THROW THE BABY OUT WITH THE BATH WATER (PART 3: MEANINGFUL LENDER DIFFERENTIATION)

Charlie Lewis defi BLOG, defi ORIGINATIONS, General News, Series-Baby

What’s different this time versus say 3 / 5 / 10 years ago when this arose before??

defi SOLUTIONS Speakers:
Charles Sutherland, Chief Strategy Officer
Scott Hendriks, Dir. Product Strategy and Product Management
Christian Wilcoxson, Solutions Engineer

This presentation is a part of AFSA’s Business Partner webinar series, which allows industry experts to share timely educational topics directly with AFSA members. Charles facilitates a “fireside chat” between Christian (playing the role of the client advocate) and Scott (speaking as the vendor technology provider community at large). This transcript has been edited for clarity and brevity.

Charles: One of the topics that I often hear from lenders is, “Hey, we believe that some point of the build gives us a meaningful source of differentiation from our peers and what is otherwise an often — not cutthroat, but certainly thrust and parry-style — competitive environment for lenders in iota.

Do you hear that source of differentiation? Do you hear it in conversations actually take the form of specific ideas about what that source of differentiation is going to be, as opposed to the broad topic of differentiation?

Christian: Usually when I’m hearing about the source of differentiation, it’s going to live in one of two core places: It’s usually going to be the pricing engine and model itself, and being able to go in and make those types of changes themselves and control that aspect of the business that gives them that competitive advantage, because they can react as they need to and keep all of that internal. Another area I may see that is really around some of the scoring mechanisms that are out there. It’s less things like their user interface or the integrations into other third-party data services. It’s those little segments of the system that lenders perceive as their secret sauce, how they’re actually decisioning things.

Charles: So if I paraphrase…the technology may enable the business process or the organizational policy decisions and the data decisions that are a source of the differentiation. The technology in and of itself isn’t that source of differentiation. It’s just an enabler.

Christian: Correct.

Charles: Scott, do you hear the same things? Because the differentiation word gets bandied about with wild abandon. When it’s coming from the IT side of an organization, it can feel like it’s about the IT as opposed to maybe what Christian’s presenting, which is more of the business operations side of the lender seeing the differentiation.

Scott: I think that’s just a fundamental shift in how we look at things. Historically, technology defined the solution. And the business was constrained by what was delivered by technology, and they had to work within that framework. So we see — when we’re doing implementations or when we’re talking to clients about where the pain points – a lot of those issues are really legacy processes or legacy workarounds that have persisted because the technology wasn’t designed or capable of meeting that business need as it related to whatever the goals were.

For a lot of lenders, it’s first decision back wins. So, I need to be the first guy back, and I need to highly automate everything, and I need to be able to recreate the thought process of my underwriting staff and be able to do that through technology capabilities that allow us to recreate that thought process and be able to deliver those decisions faster.

For others, it’s all about efficiency. I want to be able to manage cost. I want to be able to go into new markets, but not have to upsize the headcount that we have in order to be able to do that. So it comes down to managing those hard costs that are related to originations operation.

And then the third thing that we hear a lot about is the operational parts of it. That is, how do we define that buy box? But the biggest part of that really comes down to consistency, because there has to be a trust from the dealer body, as well as from the borrowers, that when I submit something and I’m given an approval, that approval will stand. So being consistent throughout the decision process, and treating deals the same way, and giving people confidence that you’re going to consistently deliver on the promises that you make.

Part 4: Today’s Baby (Why lenders should think of this differently)

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