Even though these new, innovative tools are now accessible to companies in nearly every industry, some organizations have only implemented a few of them.

Auto dealerships are a prime example of this.

The car buying process, even when taking place at a mostly modernized company, still feels like it did ten years ago. Sitting down at a sales desk, weighting handwritten numbers, waiting while the salesperson gets up to “ask” their supervisor – sound familiar?

But where vehicle buyers can often get the most impatient is the loan approval process, where even the most forward-thinking auto dealers are still relying on outdated and sluggish procedures and borrower evaluation approaches that take much longer than they should in the modern business environment.

Thankfully, it’s now incredibly simple and affordable for auto dealers to digitize their loan application process, bringing their customer experience into the modern age and – in the process – winning and keeping more clients.

An industry propped up by borrowers

Auto loans are a massive market. The simple truth is that the vast majority of car shoppers end up financing their vehicles.

More than 85% of automobile purchases are financed. In just the United States alone, there are more than $1 trillion in outstanding auto loans.

Borrowing funds to pay for a vehicle purchase is the norm, and it’s not going to shift anytime soon.

And financial institutions aren’t the ones generating all the profit from America’s addiction to auto loans, since your average car dealership racks up more than 40% of its gross profit by operating a lending desk connected to banks, credit unions, and direct online lenders.

The problem is that dealerships have to share the profits generated from their buyers’ auto loans with the banks they work with.

But, in the modern era of cutting-edge and instantaneous software solutions, why are dealerships still partnering with banks to help car buyers finance their purchases (and sharing profits along the way)?

Wouldn’t it be more profitable to take care of all lending in-house?

The answer is yes.

And not only would an in-house auto financing feature help businesses retain more of their revenues, it also helps seal the deal with impatient or on-the-fence car shoppers.

[related-solutions]

Is my loan approved yet?

Even today, most auto lending application procedures take a while. Buyers take notice.

The unfortunate truth is that many car dealerships out there are relying on outdated methods to get their buyers approved for an auto loan – from manually entering information into spreadsheets to waiting for external borrower assessments to be completed.

Not only does this slow things down considerably, the old way of doing things is significantly more prone to human error.

Even worse, an outdated auto loan approval system can cause impatient customers to let their eyes start to wander – to other lenders, that is. People even start shopping around on their smartphones while they’re still in the dealership, and can easily find an instant quote and approval while the dealer is still walking across the room.

Especially since modern consumers have grown accustomed to instant decisions and quick purchases, auto dealers shouldn’t be surprised that their sluggish loan approval process has them considering a quicker option.

The next era of automated, end-to-end auto financing

Thankfully, recent advances in software technology have enabled innovation in the area of auto financing. Now, it’s entirely possible for auto dealers to ditch their relationships with banks and manage their lending programs from start to finish – including quick approvals and out-of-the-box automation.

TurnKey Lender’s auto financing software is tailor-made for car dealer businesses, and provides a simple, end-to-end loan management solution that automates the entire loan lifecycle as well as specific phases of the lending process.

The product is ready to use out of the box, and can be launched in a dealership of any size in a matter of days – with little to no learning curve for both your sales team and potential vehicle buyers.

TurnKey Lender’s auto financing solution fully automates borrower risk analysis, loan origination, underwriting, collateral management, debt collection, loan servicing and the vast majority of a dealership’s lending reporting tasks. 

Not only does it empower dealerships to automate their entire lending process from start to finish, the solution integrates with credit bureaus, payment providers, VIN decoding solutions and e-signature services to make the loan application process a breeze for all potential buyers.

From bad credit to thin credit, used cars and new models, TurnKey Lender’s user-friendly auto lending software makes the entire experience smooth and effortless for everyone involved – and potential borrowers won’t even consider looking elsewhere for their auto loan.

Digital transformation for banks means making a brave and a long-overdue step toward intelligent automation and processes streamlining. An in-house or an outdated solution can turn this process into a nightmare with endless downtime, errors, and countless hours of development. But with the right tools, digitalization not only pleases the clients but also leads to a reduction in operational spending, an increase in efficiency, and growth in the core business.

Customers have come to expect a certain level of immediacy with their online banking experiences, and lending has been the last major part of banking that hasn’t embraced the digital age. But now that the technology is developed and stable enough, banks, credit unions, and other traditional lenders can go through a digital transformation painlessly and give a fair fight to the alternative lenders.

Digital transformation isn’t a voluntary process for banks. It’s the harsh new reality of the market that forces the hands of traditional lenders. For decades banks had an overwhelming monopoly on the lending market. Times have changed as banks started to lag in terms of the online experience they deliver. Digital transformation of a bank is seen as an incredibly expensive and lengthy process. But it doesn’t have to be like this.

A while back, banks had every chance to lead the digital revolution by example. They had the resources to go fully digital and provide borrowers with a secure, fully online experience. But the lack of competition made them stick to old systems without transforming and reforming their enormously complex outdated processes. For far too long, they were led by the good-old “if it ain’t broke, don’t fix it” principle. The only problem is that it was “broke”.

Due to that approach, the banks lost a big chunk of the marketplace that got filled by companies that lean into technology instead of tolerating it.

Remember when ten years ago e-commerce was the buzzword everyone was using too much? Then providers like Shopify came along and lowered their industry entry barrier to the point where anyone could launch a well-designed easy-to-use online store within a day and on a limited budget.

That’s what’s happening to e-lending right now with FinTechs like TurnKey Lender providing accessible and intelligent lending automation solutions for Unified Lending Management (ULM). With them, anyone from a retailer to an auto dealer, to an alternative lender, to a large-scale telecom, a credit union or a bank can launch a fully functional, end-to-end, intelligent, and easy-to-use automated lending operation.

DIGITAL TRANSFORMATION TRENDS

It’s easy to get caught up in doing things the old way and ignore the new trends and styles of doing business. But nothing speaks to people in finances as clearly as numbers. So here’s just a couple of stats to give you an idea of what the borrowers have come to expect from their lender in the post-COVID marketplace.

• Just 40% of consumers plan to return to the in-branch financial services post-COVID. – – Novantas
• New mobile banking registrations jumped by 200% in April 2020, while mobile banking traffic rose 85% – CNBC
• The most common method for applying for a small-business credit card or line of credit is a desktop or laptop computer, yet 60% of small businesses rate their bank as average or needing improvement during the digital onboarding process. – Deloitte
• Millennials now make 54% of their purchases online as of 2019 – Pure360
• 62% of global banks expect to be digitally mature in 2020, compared with just 19% in 2018 – E&Y
• Even in 2019, almost half of millennial respondents ages 18 to 34 said they’d consider moving their accounts to a digital-only institution – Marqeta.

The unfortunate delays of modern lending and how your bank can tackle them

Now that we’ve established that digitalization is inevitable, let’s look at how to tackle the transformation.

The lending process for many modern financial organizations is surprisingly prolonged – especially given the current state of technology. Even with banking startups springing up left and right, offering a completely internet-based experience and mobile deposits, the world of retail lending hasn’t caught up quite as quickly.

Online lending is out there, but – even with rapid loan approvals – the time to cash that many modern borrowers experience can drag on for up to nine days. This is true even at banking organizations that offer sleek, secure apps and instant mobile transfers, leaving customers wondering why the lending side of banking is still so sluggish to embrace digitalization.

With so many popular banking features already digitalized, why are there still so many organizations that have neglected automation of their lending processes? Why do loans still take days to arrive in our bank accounts?

The answer is logical. Lending is a way more complex process than simple money transfers and deposits with the time-consuming stages like credit decisioning and terms finalization.But it’s not just time to cash, either. Even though most banks have ditched many of their paper-based systems, loan origination and loan servicing often still require some sort of branch or team member intervention – including some of the most modernized banking organizations in the market.

For traditional lenders, banks and credit unions the delays come from the fact that having digitized the easy things, they are far from automating complex processes like credit decisioning and generally, loan origination.

These processes have too many touchpoints, the originators manually analyze the applications, run checks, evaluate risks, and finally make the loan decision – all using traditional data sources, workflows, and algorithms. Those that haven’t made it that far from the way our parents were evaluated. In the modern environment, it takes intelligent AI-driven algorithms to process this data and get meaningful insights from it in a matter of seconds. And that’s already made possible by SaaS providers like TurnKey Lender. 

Digitalization is inevitable. However, bankers are often scared of its alleged cost and time-to-market. Yet with the modern level of FinTech, digital transformation for banks has become easier, more affordable, flexible, turn-key, and accessible than we’re used to thinking.

DIGITAL TRANSFORMATION SOLUTIONS FOR A BANK’S LENDING PROCESSES

Unified Lending Management (ULM) is an umbrella term that covers every aspect of intelligent lending processes automation. From application processing, borrower evaluation, and loan origination to underwriting, loan servicing, collection, and reporting. Providers like TurnKey Lender specialize in creating ULM solutions that would be easy to integrate with the core banking system as well as be convenient both for the banker’s staff and the borrower.

TurnKey Lender, for example, offers banks a dedicated Transformer solution that is tailored specifically to the needs of a large financial institution. Separate editions include:

• Banks
• Credit unions
• Community banks

Each is tailored to the specific business flows and regulatory requirements of different operations and with configurability capable of handling even unique challenges. The key advantages of this solution are:

• Unmatched flexibility which allows for meeting any organization’s automation needs. The solution is adjusted and deployed by the TurnKey Lender team and is supported 24/7 to make sure it’s fully operational at all times.
• Ease of use – the team made sure that the UX and UI design of the system adheres to the latest and strictest standards.
• Security – the system is built in accordance with the OWASP standards and complies with the ISO 27001 (Cyber Security) and ISO 9001:2015 (Quality Management Systems. Requirements) certifications.
• Intelligence – TurnKey Lender ULM solution uses advanced deep neural networks to meld traditional and alternative credit scoring approaches. This results in a new level of credit decisioning accuracy.
• Scalability –  according to an independent analysis by HP, this solution is capable of processing 100 loans a second and more without skipping a beat.

DIGITAL TRANSFORMATION SERVICES FOR A BANK’S LENDING PROCESSES

Fortunately for borrowers, the current industry standard of multi-day lending finalization is slowly being left behind.

Today’s borrowers want a loan decision process that’s quick, accurate and comes with as little risk as possible. If a bank’s lending process fails in one of those elements, they lose out on more potential customers.

And that’s not an infeasible task for a bank. Here’s a case study about digital transformation of lending of one of the banks that use TurnKey Lender:

Commercial Bank in Asia-Pacific Region – TurnKey Lender Success Story

Not only does undergoing a digital transformation make it easier to generate more lending customers, but it also makes life as an online lending business much simpler. From automating debt collection operations to ditching old-school risk assessments, going digital frees up a substantial share of a bank’s financial and human capital.

Particularly in the highly-competitive online lending space, business leaders can use all the cost-cutting and streamlining they can get.

Some of the things you can outsource to your lending automation solution provider are:

• Credit Scoring Audit/Adjustment – digital solutions have plenty of ways to evaluate the creditworthiness of a borrower other than their credit history and credit bureau score. Your lending automation provider should be able to analyze your business and work with your staff to come up with and implement the optimal scorecard.
• Full system integration, testing, and deployment – it’s understandable if you don’t trust any third-party tech staff to even look at your backend. In this case, the solution should be intuitive and professional enough for your in-house experts to customize and implement it themselves. But there should be an option for the provider to do that for you and free you of unnecessary trouble.
• Program Digitization – having put a lot of effort into lending processes streamlining, you can request digitalization of the existing business processes. In that case, it’s important that the software provider and their solution were flexible enough to tailor it to your needs.
• Operations Automation – digitalization isn’t just about the borrower’s experience. Your staff and you should also have your lives improved. So the right ULM solution provider will also automate the operations of your lending program, allowing you to cut costs and improve efficiency.
• Employee Training – new systems, no matter how good and intuitive, should come with staff training to make sure your bank uses the digital lending solution to its fullest.

Digital Transformation Benefits

Thanks to recent innovations in FinTech, it’s now possible to:

•   Automate the loan application process, including leveraging proven and alternative credit scoring models at the same time and get the data-backed results in seconds
•   Seamlessly adopt paperless statements
•   Get credit bureau and bank statement data instantly
•   Digitally track all interactions between lenders and borrowers automatically throughout the life of the loan
•   Automatically update borrower credit bureau information
•   Enable push notifications and other types of high-demand mobile features

These make winning new customers for a bank wildly more attainable since you get the user experience of a digital lender and the reliability brought by a trusted name of a bank. But it doesn’t end there. Some of the other benefits include the abilities to:

•   Cut operational costs
•   Greatly reduce human error
•   Provide instant loan processing
•   Streamline compliance
•   Improve the user experience

And, most importantly, digitalization empowers banks to focus on what they should be concentrating on: continuing to grow their core business in the changed market.

It’s a common misconception that digitalizing a bank’s lending process is far more complex than that of alternative lenders. Bankers often think that it’ll take up to several years and a ton of resources. But the current reality is that providers like TurnKey Lender have sufficient expertise and previous experience with similar companies. This lets us deliver a fully-integrated loan origination or end-to-end lending processes automation solution with reasonable expenses within several months. The solution that would be deployed and integrated with the company’s core banking software, would meet all the requirements, and help you comply with AML and KYC.

Digital Transformation And Customer Experience

Modern customers have become accustomed to, and have begun to demand, a fast and easy-to-navigate experience when they do their online and mobile banking. Funds are sent to friends and family in an instant, fully digital savings accounts can be opened with a few clicks, and paper checks can be deposited with a phone camera.

Everything is online. Everything is instantly available.

People want easy and affordable solutions that meet their digital media expectations – and banks have been racing to please them.

Unfortunately, this has led to a backlog, with lending near the back of the line. Even though cross-bank transfers can be made with a few finger taps, loans are still taking days.

How long do you think borrowers will put up with this?

Right now is a fascinating moment to be a lending business, because there are now innovative new methods of automating and streamlining lending processes.

From the application to funding and servicing over the life of the loan, the entire process can already be completely digital – without a single business day of unnecessary delay.

Final Thoughts

For massive corporate banking giants that have seemingly limitless funds set aside for innovating their customer experience, undergoing a digital transformation on their own isn’t such a risky endeavor. For small-to-medium-sized enterprises, however, the upfront capital and expertise needed to complete a digital transformation is simply out of reach.

If startups want to embrace automation, they often turn to a trusted digital lending partner like TurnKey Lender to take care of their digital transformation.

TurnKey Lender’s end-to-end lending solution enables automation of all loan origination and servicing processes: originating, underwriting, collateral, servicing, collection, reporting, and more.

Safely onboarding your customers and disbursing funds with TurnKey Lending software can be as fast as 5 minutes. Including running all the borrower checks. With a solution like this on your side, your customers will start getting instantaneous loan decisions and automated loan servicing while you reap the reward secured by intelligent credit decisioning and reduced operational costs.

The question isn’t when, but which.

Which banking organizations will embrace instant digital lending solutions and get ahead of their peers before full modernization of lending processes becomes the norm?

Feel free to download our free whitepaper dedicated to TurnKey Lender Transformer for Banks. Learn how we can make digitalization easy for you.

Now, e-lending technology has caught up with the expectations of both the lenders who need to be able to deploy ready-made automation in a matter of days, and possibly even more importantly, the borrowers who require financing when, where, and how they want it. Lending overhead can be reduced or eliminated thanks to automated AI-driven underwriting, origination, and servicing, and collection; and there’s no need for branches maintenance in a world where all the lending-related operations can be done under the umbrella of a single lending management system, fully online.   

And even though lending technology isn’t as cheap e-commerce due to the complexities of credit scoring and numerous business logic options, the credit industry entry barrier got lower than it has ever been allowing a business owner to become a lender powered by cutting-edge software at a fraction of the price.

In this post, we’re looking into the expenses a business will have to spare in order to enter the alternative credit, embedded finance, or traditional lending game.

Of course, the final sum will differ for each lending business type, jurisdiction, and the scale of the launch. We’ll give you a rundown of what you’ll most probably have to spend money on to digitalize your lending business.

Lending processes automation for digital lending

Different lenders have different automation needs. Some only require a module for borrower evaluation, decisioning, and funds disbursement, some need a hand in servicing, some in the collection, and then some need automation of their entire lending process. Arguably, going with end-to-end automation of the lending process using one software solution is preferable since you want all the functional modules and integrations to interconnect smoothly and transfer data in between them effortlessly and without any losses. 

For a lending business, the end-goals of digitalization are:

• Replacing outdated processes with software tailored to any business’ needs.   
• Eliminate unnecessary paperwork throughout the lending process.  
• Reduce operational cost and overhead of running a lending business.    
• Get rid of any human error in the entire crediting process. 
• Reduce the cost and time-to-market of launching an e-lending business.  
• Cutting credit risks, thanks to AI-driven credit scoring.  

In order to achieve that, the perfect case scenario is when a lending business is willing to create their digital presence from scratch rather than build upon a legacy solution as it usually takes an enormous amount of effort to integrate outdated software with an end-of-the-line modern platform and maintain their compatibility in the future. Extracting and moving data from a legacy system may take some time, but in the long run, it’s well worth it. And solutions like TurnKey Lender provide you with ready-made functionality to import data into the system in batches, making up for simpler transition. 

That said, savvy lenders try to get as much automation as they can from a single provider rather than turn to different vendors for separate modules. This way you run lower risks of software failures, databases uncompetitiveness, and system downtimes. Not to mention, getting separate functional modules from different providers will require much more money and will increase the time to market of your new digital lending platform.

Parts of the lending process you will need to automate to run a digital lending business include:

• Loan origination
  • application processing
  • running multiple credit products 
  • loan applications’ management
• Underwriting
  • risk scoring
  • borrower evaluation
  • credit decisioning
• Collateral management (for secured lending)
• Servicing
  • managing the repayment schedule
  • automatically charging installments
  • tracking the repayment of the loans 
• Collection
• Reporting & Analytics
• Borrower communications
• API management & Integrations (more on that later in the article)

As you can see, that’s a lot, but with the right lending automation solution it’s as easy or easier to run than an e-commerce store. Here’s what the basic loan lifecycle looks like in TurnKey Lender. But keep in mind, that for Enterprise clients, our software is capable of incredibly complex and unique flows configured in the no-code platform by our expert team. 

Now, the problem here is that the vast majority of lending automation providers don’t have a wholesome system that you can just plug in and work. More commonly they focus their efforts on some particular aspect like risk evaluation or servicing. At TurnKey Lender went another way and took our time to create a modular all-in-one solution. This way with us lenders can choose either variant:

• Get an end-to-end solution to automate every step of their lending process with us
• Just get a module they need (origination, servicing, collection, etc)
• Get the module they need and then upgrade to implement new functionality from our system

The final price depends on the type of lending operation, the size of the business, the amount of required system customization, and other influencing factors. You can reach out to our sales staff for a quote or get a free trial to see for yourself exactly what we can do for you.

We have been working with lenders for several decades now. We know their pains and needs. To address them, TurnKey Lender team came up with an innovative pricing model in which the final amount depends on the number of loans customer issues with the software rather than a flat fee. This way the company stays invested and highly motivated to help every client achieve better results and help their business succeed.

Keep in mind, that with products this complex, if someone tells you the exact price right away, it usually means that their margin is so high that it has the maximum possible customization included into the price they charge you even if you don’t use it.

Lending-related paid integrations you’ll need

Credit bureaus – If you already have a lending business up-and-running and just want to go digital, you already have access to data from one or more credit bureaus. But for a completely new lending operation, you’ll need to research your market and get access to credit bureau data to use in your credit decisions. Of course, many digital lenders rely on alternative borrower evaluation approaches, but most still factor in credit bureau data into their decisioning process to improve accuracy.

Needless to say, different jurisdictions have different credit bureaus and the price of the plan will depend on the amount of data you’ll need, detalization, accuracy, number of requests, etc.

Payment providers– In order to achieve a truly digital experience for your users, you will need seamless integration with a modern payment system like Authorize.NET, PayEasy, or PayPal. This will let you put collection and payment processing on autopilot which otherwise would be rather daunting tasks.

SMS/Email systems – a system like TurnKey Lender comes with all the functionality required for effortless email and SMS communication built-in. But you will still need to get integrations with providers like BulkSMS, ActiveCampagin, Mandrill or Gmail in order for it to actually send out notifications to your borrowers (or potential clients).

Bank account verification and statement providers – Digital lenders are on constant lookout for agile, reliable, accurate, and intelligent borrower evaluation approaches. Observing the performance of our clients, we’ve noticed that even in the pre-corona economy it was a lot safer and more profitable to utilize both traditional and alternative borrower evaluation approaches. And in today’s digital space, on-the-fly bank account verification and bank statement scoring are a must both from the usability perspective and as means of improving the accuracy of credit scoring based on real-time financials of a borrower.

E-signatures – to ensure proper online document management, you’ll need to get your lending platform integrated with e-signature software like Adobe e-Sign, SignNow, or eSignLive, which in most jurisdictions is also important in terms of regulatory compliance.

Staff expenses of a digital lending operation

Even though automation of lending comes with a drastic reduction of expenses compared to a brick-and-mortar operation, you will still need people to oversee the system.

For example, our AI-powered algorithms can automate the origination processes fully without the need to involve people in risk evaluation or credit decisioning. But generally, lenders still prefer to have a real person making the decisions.

Put real simple, it goes something like this:

the system analyzes all the data and evaluates all the risks and then presents your underwriter with an easy-to-understand interface where they have all the data to make a credit decision within seconds. Then they either decline an application, approve it and send it further in your business workflow or request additional data from the borrower.

To cut a long story short, you will need far fewer people on your staff, but there will still be staff expenses.

Web presence for a digital lending business

Now that we’re done with the part of expenses related strictly to lending, let’s go over the other things a successful digital lender has to pay for to build a decent online presence.

Website – a digital lending business begins with a website. That’s the first thing that meets the potential client’s eye and you want to make a good impression. Because the thing with digital lending is that the borrower doesn’t even need to go across the street to strike a deal with a competitor. Rival’s website is already opened in the very next tab.

So if you’re on a tight budget, you may get a ready-made website template and fill if with content yourself. Of course, this way your expenses can be as low as $70 for a website template, $100/year for hosting and $10 for a domain name. But that’s not the look and feel a reliable digital lender wants to convey. So if you can, consider investing in a proper website.

Design and development – investing in the design and development of a custom website may seem like an overkill, but that’s the 101 of making a memorable brand. The competition out there is fierce so you need to stand out.

Marketing – build it and they will come doesn’t work with digital lending. Even with superior user experience and competitive interest rates, you need to invest in copywriting, ads, SEO, email marketing, and other kinds of online promotions. Marketing can be expensive but it’s also extremely important. Especially in the beginning, until you gain traction and achieve brand recognition. So consider hiring an experienced specialist/team to get it done right. No one wants to have an awesome product that nobody can find online and use.

Final thoughts

In our experience, these are the most important and costly things every newcomer to the digital lending industry faces. And even though it may seem overwhelming at first, in reality, it’s incomparably easier and cheaper than running an old-school brick-and-mortar lending operation.

After all, the biggest and the most important thing for today’s lending business is the lending automation software it runs on. And with TurnKey Lender’s AI-driven decisioning and smooth adjustable workflows, your operational efficiency grows on average by 283% and portfolio profitability improves by an average of 65%. So if you’re not decided yet on the lending automation platform you’re going to use, reach out for a free trial and a demo. We’ll be happy to show you what we can do for you.

Digital lending ain’t easy. But with TurnKey Lender, you lower the risks and increase the returns.

Traditional lending, with in-branch origination and manual paper-based processes, has collapsed with social distancing becoming the new norm. Now offering credit digitally is a matter of survival for lenders, not a nice-to-have. We surveyed 40+ decision-makers in the credit industry and even before the COVID crisis, 57.1% of lenders were actively working to start/continue the digital transformation of their business to meet the customer demand for intuitive and fast credit. 

Filling out a paper form, meeting with your origination officer, answering the same questions, and waiting for days for loan approval has become unacceptable. Not to mention, the interest rates and terms dictated by traditional borrower evaluation approaches can’t provide the needed accuracy anymore, cause they measure the wrong metrics in the digital-first world.

Customers have developed a high standard for the financial products and services they are getting. That happened because lending automation providers, like TurnKey Lender, created intelligent SaaS solutions that lower the lending industry entry barrier and allow anyone from a bank to a retail provider to offer easy-to-use low-risk financing to their borrowers. 

Even before TurnKey Lender, our core team has been helping businesses worldwide automate their lending and banking operations. Over the years we’ve boiled the lender’s decision process for choosing a lending platform down to the following criteria:

• The ability to meet short and long-term business needs
• Presence of end-to-end integrated functionality with a modular structure
• Cloud-based vs on-premises
• Comprehensive, integrated origination and servicing modules
• Intelligent automation approaches and proprietary configurable credit scoring
• Meeting borrower’s needs in terms of user-friendliness, UI, and UX design
• Regional editions of the platform to work with the selected markets
• Ease of business logic customization
• Time-to-market and learning curve
• A proven track record of the provider

We’ve studied the pain points of credit providers and their employees and kept on improving our intelligent all-in-one lending platform to address every one of their needs. Our clientele ranges from large scale international banks to retailers providing customer financing and from community banks to peer-to-peer lenders. And today we share the details on what you need to consider when choosing lending software for your business.

1. Gap Analysis: Short- and Long-term Business Needs

The right lending software needs to be flexible yet scalable. If you start working as a one-man operation and scale it to become a multi-billion enterprise, the platform you rely on in the process should be able to handle any number of clients you have. 

But often the problem with such solutions is that in reality, they are just slightly touched-up legacy cores which are incredibly complex, demanding in terms of resources and have a steep learning curve. Many businesses have come to see that as the status quo. And it’s not.

So you’re looking for something to meet both your short- and long-term business needs and capabilities as well as fit within your budget. Luckily, FinTech providers have lowered the industry entry barrier enough to offer sophisticated lending automation solutions for businesses even on a tight budget. 

For example, TurnKey Lender Go is an end-to-end lending automation solution for SMEs, startups, alternative lenders, and retailers that comes with a free 14-day trial that allows you to get started with digital lending within a day with no technological investments required upfront. 

As a rule of thumb, you want to start the decisioning process by defining or reviewing your short-term business goals, long-term business goals, the software you currently use, and the technology you’re going to require. This will act as the basis for a software and technology gap analysis and will significantly narrow down the list of lending software platforms to pick from.

Here are some of the questions you’ll need to answer, preferably with your team:

• Who will be using the software system? Hands-on loan officers and managers as they originate and service accounts, or the executives for reports, both?

• Do you have a solution in place that you can’t or don’t want to migrate to a new lending platform? 

• Which additional features and functionality would improve the efficiency of your operation and streamline credit decisioning for your business?

• Does your current infrastructure support the type of additional functionality you need?

• Do you have a dedicated IT staff to create and manage an in-house lending software system? 

The result of your gap analysis is a concise prioritized list of lending software features and functionality that your business will need for efficient operation in short and long-term perspectives. Overall, it’s a good idea to work with a provider that acts as a strategic partner and doesn’t just treat you as another client who’s purchased a subscription. 

2. End-to-end lending processes automation with a modular structure

The problem with the vast majority of lending and digital banking platforms is that they only cover parts of the functionality your business needs. So you may end up using separate tools for origination, servicing, underwriting, reporting, etc. And as a lender, you will have enough on your plate developing your business and managing your staff, so you don’t want lending software to be an additional source of headache. It should solve your problems instead of producing them.

The answer to this challenge is to choose a software provider that can cover the entire lending process of your operation. From the moment your client opens an application form to the moment they pay out their last installment – it can and should be done from a single platform to allow for seamless communication between employees, unified analytics, reporting, and tracking for the business owner, and a quality experience for the borrowers. This approach is called Unified Lending Management (ULM).

It’s important to keep ULM in mind from the start even if you don’t need automation of the entire lending process at the moment. There are cases when you need to solve one problem at a time or aren’t ready to commit to a new core lending or digital banking platform all at once. But if you do ripen to get new functionality, it’s better that the functionality you got can be easily integrated back into the parent solution.

In a business scenario where you need to start with automating separate elements of the customer journey, the lending software you’re looking for will still need to have Unified Lending Management capabilities but with a modular structure that allows you to only purchase and use certain parts of the system you need at the moment. This way, when and if you’re ready to add more modules or upgrade to a fully-fledged all-in-one platform, the new functionality will easily integrate and let your departments communicate and process customer data effortlessly and without skipping a bit.  

3. Cloud-based vs On-Premises

Cloud-based technology has been the overwhelming trend in lending and banking digitalization for quite some time now. Nonetheless, some enterprise-level companies are still hesitant to make the switch to the cloud due to the added security and control that comes from hosting your automation solutions locally. 

Even larger lenders generally can’t afford building an advanced dedicated lending or banking software platform. And that’s not the optimal choice these days, since there are companies whose entire mission is to develop intelligent and intuitive automation solutions. The competition between the software providers ensures that lenders can rely on cloud SaaS solutions for efficient and streamlined automation that meets the needs of the business optimally. 

That’s one of the reasons why with the development of FinTech, SaaS cloud banking and lending solutions have become the prevalent choice for lenders worldwide. They can be easy to deploy, less expensive to launch than comparable on-premises programs, and the business owner still ends up in control of the software’s source code and customer data. At the same time, the freedom to keep your data and the entirety of the system on your local servers is completely yours. Just make sure to explore the benefits of the cloud-based lending and banking like the reduced cost, uninterrupted access from anywhere, and industry-leading security best practices in place. 

In any case, make sure to get a platform that includes automatic back-up systems and a high-level of cybersecurity. To give you a quick pick at how seriously we take information security at TurnKey Lender, here are just some of our certifications and accreditations:

• SOC 2

• ISO/IEC 27001:2013 and risk management

• ISO/IEC 27002:2013 clauses and controls

• ISO/IEC 27017:2015

• ISO/IEC 27018:2019

• GDPR 2016

• NIST

• OWASP

• IMDA Singapore

• PCI DSS

Read more about our information security policies here.

Cloud-based lending and banking software systems deliver a variety of benefits to lenders most important of which are:

• Easy access to advanced features and functionality which previously were accessible only to huge banks.
• Regular maintenance, software upgrades, and new product releases.
• IT and customer service support.
• The program is fully managed at a platform level, so there’s no need to build and fund your own IT department.

SaaS programs are a good choice for the lenders who want to get the best possible technology for an affordable price. It’s a way to outsource technology and focus on sustaining a competitive edge in the marketplace.

4. Comprehensive built-in origination, underwriting, and servicing functionality 

Origination and servicing are the two biggest challenges for any lender and, arguably, any banker as well. These processes require the most time, human and analytical resources, and result in the majority of errors and risks. So your systems must keep pace. 

The ideal software partner offers an integrated loan origination and servicing functionality that’s comprehensive as well as flexible and scalable. It’s important to lenders that their SaaS offered individual modules to choose the unit with the features and functionality needed today.

Here are some loan origination features and functionality to consider:

• Intelligent automated decision-making and borrower evaluation cycle.
• Customer risk segmentation backed by data.
• Combination of traditional and alternative data sources and approaches in borrower evaluation.
• Easy integration of products, data sources, and services required for accurate decisioning, seamless processing, automated disbursement and collection, and minimal credit risks.
• Flexible management of the lender’s credit products, rules, credit policies, and scoring models.
• Ability to add individual borrower evaluation processes for different credit products, portfolio segments, and business lines.
• Evaluating the efficiency and adequacy of the loan origination system’s performance and staff productivity.

To read about the things your lending platform can and should automate in terms of origination, servicing, and more, feel free to check out this post.

5. Ease of business logic customization

Out of all the banking operations, lending is by far the most complex process. To compete in the marketplace, lenders need to offer financing on better terms, faster, and in a better interface than the rivals. 

Decision making, loan approval, business logic, and workflows differ for every business. And in most lending software platforms, this means that you’d need to either roll up your sleeves and adjust the business logic of the system yourself or get your provider to make the required changes for you. 

This leads to deployment delays, higher cost, unexpected issues with functionality and data processing, and direct editing of the system’s source code to meet your requirements.

To address the needs of a large-scale operation, TurnKey Lender’s team has created the Enterprise edition of the software that comes with a state-of-the-art drag-and-drop business logic builder and lets creditors customize all the business flows on the fly without ever touching a line of code.

6. User-friendliness for the employees and borrowers

When thinking about a bank-grade functional enterprise solution, it’s common to imagine some tangled interface with complex flows and outdated design straight from the dot com era. something along those lines is what often comes to mind:

But it doesn’t have to be like this. We may be a little biased, but here’s what TurnKey Lender’s insides look like:

The most advanced software is of no use if the user can’t understand it. The lending software provider you end up using should recognize their obligation to deliver smooth experience both to your employees and to your borrowers. In today’s cut-throat market state, design your clients see is crucial.

7. Smart Automation and Proprietary Credit Scoring

For a business, it’s not just about finding a software provider with the biggest collection of features and functions (even though it’s important). It’s about the tools that help increase revenue and reduce risks. As a lender, you need technologies that help increase operational efficiency and make credit scoring faster, more accurate, and safe.

The built-in credit decisioning functionality is that important in lending software cause it defines whether or not you can manage effectively manage credit risk for both new and existing accounts. The best programs provide integration with the major credit reporting agencies and bureaus out of the box and fully remove reliance on paper-based manual processes. They include proprietary scorecards that enhance credit bureau data and analysis. And they offer non-traditional scoring methods for lenders who cater to borrowers with thin credit or emerging markets with no established credit reporting agencies.

The top programs incorporate artificial intelligence (deep neural networks) into their base system. Machine learning and data analysis can be used to continually refine your credit scoring capabilities and reduce your risks of lending money to the wrong crowd.

8. Easy to Deploy, Easy to Learn

It’s important to get your staff up-to-speed with the new system quickly in order to gain a fast return on your investment.

1. The software must be simple to install and deploy. One of the reasons we’re partial to a cloud-based platform is that it’s easy to complete the set-up process without IT expertise, including seamless integration with all your outside vendors.
2. Look for a system with a well-designed workflow that acts like a built-in training tool. You and your employees should be able to follow the process logically without cross-referencing cumbersome manuals or stopping to read pop-up training screens.
3. Look for 24/7 technology support to ensure all your implementation and training questions get answered right away.
4. It’s a good idea to test-drive the program using a free trial before you make your final decision. If a service provider looks good on paper, but doesn’t offer a free trial period, use the platform demo to get an understanding of what it’ll work like in real-life scenarios.

9. Proven Track Record

You’ll want to research the credentials of each potential service provider. Don’t just rely on advertising messages, or product and service claims made by a sales manager during a platform demo. Here are five ways you can verify a software company has a proven track record.

• Confirm that lending is their core business. Check out their website to make sure lending software isn’t just a new line extension that taps into a high-growth market.
• Search online for press releases announcing consistent new software upgrades and new product releases on reputable resources.
• Check software review websites like Capterra or G2 to read how actual users describe their personal experience with the software and support services.
• Search online to see if the technology has earned industry awards from organizations like Credit Excellence Awards, International Asset Finance, Technology Elite Awards, etc.

Where TurnKey Lender stands in those regards

• TurnKey Lender offers an intelligent all-in-one platform which at the same time is built as a fully modular solution where the client can choose the functionality they need in the form of a subscription.
• TurnKey Lender was the first company to provide bank-grade cloud-based lending software to lenders of all sizes and types
• The functionality of the platform covers the complete lending process including origination, servicing, underwriting, reporting, and compliance out of the box. Read more about Unified Lending Management by TurnKey Lender.
• TurnKey Lender’s platform powers credit scoring and decisioning by deep neural networks and utilizes smart automation on every step of the lending process. Read more about the TurnKey Lender Decision Management System.
• We don’t settle when any competitor’s tools are more user-friendly or better designed than ours. Our team of business analysts, designers, and engineers makes sure that the whole system has little to no learning curve and is easy to use.
• TurnKey Lender has worked with clients in 50+ countries and each time we enter a new major jurisdiction we roll out a country edition to address its specific regulatory requirements and peculiarities.
• As mentioned before, TurnKey Lender comes with a drag-and-drop business logic editor which allows you to customize the business flows on the go without any need to edit the code.
• The entire system is fully white-labeled so you can brand it according to your needs from your back office.
• TurnKey Lender offers 24/7 customer support provided by highly skilled technical staff ready to fix even complex inquiries.
• TurnKey Lender has won numerous industry awards and is recognized as a technological leader of the lending and banking automation space. 
• TurnKey Lender comes preconfigured to integrate with 75+ products and services including payment providers, credit bureaus, e-signature providers, email services, etc. Everything you need to run an efficient digital lending operation. 
• Should you need to integrate other products into TurnKey Lender or to display our front-end on your website or app, you can use our advanced API integration platform.
• TurnKey Lender offers both a free trial and demos of its platforms to its potential customers to show them exactly what we’re capable of.

If our company were a restaurant, it would most definitely have a Michelin star and people would stay in lines to taste what our chefs have to offer.

We’re not just making the software that sells best, our end-goal is to make fair lending globally a reality by means of our tools. And to achieve that our business analysts listen very carefully to all our clients’ needs and wants and then pass all the requests to the R&D team of outstanding engineers and designers. They, in turn, bring the most complex features into reality in slick and intuitive interfaces.

After years upon years of hands-on work with lending business worldwide, we have a crystal-clear understanding of all the important factors to consider when choosing the right lending software for different kinds of credit businesses. And we are proud that our software is objectively the best choice out there. By a huge margin. 

Schedule a free personalized TurnKey Lender demo to start your digital lending journey with us today.

If you think there’s a reason why only 26% of loans get approved by traditional banks and they are right to play it cautiously – there’s some truth to that. Lending as a business venture is no walk in the park and one needs immense dedication and formidable resources to build a successful operation from the ground up. But the competitive advantage often overlooked is the advance of technology which you can use to your benefit. Traditional banks, using traditional and outdated scoring models and employing bloated staffs across wide-spread branches haven’t adjusted to the world of digital.

That’s where the window of opportunity for the digital-native lenders presents itself. They are able to drastically lower the operational costs, increase efficiency and speed of decisions and servicing through automation as well as reduce risks by employing advanced scoring techniques to supplement the traditional approaches and data sources. For example, TurnKey Lender offers an advanced adjustable scorecard that uses deep neural networks to minimize loan issuing risks yet approve more of the safe loans.

To gain traction, a new lending business needs to achieve a balance between remaining financially solvent yet offering low-enough rates and fast-enough processing. All that can be achieved by means of automation of all the basic parts of the lending process like origination, underwriting, collection, reporting, and servicing. The market which consists of people ignored by established large-scale institutions is enormous, so it’s well worth looking into.

What you’ll need to do to start a digital lending business:

1. Market research
2. Business planning
3. Branding
4. Legal
5. Funding
6. Hiring
7. Lending automation
8. Contracts
9. Website
10. Marketing

Let’s go over each point in a bit more details.

Market research

Even while going through a deep process of global change, the lending market is rather saturated. And to deserve your place under the sun, you’ll need to carry out a comprehensive research of what your target audience will be, what their current options are, what pain points you can address best, and what specific demographics of borrowers you will be serving.

Try to stick to the markets you already have a decent understanding of. You don’t necessarily need to become the go-to lender for everyone in your town. Start small. Maybe you’ll run an auto financing business or maybe you’ve worked in agriculture before so now you know what exactly you can offer to tilt the farmers in your favor. Map out all the possible business opportunities you can think of and find the niche that you can fill with people who will benefit most from having an agile and hungry lender working with their business.

Business planning

You may use your business plan just as a framework of your own actions in the months to come, when you’ll be preparing for the launch or as a starting point for your presentations to investors if you decide to take that route of funding. Either way, this document is kind of like what a war general would do planning a battle. You sum up all of your advantages and disadvantages, gather as much intel as you can, brush up on your math skills to count all your expenses and build models of what you need to achieve and till when.

This is also where your knowledge of your target audience will come in handy. You will need to calculate the risks you will be willing to take, the interest rates that will be dictated by those risks, contingency action items, funding, and prospected returns, etc. Business plans differ but make sure to have several things clear: your initial costs and expenses, target market and selling points, and how long it’ll take the business to break even and start making profits.

Branding

Another important and often underestimated point is branding. But as we know, clothes make the man. Commonly, it takes a long time and numerous iterations to get the design brandbook, logo, and color scheme right. They need to both reflect upon your vision, be to your liking, and work on the target audience.

As with all the other points, the investments you’re ready to spare on branding completely depend on your overall budget, but the image is crucial, especially for a new business. So you may, of course, use a ready-made design and buy a $10 logo on Envato, and it may work out just fine if your offering and marketing will be that superior. But from experience, business owners are often perfectionist when it comes to their creations, so make sure to start working on your branding some time in advance.

Legal

This is a big one. No matter the jurisdiction, legal intricacies and regulatory compliance for a lending business are tough, especially the first time around. As a new lending business, you will need to open a legal entity, register for taxes (in some countries with different governing bodies, like state and federal), and open bank and checking accounts for your operation. You will also need to start taking care of accounting from the very beginning to avoid the paperwork from piling up and not to cross any lines you didn’t know existed before.

Lending businesses in most jurisdictions are strictly regulated, so you will need to consult with qualified lawyers or the authorities to get all the necessary licenses and permits to avoid fines and other legal repercussions. Keep in mind that from the start you’ll need to keep detailed records of all the actions and transfers that will happen within your business. You may even want to include the logic of money flow into your business plan, piggybacking on how your competitors do it.

The key here might be in transparency. In developed countries, the regulating bodies should be happy or at least required to help you set up your operation in accordance with their rules, so consider contacting them with any relevant questions or concerns you have.

[related-solutions]

Funding

You wouldn’t even start doing market research if you haven’t had a pretty good idea of where you’re going to get the money to back your loans. But here you want to run a deep audit of everything you (or your investors) have for this business. Or, if you’re going to launch a peer-to-peer lending operation, you want to know exactly how you’re going to reach the people who are going to lend money through you.

Some lenders start with their own savings or retirement funds, but that’s really risky. At the same time, you can turn to investors in search of financial support for your venture, but they tend to be very careful and picky as to who they entrust their money to. Plus, you will need a really good lawyer to help you organize the process not to end up doing something illegal or shady which could hamper your business down the road.

Hiring

No matter what business you’re in, it’s extremely hard to find the people with the same values, vision, and chemistry as you who at the same time have the right experience. Nonetheless, you won’t be able to do all the things necessary to have a lending operation on your own. So assuming that you’ll take the reins yourself, any lending operation will also need someone to process loans, a bookkeeper, an accountant, at least a consulting lawyer, and a compliance specialist.

And even though it may be tempting to cut expenses early on, the lawyer and compliance specialists’ consultations aren’t something lending business can afford saving up on. Any mistakes in either domain can cost your business dearly.

Lending automation

I don’t mean to sound biased, but the single most crucial part of this list is the way you choose to organize your lending process. If it’s not about borrowing your buds a couple hundred dollars, then doing it manually or in Excel is simply unmaintainable. And a business that is going to scale will need proper automation.

And not just any automation, because lending is an extremely complex process with origination, risk evaluation, decisioning, underwriting, servicing, collection, reporting, and compliance. And all of that either takes days and weeks of your time or is seamlessly automated by means of TurnKey Lender’s intelligent platform. You can check our post about the things that your lending software should be automating here. But some of the most important points in general when choosing this kind of platform include:

• An advanced yet customizable scorecard (TurnKey Lender’s decisioning engine is customizable, is powered by deep neural networks, and combines traditional and alternative approaches and data sources to provide lenders with the most accurate borrower evaluation and lowest possible loan issuing risks.)
• All-in-one nature so that all the parts of the system worked together and all your employees could operate within the same interfaces but with different functionality accessible to them.
• Easy deployment. (TurnKey Lender’s team strives to deliver a truly turnkey experience to the business and the whole system can be ready to use on the client’s side within days.)
• Easy integrations. (TurnKey Lender’s platform has been successfully integrated with dozens upon dozens of third-party software solutions and data sources for the clients)
• Easy customization. (The boxed TurnKey Lender solution is flexible enough to be adjusted to pretty much any business’ needs. And for enterprise clients, we offer a special solution which comes with a state-of-the-art business flow builder which allows you to fully customize the platform within an intuitive drag-and-drop interface.)
• Security and privacy. Users expect their privacy to be respected and their data protected. And as a lender, you’re walking on thin ice. On the one hand, you need to collect and process a ton data to comply with AML and KYC, but on the other hand, you have things like GDPR in Europe which demand you to erase user data upon request. So there’s a lot of balancing involved. That’s why you need a platform that’s compliance-ready and a local regulation specialist to consult you.

Contracts

That’s another point where you’ll need the involvement of a lawyer and a compliance expert. Get them to draft a loan agreement which you’ll sign with each of your borrowers and all the other documents which are required in your jurisdiction for them to officially become borrower and for you – their lender. Keep in mind that different types of loan operations (like mortgages, auto financing, microlending) all require different contracts.

You can of course just take a sample contract from the internet, but it’s strongly recommended to then adjust it for your specific operation. And even though many people don’t read the contracts that carefully, they should, because the clauses matter and you want to make sure that your contracts protect you.

Website

For a digital lender, web presence is exactly what an office used to be for an old-school lender. It either makes you look credible, reliable, and relatable or you shoot and miss. But in the case with digital, the potential borrower doesn’t even need to cross the street, they just switch to the next tab with your arch nemesis there.

So consider investing in a properly designed website and make sure there are no bugs and everything loads fast. We’ve done some research, and speed is actually one of the decisive factors for lenders these days. And the web experience you provide is the first place to prove that you’re worth doing business with.

Marketing

Of course, the site should be filled with quality selling texts that appeal specifically to your target audience and are optimized to show up in search for the keywords that make sense to you but aren’t too competitive.

If you can afford it, it’s recommended to hire someone qualified to do marketing for you. You will have your hands full with operational tasks and you don’t want to neglect things like PPC, SEO, content marketing, SMM, and email marketing. Not to mention offline campaigns in more traditional media, if that’s where your audience hangs out.

Final thoughts

Each lending operation is different, but the things I listed above are those you won’t be able to avoid doing. There are a lot of moving pieces. Chances are that many things won’t go as planned and you will have to adjust on the go. But that’s quite alright and that happens to everyone.

So now that’s everything ready for the launch, don’t worry and just try to serve your clients to the best of your ability. Be agile and adjust processes where you see you can improve. The main advantages of digital lenders are speed and agility. Capitalize on that.

But before we start looking at the specifics, let’s straighten up our vocabulary. Artificial Intelligence (AI) is quite a vague term. Feels like lately it’s used for marketing reasons far more commonly than for solving actual problems. Some of the more specific niches of AI that can apply to lending include machine learning, deep learning, natural language processing (NLP), and image recognition.

AI in credit decisioning and underwriting

Credit scoring and underwriting are still some of the biggest challenges and risk sources for most lending operations. That is why TurnKey Lender focused its efforts on these two domains first. 

The end-to-end lending system comes with all the functionality one needs to run a crediting business of pretty much any kind. And the benefits of deploying TurnKey Lender’s AI-driven solutions manifest both for the lender and the borrower. There’s no guesswork involved in the credit decisioning anymore, even when there’s virtually no data about the borrower. 

Thanks to the sophisticated self-learning algorithms, lending businesses make faster and more accurate decisions based on the proprietary scoring technologies. Now the application can be analyzed and the loan issued to the right people within minutes where it used to take days. Besides, lenders can tap into previously underserved or unserved demographics — the people who may have been overlooked in the past. 

Lending operations tend to process large amounts of consumer data which remained unused up until recently. This left space for human error, lengthy loan approval process, and weak fraud protection. TurnKey Lender solved this problem with advanced self-learning algorithms. They analyze large sets of consumer data, learn the behavior patterns, and make risk evaluations and credit scoring based on this data.

As mentioned above, TurnKey Lender mainly uses machine learning for credit decisioning and risk evaluation. TurnKey Lender’s CEO, Dmitry Voronenko (Ph.D. in Artificial Intelligence), guided the development of the system. He has put together a team of scientists that did machine learning and scoring projects for Boeing, LG, Bank of America, and Stanford University in the past. 

They utilized deep neural networks with self-learning scoring models based on both traditional and alternative evaluation approaches and data sources. The system learns to use prediction, classification, clustering, and association to process loan applications through user data. 

For safety purposes, the system doesn’t just use the data client is providing but also pulls the available information from various sources (like the credit bureaus and social networks). TurnKey Lender’s algorithms process the data and then present it in the form of a risk evaluation. 

Credit decisions backed by psychology and AI

Even though the credit decisioing that comes built-in with the TurnKey Lender’s platform presents an excellent usage of AI on its own, the team didn’t stop there. The algorithms and models are polished and upgraded to account for more factors and learn faster with each new release. The experience the team got working with clients from all over the world led it to create a unique, standalone, product called TurnKey Lender Psychometrics. 

AI in collections

Leveraging AI to streamline the collections process makes it drastically more effective as proven by the TurnKey Lender’s AI-driven system. Every borrower can have a personal collectability score based on all the data the platform knows about them so lenders can predict payment defaults before they occur, enabling preemptive action to mitigate risk.

The system’s intelligent algorithms analyze borrower behavior, payment histories, and financial health indicators to prioritize collections efforts, focusing on high-risk cases and devising personalized communication strategies. This not only enhances the efficiency of collections teams but also improves the borrower experience by offering tailored solutions for repayment. As a result, lenders witness a significant reduction in delinquencies and an increase in successful recovery rates. TurnKey Lender is making the once-daunting task of loan collections a more manageable, intelligent, and customer-friendly operation.

Regulatory compliance and AI in lending

Problems with compliance cost some businesses billions. So even though implementing end-of-the-line AI into your compliance workflow is costly, it’s still way cheaper than having expenses required for a bigger staff of compliance officers. Not to mention the cost of running a higher risk of getting fined.

Of course, AI for compliance relies heavily on specific jurisdictions and the law differences. But keep in mind that some things are universal. For example, no matter where you work, you got to fight identity fraud and any unlawful activities. In addition to regulations, weeding out wrongdoers is in the best interests of any lender. 

As of now, you still need to have proper compliance blueprint and human involvement in the compliance process. But you can implement AI software to address the following:

• Regulatory updates – tracking and monitoring 
• Borrower identification
• Stress testing of the system
• Identity fraud

AI use cases for lending security 

Cybersecurity is an endless race between fraudsters and white-hat developers who struggle to create protected systems. And the good guys sometimes lose. Big time. 

Source: CSO

The thing about data security is that the software requires regular updates and maintenance to combat evolving threats. That is why self-teaching AI already plays a massive role in preventing and fighting cybercrime. 

An important innovation here is, of course, image recognition technology. For example, JPMorgan Chase’s tech already surpasses humans abilities. Not to mention, saves the company a whopping 360,000 hours of work. The technology is at a stage when accurate image recognition isn’t something special. It’s a rather mundane thing you can (and probably should) have in place in a serious lending business. 

The specific parts of the security process that can benefit from AI implementation are:

• Spam filter applications
• Network intrusion detection and prevention
• Fraud detection
• Credit scoring and next-best offers
• Botnet detection
• User authentication

Intelligent self-learning software can see patterns and help lending business eliminate security threats. And not just that. 

Due to strict regulations and high sensitivity of data, financial businesses tend to be very cautious, not willing to take any undue risks. So other than protecting from the dangers, smart technology can also help reduce the number of false positives, thus increasing profits. 

A study by Javelin Strategy shows that false positives (wrongly rejected legitimate transactions) account for $118 billions of dollars in annual losses. And that’s not counting the potential lost business that won’t come back after being rejected once. Machine learning can help address that by learning about your customers and approving more of the safe accounts.

Accounting and AI in lending

As per the article Jean Baptiste Su wrote for Forbes, “, accounting tasks including tax, payroll, audits, and banking will be fully automated using AI-based technologies, which will disrupt the accounting industry.” 

And even though we’re no fans of disruption, there’s no stopping technology. And the best business can do is embrace change and enjoy the benefits of automated processes.

AI-driven accounting software for lenders can analyze receipts and invoices extracting information like VAT identification numbers from it in the form of data points. Then it may pass the data to the reporting module of a platform like TurnKey Lender. It, in turn, will help with regulatory compliance. 

Keep in mind, that generally, this software learns continuously. And over time, it will handle each client with more insight and accuracy and extract more information about borrowers faster. 

Streamlining user experience through AI

The automation is here to stay, but this doesn’t mean that your users don’t expect to receive a personal experience. Live chat solutions and various bots powered by AI can help you provide instant quality support 24/7 and only escalate complex issues to a real person. So you cut costs while improving service. 

If you collect the right data and feed it to the right algorithms, you can automatically offer tailored loans and plans based for each client. Another approach would be to do the little things like greet them by name in their language, adjust the offering on the website based on their location, etc. Your users will be thankful for personalization of experience, products, and services.

Funding insights in P2P with AI

We’ve already covered how big a phenomenon peer-to-peer lending is right now. And no wonder, since with the right wealth management, it can be extremely beneficial both for the investor and the borrower. But making money of investing is hard unless you know what you’re doing. That’s where investors can benefit from choosing a P2P platform that runs on TurnKey Lender. 

We use the same AI-driven credit decisioning techniques to evaluate borrowers who opt-in for funds within our P2P platform. This way, AI helps investors make safer and more beneficial decisions. In this scenario, the investor only deals with one metric – borrower evaluation. And for the lender everything from filling out the form for the first time to collection and payment reports is automatic.

Next steps

Real and practical AI applications aren’t matters of science fiction anymore. This software already brings real value to the business owners. And in the lending space, TurnKey Lender’s intelligent software leads the race by example. 

Biggest benefits AI brings into lending space are:

• Faster and more accurate decision-making
• Increased sales through repeated business
• Reduced operational costs
• Identification of potential defaulters
• Increased speed of work processes
• Boosted operational efficiency
• Reduction of operational costs
• Simplified regulatory compliance process
• Streamlined and personal customer experience
• Easier analysis of large volumes of data 

TurnKey Lender easily integrates with other solutions. If a business needs to implement AI automation of some processes, our team can take care of that. 

But TurnKey Lender isn’t just about AI. On a higher level, we offer an all-in-one intelligent platform that automates the entire lending process. The solution includes functionality that covers loan origination, underwriting, collateral management, borrower evaluation, risk management, debt collection, loan servicing, reporting, supervision, and regulatory compliance. The meaningful use of deep neural networks and machine learning combined with big data is what makes TurnKey Lender stand out.  

To see it in action, get a free TurnKey Lender trial or schedule a demo and see exactly why we’re the best in the business. 

But first, let’s look at who exactly needs our solutions. The short answer is any kind of business that would benefit from employing bank-grade software at a fraction of the price. You may run a peer-to-peer lending operation, a microloan business, or just a store that wants to add another revenue stream in form of in-house financing. Any business looking to sell credit products or services will have to run on some lending automation platform. And to make this business last, the software it runs on has to be good.

In recent years, the whole alternative lending industry has made a big leap to overcome the stigma of being associated solely with payday loans. For millions of businesses and individuals, that’s already a legit alternative to traditional banks who would not only deny them on the origination stage in most cases but also take days or weeks to deliver the bad news. Just to draw a comparison, the old-school banks offer an approval rating of 13%-20% while the alternative online loan providers are at 61%-64%.

The reason why alternative lenders are able to achieve these approval numbers isn’t due to the fact that they are less picky. Rather, it’s because the more agile operations are able to employ faster yet safer processes powered by advanced technologies like AI and Big Data backed with proprietary algorithms and custom selection criteria.

Arguably, alternative lending got so big in the recent years solely because the FinTech software providers like TurnKey Lender did a great job automating their business processes, reducing their operational costs, and letting them provide loans safer and at better rates. But the choice of the lending automation platform to power your alternative lending operation is critical to the success of the venture.

And despite all the marketing fluff and empty promises, very few lending automation platforms are actually good enough to save your business operational costs and time. And there are objective reasons for it, the main being that the lending process is just that complex. But worry not, TurnKey Lender’s market-leading solutions are here for you. So let’s dig into how much time and money we’re going to save you.

How TurnKey Lender saves you time and here’s how much

Minutes vs days for loan origination

One of the most complex and lengthy processes in lending used to be origination. With traditional banks, this part of the loan life cycle could take anywhere from several days to several weeks. And for a business or an individual looking to get money ASAP, this just isn’t good enough.

And the problem isn’t only with the old-school banks because many of the modern loan origination solutions inherited the outdated algorithms and manual processes from them, leaving alternative lenders with a workflow that requires a ton of loan officers’ time.

TurnKey Lender’s origination module uses advanced proprietary algorithms, self-learning AI and Big Data to make the origination process as fast and secure as it can possibly get. As a result, the risks can be evaluated by the systems and presented to the loan officer in 30 seconds after the application was submitted (the speed depends on how fast the credit bureau will automatically process data request) and the whole origination process can be boiled down to 9 minutes.

And whereas this is more relevant to increasing the speed of operation, we got to keep in mind that each hour of your employees is billable, so lenders also make big savings here in terms of the time required for analysis of each application. In addition, the algorithms will adjust to the particular clientele of each particular business. This means that over time the process will become even safer and possibly even faster. Especially if we consider the fact that some of the best engineers and business analysts on the market are constantly working on rolling out new updates.

Automated syncronized cabinets for each kind of officers

Lending is a complex business. No matter how much you automate it, there will always be a sizeable staff which will be dealing with numerous accounts and piles of documents. Documents which will need to be in perfect order if you want to:

1. Steer away from troubles with regulating bodies;
2. Keep track of all the KPIs;
3. Be able to pull all and any info you need at any moment.

These problems are addressed in TurnKey Lender’s tool suite. Each member of your team gets a cozy workspace with virtually no learning curve in which they can and will keep the document flow neat. Within the system, you will have separate spaces for:

• Origination officers
• Underwriters
• Collateral managers
• Servicing team
• Collection staff
• People in charge of reporting
• Not to mention separate cabinets for the borrowers and the investors (if you’re running a peer-to-peer lending operation).

In our most humble estimates, on average the time it takes lenders to run their whole lending process can be reduced up to five times after implementing TurnKey Lender’s AI-driven solutions.

[related-solutions]

How TurnKey Lender saves (or rather helps you make) money and here’s how much

Portfolio profitability

The metric lenders tend to pay most attention to, no matter be they bankers or alternative providers, is portfolio profitability. Due to the in-depth automation, simple customization of business processes, and meaningful use of AI and Big Data, TurnKey Lender help any type of business selling credit products increase portfolio profitability by up to two times.

Client lifetime value

In addition, according to recent studies, the retention of a client is up to 70% more likely than the acquisition of a new one. Due to the smooth user flows and in-depth automation allowing for better interest rates and less human error, end-users of the credit products have proven to stay more loyal to the alternative lenders using TurnKey Lender’s solutions.

(Source: Invespcro)

That said, TurnKey Lender improves the client lifetime value for lenders by up to 100%, making it easier to make numerous sales. And the credit here goes to user-friendly interfaces, the ease of use of the platform and the conditions at which lenders can now provide products and services and still work at a profit.

The intelligence of the software

The intelligence of the software your business runs on plays an instrumental role in onboarding new customers, retaining existing ones, and especially in making fewer mistakes during the origination and servicing processes.

The undeniable rise in operational efficiency

All of the listed above leads to undeniable growth in operation efficiency, which in turn translates into time and money saved. In a survey we carried out for the inside purposes, clients saw their operational efficiency improve on average thrice compared to the numbers they saw before implementing the solution.

Why TurnKey Lender is the way to go when automating your lending business

TurnKey Lender provides businesses with an end-to-end AI-powered solution which addresses all of their needs:

• Fast and safe credit decisioning with risk-based pricing which helps you improve portfolio risk profile and minimize write-offs.
• The most technologically advanced platform for lenders on the market. The functionality covers even the more complex parts of the process like origination, servicing, collection, and reporting.
• A wide array of built-in and possible integrations which would otherwise need to be added manually.
• Not to mention that thanks to the bootstrapped nature of the company, TurnKey Lender’s tools are cheaper than the closest competitors. The company even offers a free trial to lenders, letting them start working for free and pay as they go.

A decade ago running a fully fledged lending operation would be possible only to a large bank. It would require a huge staff and multiple branches. Now, the whole process can be automated and within days you’re safely issuing a loan in 9 minutes where it used to take 9 days. For lenders, this automation brings reduced operational costs, more reliance on technology, and therefore less human error.

All that is thanks to FinTech which grows alongside digital lenders. The thing is that to automate digital lending for your business these days, you don’t need to create your own custom platform to take care of origination, underwriting, servicing, and collection. FinTech companies, like TurnKey Lender, specialize at creating solutions to automate the entire lending process for anyone willing to sell credit products. And, as a lender, if you choose the right lending software provider, you get an easily-deployed bank-grade platform that takes care of the whole lending process at the same time making it safer, error-free and more secure.

So from the perspective of small to midsize business, lending automation is a great thing already. But it gets better as it can be used to address some of the big humanitarian issues and help NGOs in their work aimed at solving big economic, social, and ecological challenges. And here’s exactly how lending automation solutions helps in these causes.

Reaching underbanked and unbanked demographics

In 2019 there are still 2.45 billion people without access to proper banking. And as the customer acquisition rate in developed countries grows, businesses are forced to branch out into those new markets and serve the people who were overlooked before.

(Source: G2Crowd)

Why were many of these people unserved anyway? Often because they either didn’t have a proper credit history or weren’t eligible for a loan due to some other factors, being evaluated subjectively by a human. The old-school risk evaluation techniques are outdated. Now, thanks to advanced AI, software is able to make more of the right loan decisions faster. It also reduces risks for the lenders and gives chances to some of the previously underserved people since the algorithms make decisions based on more accurate and sophisticated predicting factors.

Lending automation plays a critical role in reaching underbanked audiences and providing them with access to financial services and products. Due to reduced operational costs and human error, as well as reduced interest rates and more intelligent decisioning and risk evaluation, businesses can safely loan money to those in need. And then, of course, make back more than they invested.

Another model that reinforces this point, would be P2P lending. In the peer-to-peer model, people in the same community get to be both investors and borrowers and the lenders need even less money to get the ball rolling. Just as alternative lending, peer-to-peer is also on the rise globally and can also be fully powered by intelligent automation, like that of TurnKey Lender.

Stimulating small and medium business

Automated lending stimulates small to mid-size business in two ways:

1. It provides striving lenders with bank-grade software that instantly takes them ahead of even big banks in terms of technology. As technology becomes more accessible and easy-to-use, more entrepreneurs start to try their luck in launching all kinds of alternative lending operations. For decades lending has been a prerogative of large banks. Only they had the resources and the funding sufficient to run all those branches and issue all those loans. But luckily, the market has changed and due to the development of technology, you already don’t even need to have a single physical branch or develop your own custom solution. Thanks to automation, digital-only lending operations cost less to run, rely on technology and therefore have faster processes with far less bureaucracy and paperwork.
2. With growing competition and reduced operational expenses, lenders can afford to finance people at lower interest rates and still make a profit. This way for the wider audiences it becomes cheaper and easier to start a business, make money, and grow the economy of their country.

In-house financing for ecologically and socially important projects

Being environmentally aware isn’t cheap for a business. And if you’re fighting for the cause of helping the world switch to sustainable energy, the more selling points you have for the potential customers, the better. One of such selling points is in-house financing.

When a company provides in-house financing, things like getting a loan for the installment and maintenance of solar panels instantly becomes much easier. The client neither needs to give their data to any third-party providers nor to go across town to a branch of their bank. Companies for whom lending isn’t the main revenue source can use lending automation to power up their in-house financing programs. This way they both make it easier for their clients to purchase their products and get an additional revenue stream in form of the interest rate.

The thing about lending platforms like TurnKey Lender is that they are fully customizable, making it possible to adjust business flows, decisioning rules, and interest rates without editing source code significantly reducing time to market.

And there are plenty of cases showing that this actually works. For example, staying true to their convictions, TurnKey Lender team provided a technological platform with customization options to a solar panel company in the US and a smart energy company in France which are wholeheartedly focused on environmentally conscious manufacturing, installation, and maintenance.

Lending automation for non-profit financial organizations

Starting a small business in many countries is still a privilege. And even more so getting a loan to start one. You may have a great credit score and have been an exemplary citizen for your entire life, yet it’s often a challenge to get a small business loan at a fair rate. In each and every community there are those who are ignored by the establishment.

Luckily, there are NGOs that address these specific issues and finance specifically those disadvantaged. In the light of the current geopolitical events, often those people are refugees and asylum seekers. A brilliant example of a company making the world a better place in this domain would be Thrive Refugee Enterprise. And I’d like to take this particular case apart in more details in terms of their cause and how lending automation helped it.

Thrive Refugee Enterprise is a not-for-profit organization whose primary role is to provide microfinancing and business support that can help refugee entrepreneurs start and grow viable new businesses. Thrive was established in 2017 to help refugees start businesses with financing and mentoring support. The company assists hundreds of potential refugee business owners and helps build a happier striving community where everyone gets a chance.

Thrive Refugee Enterprise uses the Turnkey Lender’s cloud platform for their microfinancing needs. They implemented it to help refugee entrepreneurs start and grow viable new businesses. The company has been looking for a software solution to automate the multistage process of loan submission for the customers with a high-risk credit score. The basic TurnKey Lender’s system feature-set advanced the organization processes with the loan servicing functionality, provided loan managers with financial reports and multiple other tools.

Due to a number of specific requirements, Turnkey Lender’s platform underwent deep customization to meet the needs of the Thrive’s business model. Nonetheless, the ready-to-use solution was delivered in only a few months. The lending platform was adapted to the complicated loan application process which comprises of filling some documents online and generating others which are required to be signed as hard copies. The system brings the customer credit reports to the loan manager thanks to the direct integration with a credit agency in Australia. Based on this data, along with that provided by a customer, the system performs the customer credit scoring which helps a loan manager to make a decision about a loan.

Why TurnKey Lender is the optimal solution for socially important initiatives

TurnKey Lender is an intelligent all-in-one platform that automates the whole lending process out of the box. And we’re devoted to the cause of helping those in need whenever we can. That’s why the company places top priority on environment-friendly projects for clients and partners. But it’s not just about being the good guys. TurnKey Lender is also objectively the optimal technological choice for those companies as the first SaaS to put bank-grade lending software on a commodity cloud. The platform is flexible enough to adjust to each business’ specific needs and versatile enough to meet most business’ needs and be deployed ASAP.

The intelligent solution covers the whole lending process including loan origination, underwriting, collateral management, borrower evaluation, risk management, debt collection, loan servicing, reporting, supervision, and regulatory compliance. The platform is driven by an advanced artificial intelligence which lets it analyze and evolve to match the specific clientele of each customer and approve more of the right loans faster.

A decade ago running a fully fledged lending operation would be possible only to a large bank. It would require a huge staff and multiple branches. Now, the whole process can be automated and within days you’re safely issuing a loan in 9 minutes where it used to take 9 days. For lenders, this automation brings reduced operational costs, more reliance on technology, and therefore less human error.

All that is thanks to FinTech which grows alongside digital lenders. The thing is that to automate digital lending for your business these days, you don’t need to create your own custom platform to take care of origination, underwriting, servicing, and collection. FinTech companies, like TurnKey Lender, specialize at creating solutions to automate the entire lending process for anyone willing to sell credit products. And, as a lender, if you choose the right lending software provider, you get an easily-deployed bank-grade platform that takes care of the whole lending process at the same time making it safer, error-free and more secure.

So from the perspective of small to midsize business, lending automation is a great thing already. But it gets better as it can be used to address some of the big humanitarian issues and help NGOs in their work aimed at solving big economic, social, and ecological challenges. And here’s exactly how lending automation solutions helps in these causes.

Reaching underbanked and unbanked demographics

In 2019 there are still 2.45 billion people without access to proper banking. And as the customer acquisition rate in developed countries grows, businesses are forced to branch out into those new markets and serve the people who were overlooked before.

(Source: G2Crowd)

Why were many of these people unserved anyway? Often because they either didn’t have a proper credit history or weren’t eligible for a loan due to some other factors, being evaluated subjectively by a human. The old-school risk evaluation techniques are outdated. Now, thanks to advanced AI, software is able to make more of the right loan decisions faster. It also reduces risks for the lenders and gives chances to some of the previously underserved people since the algorithms make decisions based on more accurate and sophisticated predicting factors.

Lending automation plays a critical role in reaching underbanked audiences and providing them with access to financial services and products. Due to reduced operational costs and human error, as well as reduced interest rates and more intelligent decisioning and risk evaluation, businesses can safely loan money to those in need. And then, of course, make back more than they invested.

Another model that reinforces this point, would be P2P lending. In the peer-to-peer model, people in the same community get to be both investors and borrowers and the lenders need even less money to get the ball rolling. Just as alternative lending, peer-to-peer is also on the rise globally and can also be fully powered by intelligent automation, like that of TurnKey Lender.

Stimulating small and medium business

Automated lending stimulates small to mid-size business in two ways:

1. It provides striving lenders with bank-grade software that instantly takes them ahead of even big banks in terms of technology. As technology becomes more accessible and easy-to-use, more entrepreneurs start to try their luck in launching all kinds of alternative lending operations. For decades lending has been a prerogative of large banks. Only they had the resources and the funding sufficient to run all those branches and issue all those loans. But luckily, the market has changed and due to the development of technology, you already don’t even need to have a single physical branch or develop your own custom solution. Thanks to automation, digital-only lending operations cost less to run, rely on technology and therefore have faster processes with far less bureaucracy and paperwork.
2. With growing competition and reduced operational expenses, lenders can afford to finance people at lower interest rates and still make a profit. This way for the wider audiences it becomes cheaper and easier to start a business, make money, and grow the economy of their country.

[related-solutions]

In-house financing for ecologically and socially important projects

Being environmentally aware isn’t cheap for a business. And if you’re fighting for the cause of helping the world switch to sustainable energy, the more selling points you have for the potential customers, the better. One of such selling points is in-house financing.

When a company provides in-house financing, things like getting a loan for the installment and maintenance of solar panels instantly becomes much easier. The client neither needs to give their data to any third-party providers nor to go across town to a branch of their bank. Companies for whom lending isn’t the main revenue source can use lending automation to power up their in-house financing programs. This way they both make it easier for their clients to purchase their products and get an additional revenue stream in form of the interest rate.

The thing about lending platforms like TurnKey Lender is that they are fully customizable, making it possible to adjust business flows, decisioning rules, and interest rates without editing source code significantly reducing time to market.

And there are plenty of cases showing that this actually works. For example, staying true to their convictions, TurnKey Lender team provided a technological platform with customization options to a solar panel company in the US and a smart energy company in France which are wholeheartedly focused on environmentally conscious manufacturing, installation, and maintenance.

Lending automation for non-profit financial organizations

Starting a small business in many countries is still a privilege. And even more so getting a loan to start one. You may have a great credit score and have been an exemplary citizen for your entire life, yet it’s often a challenge to get a small business loan at a fair rate. In each and every community there are those who are ignored by the establishment.

Luckily, there are NGOs that address these specific issues and finance specifically those disadvantaged. In the light of the current geopolitical events, often those people are refugees and asylum seekers. A brilliant example of a company making the world a better place in this domain would be Thrive Refugee Enterprise. And I’d like to take this particular case apart in more details in terms of their cause and how lending automation helped it.

Thrive Refugee Enterprise is a not-for-profit organization whose primary role is to provide microfinancing and business support that can help refugee entrepreneurs start and grow viable new businesses. Thrive was established in 2017 to help refugees start businesses with financing and mentoring support. The company assists hundreds of potential refugee business owners and helps build a happier striving community where everyone gets a chance.

Thrive Refugee Enterprise uses the Turnkey Lender’s cloud platform for their microfinancing needs. They implemented it to help refugee entrepreneurs start and grow viable new businesses. The company has been looking for a software solution to automate the multistage process of loan submission for the customers with a high-risk credit score. The basic TurnKey Lender’s system feature-set advanced the organization processes with the loan servicing functionality, provided loan managers with financial reports and multiple other tools.

Due to a number of specific requirements, Turnkey Lender’s platform underwent deep customization to meet the needs of the Thrive’s business model. Nonetheless, the ready-to-use solution was delivered in only a few months. The lending platform was adapted to the complicated loan application process which comprises of filling some documents online and generating others which are required to be signed as hard copies. The system brings the customer credit reports to the loan manager thanks to the direct integration with a credit agency in Australia. Based on this data, along with that provided by a customer, the system performs the customer credit scoring which helps a loan manager to make a decision about a loan.

Why TurnKey Lender is the optimal solution for socially important initiatives

TurnKey Lender is an intelligent all-in-one platform that automates the whole lending process out of the box. And we’re devoted to the cause of helping those in need whenever we can. That’s why the company places top priority on environment-friendly projects for clients and partners. But it’s not just about being the good guys. TurnKey Lender is also objectively the optimal technological choice for those companies as the first SaaS to put bank-grade lending software on a commodity cloud. The platform is flexible enough to adjust to each business’ specific needs and versatile enough to meet most business’ needs and be deployed ASAP.

The intelligent solution covers the whole lending process including loan origination, underwriting, collateral management, borrower evaluation, risk management, debt collection, loan servicing, reporting, supervision, and regulatory compliance. The platform is driven by an advanced artificial intelligence which lets it analyze and evolve to match the specific clientele of each customer and approve more of the right loans faster.

Digitalization leaves no industry untouched. In the last decades, lenders, traditional and alternative, have been on the lookout for new technologies to take them ahead of the competition. Software that would make credit decisioning and loan management safer, faster, and cheaper. Naturally, AI has been a focus for most.  

Many of the AI applications are still in the R&D phase, but many are already here and helping real businesses save money and streamline processes. 

But before we start looking at the specifics, let’s straighten up our vocabulary. Artificial Intelligence (AI) is quite a vague term. Feels like lately it’s used for marketing reasons far more commonly than for solving actual problems. Some of the more specific niches of AI that can apply to lending include machine learning, deep learning, natural language processing (NLP), and image recognition.

AI in credit decisioning and underwriting

Credit scoring and underwriting are still some of the biggest challenges and risk sources for most lending operations. That is why TurnKey Lender focused its efforts on these two domains first. 

The end-to-end lending system comes with all the functionality one needs to run a crediting business of pretty much any kind. And the benefits of deploying TurnKey Lender’s AI-driven solutions manifest both for the lender and the borrower. There’s no guesswork involved in the credit decisioning anymore, even when there’s virtually no data about the borrower. 

Thanks to the sophisticated self-learning algorithms, lending businesses make faster and more accurate decisions based on the proprietary scoring technologies. Now the application can be analyzed and the loan issued to the right people within minutes where it used to take days. Besides, lenders can tap into previously underserved or unserved demographics — the people who may have been overlooked in the past. 

Lending operations tend to process large amounts of consumer data which remained unused up until recently. This left space for human error, lengthy loan approval process, and weak fraud protection. TurnKey Lender solved this problem with advanced self-learning algorithms. They analyze large sets of consumer data, learn the behavior patterns, and make risk evaluations and credit scoring based on this data.

As mentioned above, TurnKey Lender mainly uses machine learning for credit decisioning and risk evaluation. TurnKey Lender’s CEO, Dmitry Voronenko (Ph.D. in Artificial Intelligence), guided the development of the system. He has put together a team of scientists that did machine learning and scoring projects for Boeing, LG, Bank of America, and Stanford University in the past. 

They utilized deep neural networks with self-learning scoring models based on both traditional and alternative evaluation approaches and data sources. The system learns to use prediction, classification, clustering, and association to process loan applications through user data. 

For safety purposes, the system doesn’t just use the data client is providing but also pulls the available information from various sources (like the credit bureaus and social networks). TurnKey Lender’s algorithms process the data and then present it in the form of a risk evaluation. 

Credit decisions backed by psychology and AI

Even though the credit decisioing that comes built-in with the TurnKey Lender’s platform presents an excellent usage of AI on its own, the team didn’t stop there. The algorithms and models are polished and upgraded to account for more factors and learn faster with each new release. The experience the team got working with clients from all over the world led it to create a unique, standalone, product called TurnKey Lender Psychometrics. 

It’s an app that uses the original AI-powered decisioning engine as a starting point and enhances it with a psychological evaluation. The test, combined with the deep neural networks which analyze its results, allows to accurately evaluate loan risks and potential borrowers even in cases when there’s no access to their credit history or even bank accounts.

Here are fresh comparisons of TurnKey Lender’s solutions and its closest competitors, nCino and Cloudlending.

Regulatory compliance and AI in lending

Problems with compliance cost some businesses billions. So even though implementing end-of-the-line AI into your compliance workflow is costly, it’s still way cheaper than having expenses required for a bigger staff of compliance officers. Not to mention the cost of running a higher risk of getting fined.

Of course, AI for compliance relies heavily on specific jurisdictions and the law differences. But keep in mind that some things are universal. For example, no matter where you work, you got to fight identity fraud and any unlawful activities. In addition to regulations, weeding out wrongdoers is in the best interests of any lender. 

As of now, you still need to have proper compliance blueprint and human involvement in the compliance process. But you can implement AI software to address the following:

• Regulatory updates – tracking and monitoring 
• Borrower identification
• Stress testing of the system
• Identity fraud

[related-solutions]

AI use cases for lending security 

Cybersecurity is an endless race between fraudsters and white-hat developers who struggle to create protected systems. And the good guys sometimes lose. Big time. 

Source: CSO

The thing about data security is that the software requires regular updates and maintenance to combat evolving threats. That is why self-teaching AI already plays a massive role in preventing and fighting cybercrime. 

An important innovation here is, of course, image recognition technology. For example, JPMorgan Chase’s tech already surpasses humans abilities. Not to mention, saves the company a whopping 360,000 hours of work. The technology is at a stage when accurate image recognition isn’t something special. It’s a rather mundane thing you can (and probably should) have in place in a serious lending business. 

The specific parts of the security process that can benefit from AI implementation are:

• Spam filter applications
• Network intrusion detection and prevention
• Fraud detection
• Credit scoring and next-best offers
• Botnet detection
• User authentication

Intelligent self-learning software can see patterns and help lending business eliminate security threats. And not just that. 

Due to strict regulations and high sensitivity of data, financial businesses tend to be very cautious, not willing to take any undue risks. So other than protecting from the dangers, smart technology can also help reduce the number of false positives, thus increasing profits. 

A 2015 study by Javelin Strategy shows that false positives (wrongly rejected legitimate transactions) account for $118 billions of dollars in annual losses. And that’s not counting the potential lost business that won’t come back after being rejected once. Machine learning can help address that by learning about your customers and approving more of the safe accounts.

Accounting and AI in lending

As per the article Jean Baptiste Su wrote for Forbes, “…by 2020, accounting tasks including tax, payroll, audits, and banking will be fully automated using AI-based technologies, which will disrupt the accounting industry.” 

And even though we’re no fans of disruption, there’s no stopping technology. And the best business can do is embrace change and enjoy the benefits of automated processes.

AI-driven accounting software for lenders can analyze receipts and invoices extracting information like VAT identification numbers from it in the form of data points. Then it may pass the data to the reporting module of a platform like TurnKey Lender. It, in turn, will help with regulatory compliance. 

Keep in mind, that generally, this software learns continuously. And over time, it will handle each client with more insight and accuracy and extract more information about borrowers faster. 

Streamlining user experience through AI

The automation is here to stay, but this doesn’t mean that your users don’t expect to receive a personal experience. Live chat solutions and various bots powered by AI can help you provide instant quality support 24/7 and only escalate complex issues to a real person. So you cut costs while improving service. 

If you collect the right data and feed it to the right algorithms, you can automatically offer tailored loans and plans based for each client. Another approach would be to do the little things like greet them by name in their language, adjust the offering on the website based on their location, etc. Your users will be thankful for personalization of experience, products, and services.

Funding insights in P2P with AI

We’ve already covered how big a phenomenon peer-to-peer lending is right now. And no wonder, since with the right wealth management, it can be extremely beneficial both for the investor and the borrower. But making money of investing is hard unless you know what you’re doing. That’s where investors can benefit from choosing a P2P platform that runs on TurnKey Lender. 

We use the same AI-driven credit decisioning techniques to evaluate borrowers who opt-in for funds within our P2P platform. This way, AI helps investors make safer and more beneficial decisions. In this scenario, the investor only deals with one metric – borrower evaluation. And for the lender everything from filling out the form for the first time to collection and payment reports is automatic.

Next steps

Real and practical AI applications aren’t matters of science fiction anymore. This software already brings real value to the business owners. And in the lending space, TurnKey Lender’s intelligent software leads the race by example. 

Biggest benefits AI brings into lending space are:

• Faster and more accurate decision-making
• Increased sales through repeated business
• Reduced operational costs
• Identification of potential defaulters
• Increased speed of work processes
• Boosted operational efficiency
• Reduction of operational costs
• Simplified regulatory compliance process
• Streamlined and personal customer experience
• Easier analysis of large volumes of data 

TurnKey Lender easily integrates with other solutions. If a business needs to implement AI automation of some processes, our team can take care of that. 

But TurnKey Lender isn’t just about AI. On a higher level, we offer an all-in-one intelligent platform that automates the entire lending process. The solution includes functionality that covers loan origination, underwriting, collateral management, borrower evaluation, risk management, debt collection, loan servicing, reporting, supervision, and regulatory compliance. The meaningful use of deep neural networks and machine learning combined with big data is what makes TurnKey Lender stand out.  

To see it in action, get a free TurnKey Lender trial or schedule a demo and see exactly why we’re the best in the business.