The defi Team Automation, defi INSIGHT, Originations

Modern society depends on automation. Robotic assembly lines have largely replaced humans throughout much of the manufacturing process. In the logistics industry, Amazon warehouses benefit from picking and packing automation that optimizes their operations. Some households even have computerized coffee makers that can be programmed to make coffee in the mornings while their owners catch a few more Zs.

It’s no different with the auto lending and leasing industry. Automation has benefited both lenders and borrowers, and with auto sales declining, lending opportunities are becoming harder to come by. These trends in the auto lending industry have made technology even more important. Automated loan processing systems have become essential for lenders wanting to remain competitive and keep their businesses profitable.

Automated Loan Processing System

Advanced automated loan processing systems offer distinct advantages over legacy lending systems. Using the latest cloud-based technologies, they can be quickly implemented as a configurable solution that provides superior customer experience while improving decisioning accuracy. They additionally save on operational costs by largely eliminating the need for paper documentation. Automated loan processing systems make all stages of the loan cycle more efficient.

Though many lenders receive hundreds, or even thousands, of applications on a weekly basis, only a small proportion of these align specifically with a lender’s established strategy. Automated loan processing enables banks, captive lenders, credit unions, and other lenders to quickly evaluate and identify applications meeting their lending criteria. Once suitable applications have been identified, automation also allows lenders to contact applicants and, once approved, confidently underwrite and fund a loan. By automating decision rules and digitizing applications, lenders can easily gather performance data.

This allows lenders to:

  • Provide better user experience by improving speed and accuracy on loan applications.
  • Process more loan applications without increasing the need for more resources.
  • Largely eliminate human error while making quicker and better decisions.  
  • Establish predictable, repeatable, and auditable processes that support compliance.
  • Reduce delays and costs associated with paper processes.
  • Analyze process and loan performance to continually improve efficiency and profitability.

To be successful in competitive auto lending and leasing markets, lenders must adopt innovative loan processing solutions. By incorporating cutting-edge automation technologies, lenders gain significant advantages over their competitors.

Improved Customer Experience

The internet has made many daily transactions frictionless. Consumers can now purchase just about anything online. Traders can buy and sell stocks. Bank customers can conduct banking activities online. Homeowners can even adjust their home’s heating and cooling remotely from personal computers or mobile devices.

Today’s consumers have come to expect the simplicity and efficiency that automation provides. However, the auto lending and leasing industry lags behind in adopting automated loan processing systems. As a result, many potential car buyers view the process of obtaining an auto loan as overly complex.

For example, a 2019 FICO survey found that 91 percent of US consumers stated they’d either accept or consider loan offers if it meant not having to do extra paperwork. But even as consumers complain about paperwork, the digital transformation of the US auto lending sector continues to make inroads and improve efficiency. This same study also found that over two-thirds of US consumers found automated loan processing systems easy to use, with 42 percent waiting less than a half hour to finalize their auto financing.

An automated lending system dramatically simplifies and accelerates the process. Applicants can apply from anywhere there’s an internet connection. Configurable menus lead applicants through the process, prompting them for information and providing guidance when necessary to ensure the information gathered is accurate and that no fields are left blank.

Paper documents are digitized when required and instantly and securely sent to the lender to eliminate delays. With automated loan processing, systems that once required hard copies of documents no longer require these to be sent. Automating the application process allows lenders to collect information quickly and accurately. Once finished, it’s transmitted to the lender. When automated, loan processing systems deliver decisions quickly, in some cases almost instantly. Faster decisioning gives lenders a competitive advantage in today’s auto lending and leasing market.

Accurate and Repeatable Decisioning

Automation improves the ability to evaluate applicants accurately while reaching decisions more swiftly. Once automated, loan processing systematically improves, as repetitive manual steps are largely eliminated. This enables underwriters and other decision-makers to use their expertise rather than simply entering data.

Examples of how automation can help lenders include:

  • Decision rules that evaluate applicant attributes and provide near-immediate loan approvals for applicants with excellent credit, automatic declines for applicants that don’t meet a lender’s criteria, or flag others for further review.
  • Integrating with credit data sources and services like Digital Matrix Systems lets lenders automatically and quickly verify applicant information.
  • Configurable decision rules allow lenders to evaluate applications in order to make exceptions that allow the delegation of more complex decisions to experienced underwriters.
  • Paper documents converted to digital images are immediately and securely made accessible to underwriters to review applications more quickly while largely eliminating the worry of lost or misplaced documents.
  • Lenders can calculate optimum loan structures and terms automatically by combining decision rules with integrated credit data sources and services.
  • Automated decision rules provide predictable, repeatable processes that remove disparities associated with human decisions, which in turn demonstrates compliance with lending regulations.

Multichannel for Digital Notification

With automated systems, loan processing becomes much less manual. Even notifying applicants whether they’ve been approved or declined can be done by putting in place decision rules that automatically send out communications. Every application requires a response, and digitizing this process gives lenders greater flexibility on how they respond. An automated loan processing system can help lenders create a variety of notification templates, populating them with applicant and loan-specific information to personalize notifications. 

Multichannel communication allows lenders to notify customers via email, text, or other means. This helps lenders reduce printing and mailing costs while also digitally retaining copies of notifications to decrease the risk and expense of storing paper documents. This helps lenders maintain strict regulatory compliance, including in cases of adverse action letters.

Analytics for Continuous Process Improvement

In addition to the previously mentioned advantages, automation helps lenders analyze their lending practices. Automated loan processing systems help lenders gather data gleaned from analyses from a wide array of sources, including loan applications and underwriting decisions. Though these data analytics tools designed explicitly for lending help show in which areas a lender performs best, more importantly, it points out where lenders can improve.

With analytics tools, lenders can:

  • Identify which geographic areas provide the best lending opportunities while also providing data to help replicate successes in other geographical regions.
  • Determine which borrower traits influence loan performance so as to use this insight to accept more applicants with these attributes.
  • Discover which loan structures and terms reduce the risk of default for subprime borrowers.
  • Identify borrower characteristics that lead to unexpected delinquencies and implement more stringent steps when qualifying applicants to reduce risk.
  • Identify unnecessary, time-consuming manual steps in the loan origination process that can then be improved through configurable decision rules.

Analytics is an essential tool for modern lenders, with the above being only a small selection of the benefits they can glean. An automated loan processing system improves the efficiency of the entire lending process. Analytics monitors performance and provides insights allowing lenders to optimize their processes continually. In a competitive lending market, lenders must constantly improve their processes to sustain profitability.

Success Requires Automation     

Automation positively impacts the daily lives of everyone living in a modern society. It increases productivity and reduces costs while improving the quality and consistency of consumer products and services. Without automation, we wouldn’t have all the amenities of a modern world. Consumer lenders who haven’t yet embraced technology need to look around and take careful note.

Automated loan processing systems provide lenders’ customers with better experiences by making applications simpler and quicker. Automating decision rules helps enable this, making the underwriting process faster and more accurate. Multichannel communications facilitate speedy notifications. The digitization of records supports compliance requirements. Analytic tools give lenders the power to continuously improve efficiency and performance. To effectively compete in today’s auto lending market, lenders need to recognize the advantages of automation and how it benefits the entire lending process.

Getting Started

defi SOLUTIONS offers a total automated loan processing system 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 complete 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 on the advantages of an automated loan processing system, please visit

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