How joining up the dots is reshaping the loan origination process

[Editor’s note: This is a blog post from Rob Evans, Founding Director of SamePage Group. SamePage Group is a bronze sponsor at LendIt Fintech Europe 2018, which will take place on November 19-20, 2018 in London.]

The consumer credit lending process has historically been a complex one and disjointed for many financial institutions, resulting in inefficient and costly approval processes predominantly due to manual interventions.

Such a convoluted approach is now even more at odds with today’s society, with consumers demanding convenience and immediacy in every aspect of their daily lives.

Research from Salesforce tells us that 64% of consumers expect companies to interact with them without delay. Digital is the contact preference of choice, particularly amongst millennials, who favour digital over physical interaction.

Customers have always expected lenders to fulfil loan applications in real time. This is a hygiene factor not just for loan propositions but all modern-day sales interactions. Amazon Prime, with its sophisticated and highly efficient fulfilment eco-systems, is a great illustration of this.

It can be argued that the need to excel within the customer engagement process is now a pre-requisite rather than a USP. Leveraging modern-day technology and apps requires fintech companies, like ourselves, to deliver a customer user experience and journey enabled by innovative technical solutions.

I am a great believer that most things exist and most problems have already been solved. Sensibly assembling technologies and propositions, such as underwriting data sources, as well as third party services, seems a common-sense approach. Yet, historically this has been no mean feat. However, now new cloud-based platforms and services are helping us to assemble the new world model – ‘“joining up the dots” so to speak.

With respect to the credit assessment process, lenders now seek the most comprehensive, up-to-date sources of data to help them assess, verify and stress test customers within the risk assessment process.

Recent models have relied upon a single source of data – credit reference agencies. Lenders now have an appetite for ever-increasing number of data sources and tools to supplement the traditional credit file and credit scoring approach.

The adoption of open banking, availability of social profiling data (now hindered by the roll out of GDPR and its strict data use and privacy rules), and a pragmatic approach to the use of such data in Machine Learning and Artificial Intelligence models all challenge existing conventions.

The primary objective should not be forgotten – identifying new lending opportunities, making better-informed lending decisions, and improving their overall portfolio performance.

Having approved the customer, the challenge moves on to delivering a fulfilment process that is instant, cost effective and not to forget, regulated. While readily available in today’s digital economy, many lenders due to the constraints of their embedded legacy systems and processes are unable to adapt to open banking, e-signature, faster payments, online chat to name just a few.

So, where should lenders focus their efforts, which dots should they join up, and in which order should they be assembled?

With so much to think about it is often difficult to focus on re-engineering your ‘as is’ model. Having a clear vision about how a solution should work in this digital age is where to start. This needs to be supported by a definitive commitment and investment in modern technology and often, an acceptance that letting go of years of process and technology legacy is required before a new paradigm can be established.

It goes without saying that cloud technology makes services available to a wider range of clients, much quicker and more cost effectively. Implementing cloud-based services is faster than you think (they have been designed to be integrated with minimum interaction and are also well documented to support such a low friction model) and relatively simple to do.

The problem now turns from the technical integration to the third-party services that should be chosen, prioritised and are best suited to your business model and user journey vision. Typical examples will include:

  • Identification and verification – use of a myriad of authentication services to verify the identity of your customer
  • Document execution – the best e-signature process and/or platform to base your legal contractual process on
  • Disbursements – faster and secure payments transfers, leveraging multiple new payment streams, minimising processing costs
  • Analytics – particularly around the analysis f the customer journey allowing feedback into the model to iterate and improve the process
  • Self-service – pushing information digitally, on demand o not only clients but any third parties who have a need and right to access such data and transaction

Those that adopt such new technology will undoubtedly outpace the competition by digitally streamlining the engagement and on boarding process, driving faster credit decisions, enhancing customer experience through self-service, making better risk decisions and delivering up to 50% lower costs compared to legacy platforms.

So what does this technology mean for the future of the consumer lending industry? Digital only interaction, fast and efficient processing, and fully configurable platforms, allowing an element of ‘pick and mix’ from the relevant data sources and services.

At SamePage, we’re working hard to transform the consumer lending journey through our dynamic, cloud-deployed loan origination platform.

As a team with huge experience in the financial services industry, we set out to simplify and accelerate the entire loan application process to the benefit of UK lenders and consumers.

Our intuitive platform delivers a highly-automated process to support the entire lifecycle of a loan, from quote and apply, through to fulfilment and disbursement of funds.

Digitally enabling start-ups and established financial institutions to compete in an ever changing commercial and regulatory world, the platform can be deployed quickly and cost-effectively, and can integrate seamlessly with a range of third party data sources and providers.

For more information and a demo visit samepagegroup.com

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