defi INSIGHT
Insights into Modern Lending
In recent years, the US has experienced a growing economy, low interest rates, and a downward unemployment trend. Auto lending, on
Unprecedented technological advances in the last decade have sparked great efficiencies in the auto industry. Design, prototyping, and manufacturing techniques, as
Over the last decade, banks and credit unions, have adopted mobile and web technologies with unprecedented, and in some ways unanticipated,
Technology: Does it help or hinder society? From a personal perspective, there’s nothing to debate. Daily, we enjoy the benefits of
Let’s begin with this top-of-mind, worrisome auto finance industry trend: After years of growth, auto sales are declining. It’s a tough
Whenever I fix something at home, I gather everything I’ll need to make it happen: tools, supplies, instructions—the lot. Sometimes I
Tension and uncertainty created by the CFPB's 2013 Indirect Auto Lending Bulletin evaporated April 18, 2018, when the US Senate voted
Declining auto sales and fewer loan opportunities are increasing competition among lenders. In these challenging market conditions, improving lending and operational
2018’s big auto finance news is that the US House and Senate voted to repeal the CFPB decree on auto-loan financing.
You can’t go a day without the benefits of automation. From better-quality automobiles to robotic picking and packing at Amazon warehouses
Pretend your current loan origination system is an automobile. How would you describe it— antique, clunker, ready for recycling, gas hog,
If you haven’t updated your legacy lending system in a while, or are looking for something better, you’re in the right
The true value of gathering and storing data from an ever-increasing number of sources is our ability to gain insight from
Cloud computing has been around for more than a decade. It has changed the way that software is developed, delivered, consumed,
Either you’re compliant or you’re not. In the long run, achieving compliance is the easier choice, but it does require accurate
How will the second half of 2018 play out for auto lenders? Will tariffs, trade wars, higher gas prices, rising interest
Hybrid cars don’t use any gas going downhill, so their drivers often coast as long as possible, increasing their overall mileage.
What degree of lending risk are you willing to tolerate? You probably ask yourself this daily. Your answer varies with the
How do you balance the demands of operating an efficient and profitable lending business while complying with increasing regulations? The Truth
Auto lending regulations are the result of consumer advocates, industry lobbyists, and government officials proposing, negotiating, and compromising to bring about
What’s in it for me? That’s a legitimate question for every lender to ask when evaluating the features, capabilities, and benefits
Today’s robots and long-gone steam engines have something in common: Automation. The essence of automation is the replacement of a manual
Credit unions are experiencing a surge in auto lending. That was one of the pieces of good news for auto loans
If you’ve been in the auto lending business for any length of time, you’ve captured or created volumes of applicant, borrower,
How easily can you make modifications or customize your loan management system to meet current (and future) lending needs? It should
The auto lending process—applications through final payments—creates volumes of valuable applicant, borrower, process, and portfolio data for lenders. When auto lending
Risk is an inherent part of the auto lending industry. Initially, risk was almost exclusively associated with the criteria and policies
How worried should you be about current auto lending market and delinquency trends? Subprime auto loan delinquencies have been on the rise
The concept of workflow has been around for decades. The assembly line instituted by Henry Ford was the shining example of
A regular practice of auto loan portfolio risk assessment allows lenders to continually evaluate and adjust their credit policies in response
It should be easy to comply with the Truth In Lending Act (TILA), more commonly referred to as Regulation Z (or
With auto sales in decline in 2018, lenders are looking for options to build a profitable portfolio. There’s always the temptation
The Kansas City Federal Reserve’s MAIN STREET VIEWS Policy Insight Auto Loan Delinquency Rates Are Rising, but Mostly among Subprime Borrowers
Auto loan delinquency rates will always be a challenge for lenders, who must balance acceptable risk with profitability. As an indicator
A comprehensive auto lending risk management strategy addresses every phase of the lending cycle from applications through servicing. Regular analysis of
Experian’s State of the Automotive Finance Market - A look at loans and leases in Q2 2018 provides an excellent, easy-to-digest
The headline of the Federal Reserve Bank of Kansas City’s Macro Bulletin summarizes the Q2 2018 auto loan delinquency statistics: Auto
Modern lending solutions take advantage of the latest fintech capabilities to help you assess and effectively manage risk throughout the lending
How concerned should you be about 2018 auto loan delinquency rates? The answer depends on your credit policies, their effect on
An ever-increasing number of business transactions are conducted via mobile devices. Statistics from Cyber Monday 2018 indicate more than a third
Per Automotive News, 2018 vehicle sales, with few exceptions, continue to disappoint. There are many reasons for the sales plateau. The
Banks, credit unions, and fincos with auto lending operations can improve efficiency and reduce costs by replacing paper documents with digital
The combination of cloud, wireless, and mobile technologies have created consumer expectations of convenient commerce. Business transactions that once could only
Anyone with years of experience in lending knows paperwork has become voluminous as a result of new regulations. Paperwork is a
Advances in fintech bring ever-greater efficiency to the auto purchasing experience. Cloud, mobile, and the wealth of automotive information available via
Only a fraction of banks, credit unions, and fincos use the full power of auto lending analytics to their advantage. Legacy
Maintaining regulatory compliance requires a focused and continued effort. Lenders need to understand frequently-changing federal and state regulations and translate them
Big data and analytics are transforming every process- and data-intensive industry. Organizations that fail to recognize the value (and the necessity)
The rise of big data is transforming how organizations plan, manage, and evaluate their businesses. Auto lending is no different. Data
If you’re a lender with a legacy auto lending solution, you likely know you should upgrade to one with integrated auto
In a competitive auto lending market, what gives you the greatest advantage in capturing more auto loans and growing your portfolio?
Anti-theft technology has reduced the incidence of traditional auto theft. So thieves have shifted to auto lending fraud. If you want
While fraud has always been a problem with auto loans, technology is making it easier to get a steal of a
What percentage of the auto loan applications you received this month intentionally misrepresented information about the borrower, vehicle, or dealer? How
You’ve processed hundreds to thousands of auto loan applications this month. Some lending decisions were near-instantaneous—auto approval and auto declines—aided by
It’s the last day of the month. The dealer’s numbers are good, but one more deal would make it a record
The most painful way to learn about auto loan straw buyers is to become their fraud victim. According to PointPredictive, straw
If your loan origination software (LOS) runs on servers located in your facility, annual licensing and maintenance costs are increasing, and
With auto sales having peaked in 2017, lenders need every advantage to stay profitable. The industry is also adjusting to
Delinquency and default rates remain relatively stable, according to a recent Experian report. While that may be comforting news, it’s also
Four growing trends, driven by technology and millennial usage and behavior, are depressing vehicle ownership, and, consequently, auto financing. Uber and
The Transunion Q4 2018 Industry Insights Report describes a relatively smooth road ahead for the Canadian credit market in 2019.
U.S. News and World Report succinctly contrasts the pros and cons of buying new vs. used cars. In today’s auto market,
With 17 million vehicles sold in 2018 and 16.8 million new cars and light trucks predicted in 2019 by NADA (now
According to U.S. Census Bureau population projections, millennials are expected to overtake Baby Boomers in 2019 as the younger group’s population
We’ve met a lot of lenders in this situation: Their legacy loan origination system has become too pricey to maintain. It
Fintech innovation is reshaping auto financing into a streamlined customer experience, as Boston Consulting Group (BCG) notes in Staying Ahead as
When’s the last time you thought about your credit bureau data? If you’re like most auto lenders, you usually don’t have
J.D. Power reports that nearly 84% of new-vehicle buyers in 2018 arranged financing through a dealership. For lenders, that underscores
You can draw immediate conclusions from a credit score, especially scores at extreme ends of the credit scoring range. Easy
Outstanding auto loan debt reached $1.27 trillion in the final quarter of 2018. Earlier this year the New York Fed
The major credit bureaus now provide lenders with trended credit data reports to complement traditional credit scores. This gives lenders greater
The major credit bureaus now provide lenders with trended credit data reports to complement traditional credit scores. This gives lenders greater
A trended credit data report paints a more accurate picture of a borrower’s financial position by detailing their spending habits and
Auto finance analytics are usually the domain of specialists schooled in the finer points of finance and advanced statistics. Some specialists
Q: Are long-term auto loans a bad idea? A: It depends on who you ask. If you ask borrowers, they can
J.D. Power’s 2018 U.S. Consumer Financing Satisfaction Study, cited in Automotive News, highlighted the value and benefit of easy-to-use mobile apps.
Fraud has many faces. Auto dealer loan fraud isn’t as frequent as income, employment, or identity fraud by individuals and fraud
Automation is continually improving auto lending process efficiency, along with the quality and consistency of lending decisions. Replacing manual, mundane tasks
If you can’t remember when your current auto lending platform was originally implemented, it’s probably time to consider an upgrade. Technological
Advancements in fintech are transforming loan origination into an increasingly-automated process. Loan applications are now often turned into booked loans with
For many lenders, credit risk management depends on years of experience. Their credit risk expertise is a mix of shrewd loan
Large lending institutions often have personnel dedicated to analytics. These professionals have backgrounds in statistics, knowledge of SQL query language, and
Mentioned in the context of a technology discussion, disruption invariably means innovation. The world of finance is undergoing disruption, and as
Information technology (IT) has transformed the way modern lending works. Fincos, banks, and credit unions have access to more lending solutions
As of this writing, there’s no pending recession, though there’s frequent speculation of a downturn, perhaps in 2020. When that downturn
Salesforce has developed a lending solution built on its CRM platform. Financial services providers that have invested in Salesforce and want
It’s impossible to tell precisely how much a used vehicle is worth without detailed historical data. You can kick the tires
The lending industry is evolving. Quickly. Innovative new loan origination system (LOS) features are helping lenders stay ahead, even in competitive
Lenders looking for an LOS often start by checking loan origination system market share. That can reveal industry leaders and niche
It’s an exciting time to be in the lending industry. Major technological advances in loan origination system software have made it
Business process automation has helped the banking industry bring efficiency to high-volume processes. It brings speed and accuracy to account openings
Big data has transformed businesses in every industry. Banks now use data acquired from nearly every step of the loan origination
The millions of people born in the US sometime between the early 1980s and mid-1990s now outnumber baby boomers. For banks,
According to the American Bankers Association, only half of large banks and 38% of small banks currently use an online or
According to the New York Fed, US subprime loans are going delinquent at rates unseen since the Great Recession. Auto loan
The best LOS systems calculate alternative credit scores for each loan type offered. To start collecting alternative credit data on your
Business process automation (BPA) replaces inconsistently-executed manual activities with consistently-executed workflows and decisions. The result for financial services providers: Lower processing
Today’s lending market looks very different than it did even just a handful of years ago. More customers are checking auto
Lenders have long relied heavily on scores from the big three credit bureaus. However, the bureaus have recognized that alternative credit
Down Payment Fraud Detection Key Points: 1) Loan fraud is on the rise with false identities as a leading scheme 2)
What are the straw buyer red flags that lenders can use to identify fraud and prevent it from hurting portfolio performance?
Anyone who orders from Amazon regularly understands the advantages of a completely digital process. Order in seconds. Delivery in 2 days
Phantom auto loans are a sophisticated scheme to defraud banks, credit unions, and fincos. No car is ever sold. Often, no
There are two major growth drivers of online loan originations. The first is demographic. Millennials, born digital, are now a larger
One recent lending fraud analysis estimated that one in 123 mortgage applications, or 0.81% of all applications, contained indications of fraud
Loan applications are often sent to multiple lenders simultaneously. The action is called loan stacking, and it can help address a
The ease of committing fraud using online resources has made banking fraud detection necessary for loan origination.
In an account takeover, an individual or well-organized cartel obtains access to a consumer’s account, changes login credentials or personal data,
With seismic enhancements in fraud detection software, banks can now catch fraudsters quicker while improving the flow of non-fraud borrowers. We’ve
Analytics-based lending helps improves the speed and quality of lending decisions while simultaneously reducing risk. Two developments in lending technology offer
The big loan management software trends for 2020 focus on achieving two major goals: Reducing risk and identifying new lending opportunities.
Despite an economy that continues to roll along and a stock market setting new records, several factors are contributing to delinquencies
As you begin the process of evaluating lease management service providers, use this concise list of attributes and capabilities to assess
With leases being a significant portion of the new vehicle market, dealers and lenders are looking for the most efficient ways
Delinquent account recovery is a serious financial drain for lenders. Mailing out late statements and hiring staff to call debtors daily
As you begin the process of evaluating lease management service providers, use this concise list of attributes and capabilities to assess
By embracing the latest technology and innovations, even the smallest community credit unions can thrive in a saturated market. In this
The sustained economic growth of recent months and an optimistic outlook presents credit unions with an opportunity and a challenge. There’s
Major IT advancements now make for quick implementation of innovative services, so that community banks can realize the benefits of the
It’s not about upgrading to a state-of-the-art system that can handle millions of accounts and loans; it’s about leveraging technology to
Compared with national banks, community banks have the advantage of a main-street understanding of the unique economic climate of the cities
Some of the top credit union technology challenges right now are: Lack of agility in deploying IT resources and services to
Customer service outsourcing is one of the most valuable tools available to community banks. When you outsource customer communications, not only
For many credit unions, vehicle auctions detract from their core financial focus. The complex relationships between auction houses and transporters, along
Lending and leasing for vehicles can involve remarketing off-lease and repossessed vehicles. At the end of those contracts, many community banks
Internal risks tied to credit and compliance are far easier to manage thanks to advancements in loan origination solutions. Let’s take
The main problem is that community banks don’t have as many risk management resources at their disposal as larger federal banks.
If you don’t have an efficient and well-staffed back office, then your front office will suffer. This is where back-office outsourcing
If you’re looking to improve your customer service specifically, here are just a few of the back office tasks you can
Having an efficient back office that essentially runs itself is one of the best ways to stand out in today’s saturated
Many lenders are getting out of the loan servicing business altogether because it’s too difficult and costly to manage. This is
Credit unions want to offer their members exceptional lending services. That’s tough to do when member expectations rise every year. As
The community banking industry is abuzz over loan servicing companies. Third-party loan servicing is one of the biggest community banking trends
Following a loan servicing compliance guide and relying on experts to guide you can help protect your credit union members. Just
Loan servicing compliance is one of the most important things community bankers think about when they manage their loan portfolios. Yet
In our work with community banks, many have voiced the need for greater efficiency in handling high-volume, repetitive loan servicing processes.
When you hire a third-party loan servicing company to go through each of these steps with you, your credit union will
Using alternative data, credit unions can more fairly assess applicants—even those who might never held a credit card or who have
Alternative data is helping community banks identify new opportunities and reduce risk.
Our guide covers seven qualities of an excellent loan servicing platform to ensure the greatest impact on your operational efficiency
Many community banks are now evaluating loan servicing platforms from specialist providers to improve efficiency.
If you've been thinking about upgrading your system, here’s what you need to know about the benefits of an optimized workflow.
Today, community bank lending workflow solutions provide a more sophisticated level of automation.
Lenders anticipating an increase in small business loans may be rethinking their approach to loan servicing. Many lenders who built their
Pause for a moment and take a close look at your loan servicing process. Is it as efficient as it could
Bank loan-to-deposit ratios (LDR) average between 80% to 90%. It’s an understatement to say that lending is critical to profitability. With
Auto lenders facing the uncertainties of the current economic climate are looking for every opportunity to reduce operating costs. For many
Customer care is the bread and butter of the auto lending industry. While it’s important to have reliable loan origination software
Community banks have a lot on their plates. From customer service to payment processing, there are thousands of important tasks banks
How would you describe your loan origination process? Fast, easy, simple, competitive advantage? Or is it slow, cumbersome, confusing, and outdated?
In late 2019 many industry publications highlighted the expected auto lending trends for 2020 anticipated by J.D. Powers, Fitch, and other
In-house processing was once one of the only effective options for banks, credit unions, and fincos to manage their lending processes
COVID-19 is redefining the notion of risk in nearly every facet of the global economy, forcing financial institutions to rethink policies
How do you effectively reduce credit risk? Some lenders use manual risk assessment tools, portfolio management spreadsheets, and even good old-fashioned
Over the past decade, an increasing number of buyers have turned to online resources to shop for vehicles. Though not yet
The ability to handle auto financing online is one of the past decade’s greatest innovations for lenders. Gone are the days
In a world where the car-buying journey has become increasingly digital, lenders and dealers must adapt to attract motivated buyers and
If you’ve ever considered the importance of mobile lending technologies but haven’t acted on it, recent events should be moving you
Regardless of economic climate, risk management remains an important factor for lenders to consider during the approval process. Its importance in
Many lenders are receiving an overwhelming number of loan servicing requests in recent months—but why? The impact of COVID-19 plays a
According to a recent survey from Cox Automotive, 83% of consumers want to perform at least one or more steps of
Established auto lenders have weathered several instances of market turbulence over the decades. The pandemic is yet one more storm and
Lending risk analysis is more important than ever, with lenders walking a fine line between accepting new lease or loan applications
With technology growing and evolving by the second, fraud is more prevalent than ever. In its July 2020 white paper, the
Lease and loan servicing volumes are up. The reasons? Questions about loan forbearance. Increase in requests for lease and loan modifications. Longer loan
What if you could respond to well-qualified applicants within seconds? Bring in new borrowers any day of the week, day or
Commerce is increasingly driven by mobile devices in the hands of consumers. Lenders who use an auto lending digital platform to
In the past months since the onset of COVID-19, you’ve likely been in a reactive mode, scrambling to cope with the
The process of acquiring an automobile, either buying or leasing a brand new or pre-owned upgrade, has been gradually transforming from
It’s easy to get lulled into thinking that the software you purchased a few years ago is continuing to meet current
Looking ahead to 2021, banks, credit unions, and fincos are reevaluating their ability to effectively respond to unexpected economic conditions. In
Loan origination best practices benefit both consumers and lenders. After years of developing, delivering, and supporting lending systems, we at defi
Banks have mastered the digital process for many of their services. Today, it’s not unusual for a bank’s customers to never
We believe that great customer service begins with the first transaction a customer has with your bank and extends throughout the
Credit unions boost their ability to grow their auto loan and lease business with software designed to: Improve the efficiency of
The past year has highlighted the importance and value of loan servicing software that can quickly respond to unexpected changes in
In an environment where consumers expect a near-instantaneous confirmation of transactions, the loan origination process of many lenders comes up short.
In comparison to nationwide financial institutions, credit unions have an inherent advantage; they understand the local economy and the financial needs
Modern auto loan origination software is making it easier than ever for banks to respond to loan applications rapidly and boost
When you can’t sell a vehicle to the lessee at the end of the lease or you know there’s no local
Business process outsourcing (BPO) has become an integral part of operations for many fincos, banks, and credit unions. BPO for contracting
For a bank wanting to establish a lending relationship with local auto dealers, the capabilities of a modern lending solution are
COVID-19 was extremely disruptive to anyone involved in auto lending and leasing. The economic uncertainty caused by job losses, the overwhelming
If the events of 2020 have caused you to reconsider the efficiency of your auto loan and lease servicing capabilities, you’re
Lenders who are considering upgrading their loan servicing software typically go through the process of comparing the architecture, capabilities, and market
Establishing a mutually beneficial relationship with local auto dealerships can be one of the most effective ways to grow your lending
Approximately 90% of new retail auto sales are financed via a lease or loan, and at the moment, Americans owe approximately
Compared to the lease or loan origination process, the servicing process is far more complex. It can last years, and may
Lending institutions looking for more efficient ways to manage auto loan servicing and portfolio management are beginning to outsource some or
Recent economic data indicates that we’re experiencing one of the fastest-growing economies since 1984. As a result, lenders are likely to
Is it time to consider the benefits of outsourcing your call center operations? Many auto lenders who have struggled with the
How efficiently are you managing collections? Unlike the lease or loan origination process which is comparably quick and predictable, the collections
Every auto lender looks for ways to improve the efficiency of their business processes and reduce operating costs. For most auto
The economic difficulties of the past year have challenged all parties involved in the auto financing cycle. Lenders who already invested
A growing number of lenders, specifically those solely focused on auto lending, are considering business process outsourcing as a means to
Many auto lenders across the US have hit the wall while attempting to streamline their auto loan servicing operations. Certainly, the
The auto industry is recovering from the abrupt, early 2020 shutdown of the US when new sales dropped a whopping 38%
Many fincos and lenders who specialize in the auto industry have realized that the management of a call center is a
Business process outsourcing has been widely adopted across all industries, from the simple outsourcing of activities, such as accounts receivable, to
Every auto lender strives for greater efficiency and lower operating costs. Throughout the lending cycle, there are dozens of opportunities to
Even amidst pandemic-related slow-downs, the auto loan industry remains one of the biggest in the U.S. Overall, American consumers have $1.4
A growing number of auto lenders are seriously evaluating business process outsourcing (BPO) services. The primary BPO value propositions are improved
The risks of outsourcing call center operations, like concerns over data breaches or poor customer service, are certainly valid reasons to
Unlike loan originations which has a relatively short start to finish cycle and uses automation extensively to bring consistency and speed
Auto lenders wanting greater efficiency in managing the increasing call volume from borrowers may be hesitant to consider outsourcing their call
Many auto lenders wanting to improve the efficiency of business processes and reduce operational costs seek out a business process outsourcing
Lending institutions of all sizes are looking for strategies to improve the efficiency of customer care and simultaneously lower operational costs.
Has the volume of calls and requests from your customers become overwhelming? Maybe you’ve considered establishing an in-house call center but
Business process outsourcing isn't just a case of "out of sight, out of mind." While auto lenders can reap significant benefits
The year 2020 was challenging for nearly every industry, and the automotive industry was no exception. Disrupted supply chains, assembly line
Choosing an outsourcing partner is one of the most crucial business decisions auto lenders can make. Once the decision is made,
Having a customer contact BPO provider is an excellent tool that allows lenders to increase their efficiency, profits, and customer satisfaction.
With technology developing rapidly, automation and cloud-based computing are changing the way businesses work—and driving better outcomes. Innovative automation is also
Customer service is the backbone of the auto lending industry. When customers consistently have positive interactions with your representatives, they're more
Fincos want to understand customers better and, therefore, better meet their needs, maintain satisfaction, and create a close, long-term relationship with
Today, finance companies have to deal with a rapidly changing market, with challenges around compliance, costs, and customer retention. Keeping up
Call centers are a significant aspect of your business. As the centralized offices that help lenders interact with and support customers,
Many auto lenders seek out business process outsourcing (BPO) companies to improve efficiency, reduce overhead, and scale their lending operations. It’s
Auto lenders are always seeking ways to adapt, stay competitive, and reduce expenses. One way to do that is using business
Business process outsourcing (BPO) is a popular option for auto lenders, and more are turning to it as a cost-cutting measure.
One of the fastest ways to improve the quality of your customer service is to outsource a call center. When you
It’s easier than ever for prospective borrowers to apply for a lease or a loan. In fact, people no longer have
Today’s consumers can get packages delivered in less than a day, hire a driver and get picked up in a few
The ever-changing world of technology requires industry-leading auto lenders to evolve their loan origination systems (LOS) to maintain a competitive upper
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