THROW THE BABY OUT WITH THE BATH WATER (PART 4: TODAY’S BABY | WHY LENDERS SHOULD THINK DIFFERENTLY)

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Why is today’s baby more attractive than the children of 3, 5, 10 years ago? Why should lenders think of this differently now than other times this perennial topic has come up?

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.

Christian: I think what’s really made it so different recently is more along the lines that in the past when a lender would approach build versus buy and how they wanted to address their technology, it was often an internally-driven initiative. There was some new technology that was being utilized to speed up the process, improve automation, something like that, or they wanted to change their programs and how they’re really looking at these applicants and applications.

But the last 18 to 24 months, I think they’ve shown a lot of lenders that they may not currently be in a situation where they can react fast enough to unexpected market changes, things that are taking place outside of our control that we’ve seen vary drastically happen, especially the past year and a half. And so with that we’re seeing a lot of them approach this not so much from a, “I want to build absolutely everything” but back to my point earlier, “What really can I buy that has that core fundamental platform there, but when I do need to react quickly, provides me either the flexibility within the platform to do so, or the extensibility of the platform to quickly add additional features and functionality onto it so that I can react to the market in a timely manner?”

Charles: Scott, is there something about today’s child or today’s baby that’s more attractive? Or are people trying to hold on to…I’m not sure how far I can stretch the metaphor, but how big a family they’re trying to keep? Are there more children they’re trying to keep now than 3, 5, 10 years ago? Getting on thin surface with a metaphor now.

Scott: I think what I would say is we no longer deliver pudgy babies, right? We’re trying to stay away from the monolith. And we’re trying to deliver either multiple babies or eight-headed hydras, depending on how far you want to go with that metaphor. But as a solutions provider, this concept of hard resets and migrations and building these massive platforms, what you end up with over a lifecycle is things tend to get bolted on or things tend to get twisted, or things that lenders are managing on their own, they tend to grow in ways that aren’t necessarily thought of up front. Because it’s all… to Christian’s point, it’s all reactionary, right?

As the market changes, or risk profiles change, or fraud profiles change, things have to be put in place, whether that’s configuration that allows you to compensate for whatever those factors are, whether that’s building something new, whether that’s integrating to another third party, all of that continues to grow the footprint.

And what we’re seeing more of now is that — instead of somebody going and buying a complete end-to-end that does everything and then trying to modify that to fit what they needed to do — you’re able now to really assemble things. If you’ve got a really good decision model through a provider that you can incorporate into your flow, that helps you. It helps you in a way that’s not requiring you to go back and re-engineer your entire platform, as long as your platform is able to support that type of extensibility.

So it’s really looking at your entire ecosystem, instead of just your LOS. I think that’s really the big thing we’re seeing now versus 10, 12 years ago, where you picked the big monolith, and then figured out where you could play around with it on the edges to make it do what you needed it to do. You’re not constrained by that anymore.

Charles: It’s an interesting dynamic listening to the two of you. Because Christian, and rightly so, as the lender persona, it’s a lot easier to source the differentiation in this, with the advantage coming from the flexibility to do the business process. And in some way, Scott, that’s what you’re hinting at the technology as the enabler, right? That’s what’s different out. Maybe that’s why this is coming to the fore more.

Part 5 What is Driving This Moment

Getting Started

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