LOAN ORIGINATION LIFE CYCLE: HOW TO STREAMLINE IT BY GOING DIGITAL

Many dealers and lenders are on their digital lending journeys. For them, refining to best suit their unique end-to-end loan origination life cycle is the next step in the ongoing evaluation and improvement process. Digital tools can streamline the loan origination life cycle, starting with the application submission, followed by information verification, underwriting, application approval or denial, loan documentation, closing, and funding of the loan. Throughout this cycle, borrowers, lenders, underwriters, and loan officers are involved, ensuring compliance with regulatory requirements and facilitating a smooth transition from application to funding.

A single digital platform is valuable to enhance a lender’s capabilities and speed up the loan origination process. To improve the borrower’s experience, the latest digital loan original platforms combine:

• Speed 
• Ease 
• Value

Satisfied customers are more likely to return, resulting in business growth. In fact, according to a survey by J.D. Power, digital engagement is crucial to customer satisfaction with the financing process. 

Available Loan Origination Life Cycle Improvements

One of the most common problems facing lenders is information silos. Departments within the lender’s business structure may lack fluidity and ease of communication as lease or loan applications move toward approval. The result? Delays and confusion for staff and customers.

Using the latest, most robust platforms, communication between departments becomes seamless. Available data is consolidated and easily accessible. Team members automatically receive updates on an approval’s progression, and task delays are eliminated.

In this era of high consumer demand, the need for speed and accuracy increases. Lenders intent on growth opportunities should seek the most advanced platforms to serve buyers best. A quick, easy approval process will enhance loyalty, leading to repeat business.

A streamlined platform helps lenders keep current with the latest resources impacting buyer eligibility.

How Do Out-of-Date Processes Limit Non-Traditional Buyers?

In recent years, credit score resources have expanded beyond previously accepted forms of collateral. Credit ranking agencies have already incorporated this new data point. For example, TransUnion now considers consistent rental payments an alternate measure of predictive analysis for loan repayment likelihood. Additional alternative credit data can include:

Alternative Credit Data
✔ Banking information showing relationships and types of accounts	✔ Cell phone bills
✔ Utility records	✔ Alternative loan types (i.e., Buy Now Pay Later loan)
✔ Cable TV bills	✔ Rental payments

Borrowers who have yet to establish sufficient credit benefit significantly from alternative forms of loan qualification. If records such as those mentioned above reveal a strong payment history, lenders are empowered to attract more customers.

There are several benefits to adopting digital loan origination technology:

• Updated credit assessments are achievable through configurable platforms. With this upgrade, lenders can easily integrate new standards and services that increase the pool of qualified customers.
• Digital loan processing welcomes potential buyers who have been excluded under former standards and practices. 
• Employing updated digital qualification methods capable of analyzing 90-day payment rates on credit cards, auto loans, or rent deepens the lending market. With the confirmation of a strong payment history, approvals could increase by at least 10%.
• Technology’s precision and reach will eliminate long-standing barriers to credit access. Digital qualification means lenders are looking to artificial intelligence and machine learning to enhance their decision-making by including typically excluded data points.

The bottom line? Lenders who continue to rely on complex, outdated platforms will underperform in the end-to-end loan life cycle. Employing the most updated tools aids in assessing and applying current industry lending trends. Broader application of analytics expands buyer markets, capturing previously overlooked customers. 

Streamlining the Loan Origination Process

Options await lenders looking to upgrade. Robust platforms combining agility and speed are quickly gaining in popularity. Processes are quickened. End-to-end loan cycles are streamlined. More buyers can become satisfied, repeat customers. Newer and more powerful platforms are evolving. 

defi’s loan origination platforms have several industry-leading features to improve and streamline the loan origination process. These include: 

• Automated decisioning, conditioning, deal structuring, and funding to maximize return on investment while controlling risk
• Access to alternative credit data sources and data analytics tools
• Support for complex pricing matrices and models
• Flexibility to identify and target specific market segments and change business models
• Customer-facing portals and other technology to improve customer service
• Integration with a broad ecosystem of third-party services and partnerships

The benefits of an industry-leading loan origination platform are clear. Improved customer satisfaction leads to revenue growth for lenders. So let’s talk about what you need.