applications.
From the perspective of today’s consumers, mobile loan or lease origination is expected, generally preferred, and therefore considered a best practice. Without that capability, lenders are missing countless lending opportunities.
Mobile Loan Origination Facilitates Underwriting Efficiency
Loan origination via mobile devices delivers all the required information to the lender in a digital format. It allows banks and credit unions to eliminate manual underwriting steps through the utilization of automation capabilities, which enable lenders to quickly respond to loan or lease applications and boost their chances of successfully capturing opportunities.
In a modern lending platform, configuration via a comprehensive set of menus is the best practice for tailoring the software to the lender’s specific needs. With configurable menus, programming skills are not needed to bring a high level of automation to the loan origination process.
|Benefits of Lending Platforms with Configurable Menus|
|Custom Dashboards||Develop custom dashboards that display relevant loan or lease information based on the underwriting step of line-of-business responsibilities.|
|Data-Driven Workflows||Create data-driven workflows that support a consistent yet flexible loan origination process that reflects the lender’s unique practices.|
|Auto-Structuring Rules||Establish auto-structuring rules that automatically modify loan terms to match credit rules when applicants fail initial credit reviews.|
|Innovative Services||Integrate innovative lending services that improve process efficiency and reduce lending risk.|
Compliance is a continuing concern for any lender. Implementing compliant practices and proving compliance can often be challenging. A modern lending platform that configures the lending process to the lender’s needs solves this problem by automatically maintaining a record of modifications made. This makes it easy to demonstrate which policies and processes were in place and determine when they were changed per new or updated regulations.
Cloud-Based Lending Services Enhance Decision Confidence
Credit unions and banks should take advantage of the ever-increasing number of cloud-based information sources that accelerate loan decisions and reduce risk. These innovative services significantly enhance a lender’s ability to respond to loan requests faster and more confidently. The table below highlights some of the more innovative sources helping credit unions, and banks reach a new level of loan origination best practices.
|Service||Best Practice Benefit|
|Alternative consumer data sources||Give lenders a more accurate understanding of an applicant’s financial standing and recent credit trends. Boost loan opportunities for applicants with “thin” credit records.|
|Fraud detection and information verification||Identify applications with a high probability of inaccurate information provided to improve the chances of getting approved for a loan. Avoid high-risk applications likely to lead to defaults.|
|Machine learning underwriting techniques||Calculate risk-adjusted terms in a matter of seconds. Apply sophisticated algorithms to a wide range of consumer data to increase lending opportunities without increasing risk.|
Modern loan origination platforms make it easy for credit unions and banks to incorporate these and many other cloud-based information sources without time-consuming programming or customization.
Best Practice: Use Analytics to Gain a Better Understanding of Lending Efficiency and Opportunity
Analytics plays a key role in helping credit unions and banks improve nearly every aspect of their lending practice. Learn more about the value of analytics in our quick read: 3 Auto Finance Analytics Innovations.
Boost Loan Origination Best Practices With a Modern Lending Platform
A modern lending platform supports mobile applications, provides versatile automation capabilities, and offers innovative cloud-based lending services. These capabilities can significantly boost the ability of banks and credit unions to implement loan origination best practices that address the needs of today’s consumers.
If you are looking for an industry-leading loan origination and servicing provider that is firmly grounded in loan origination best practices, look no further than defi SOLUTIONS. Our defi MANAGED SERVICING provides a single hub, digital interactions, and intelligent virtual assistants to bring everything together.
With defi MANAGED SERVICES, you can ramp up a new or beef up your existing back office operation with white-label, outsourcing services for:
- Inbound call handling and fulfillment.
- Return mail processing.
- Payment processing.
- Collateral management title work.
- Cash management.
- Back-office payment processing.
- Default management (collections, bankruptcy, repossessions, recovery).
- Lease maturity management.
defi MANAGED SERVICING uses artificial intelligence (AI) and Contact Center as a Service to boost operations and processes related to auto loans, leases, and leased vehicle dispositions, reducing budgetary expenses and improving customer service.
defi SOLUTIONS is redefining loan origination with end-to-end software solutions that enable lenders to automate, streamline, and deliver. Borrowers want a quick turnaround on their loan applications, and lenders want quick decisions that satisfy borrowers and hold up under scrutiny. With defi MANAGED SERVICING, lenders can improve operations and processes related to auto loan servicing, leases, and the disposition of leased vehicles, cutting expenses through automation and outsourcing services. For more information on what to look for when considering back-office outsourcing for credit unions and how we can help, Contact our team today and learn how our cloud-based loan origination products can transform your business.