In-depth Guide to Digital Lending Cybersecurity in 2024
Interpol reports a 569% growth in malicious registrations, including malware and phishing, and a 788% growth in high-risk registrations. And it’s just the ones that were detected and reported. And since the trend toward the migration of businesses online, the potential for increased financial benefit will see cybercriminals continue to ramp up their activities and develop more advanced and sophisticated techniques. For many companies, digital transformation plans have been radically changed and forcefully quickened by the remote-first policies of the Covid crisis. And when digitalization is forced, many cybersecurity holes can be overlooked and can lead to data loss, breaches, or even a takeover of the lending automation system. Given the sensitive nature of the data lending operations collect, process, manage, and store, ensuring bulletproof cybersecurity is one of the cornerstones to build the foundation of a digital lending business on, to gain trust, and be a reliable partner to the borrowers. Today’s lenders contend with credentials stuffing, phishing attacks, ransomware, spyware, keyloggers, worms, and compromised accounts every day of the week. There are so many diverse threats, and so many high tech security solutions, that it can be difficult to determine the best tools for your business. Lender best practices in cybersecurity include both tried-and-true techniques as well as cutting edge technologies. The goal is to protect your customers’ personal information along with your business data using a combination of physical, electronic, and procedural safeguards that meet all applicable federal, state, and international regulatory requirements. And if cybersecurity isn’t on your agenda, as a digital lender, you may be missing out on what’s going on on the web around your business. And if at some point you believe that your lending operation is impregnable, then your early warning system may not be working correctly. Remember that it takes an average of 69 days to identify a breach. Unfortunately, consumers often are not aware their information has been compromised until they start to see signs of identity theft on clients’ accounts. Fraudsters generally use the information for credentials stuffing. This is a criminal activity where automation software attempts to access other accounts owned by the same customer. They do this by recycling the same user name and password combination on other websites. Measures to combat most common cybersecurity threats Only a large-scale bank with enterprise resources has the capabilities to develop and maintain a proprietary competitive lending automation system. With the development of lending technology, that becomes similar to creating your own e-commerce engine, instead of using some ready-made alternative tailored to your needs. It’s near impossible to keep up with cybersecurity threats in-house even if you have a dedicated department for the development and maintenance of the software. TurnKey Lender’s end-to-end lending processes automation platform has received the SOC2 Type II certification, the standard operating procedures of the company are strictly audited for organizational oversight, vendor management, risk management, and regulatory oversight. A SOC 2-certified service organization is appropriate for businesses whose regulators, auditors, compliance officers, business partners, and executives require documented standards. SOC 2 Type II is considered to be the most reliable certification to look for in a potential service provider’s credentials and proves the system to be designed for secure storage and operation of sensitive data. Other than all the cyber-security best practices, to improve AML, KYC, as well as risk assessment, for every loan application, TurnKey Lender conducts bank statement analysis, credit bureau checks, network and cybersecurity checks, application data checks, as well as a list of configurable decision rules. As a lender, you have to counter hacking attempts through insecure interfaces and APIs, borrower identity theft through two-factor authentication, lack of cloud security architecture and strategy, insufficient identity, credential, access and key management, money laundering attempts, configuration and inadequate change control, account fraud, and any number of ever arising new security threats. The key approaches to get a hold of the customer and business data used are credentials stuffing, phishing attacks, ransomware, spyware, keyloggers, worms, compromised accounts, etc. Fortunately, most attacks can be prevented by ensuring borrowers and employees follow basic rules for their password security and two-factor authorization, and the measures taken by the lending automation platform you use. For example, all of the above is addressed in the TurnKey Lender platform and the security features can be tailor-fit to each particular creditor. TurnKey Lender also applies face and document recognition, integrated into the loan application workflow. The borrower takes a photo of themselves and their ID, and our system will analyze and cross-reference the two. When creating a loan application, the borrower can take a photo of themselves with the built-in camera of their device or the webcam. Many lenders require borrowers to attach a photo to the loan application (optionally you can request photos with a form of ID for even greater security). CYBER SAFETY, DIGITAL LENDING BEST PRACTICES At TurnKey Lender we’ve identified six cyber safety best practices that should be part of every lender’s playbook: Build a solid foundation Turn staff into cyber warriors Detect fraudulent loan applications Prevent account takeovers Identify cross-device use Analyze borrower data Use two-factor authorization Deploy a cloud-based lending platform. Feel free to download the whitepaper we wrote around creating a cybersecurity playbook here. Cybersecurity disaster recovery plan outline The purpose of the Disaster Recovery Plan (DRP) is to maintain the continuous operational capacities for all systems powering your digital lending operation. For every business, recovery plans after an attack differ but here’s a high-level overview of what we do in case TurnKey Lender. In Turnkey Lender we use data centers and server hostings worldwide to prevent loss of any customers’ data. The DRP we apply is universal and applicable for all systems based on Turnkey Lender software platform. The DRP must be executed in the event of the collapse of the system caused by technical, natural, or human-made disaster. To maintain the capability for the fastest recovery TurnKey Lender: Saves all the source code for the software on both local and remote hosting
Introduction to Factoring & Invoice Financing for Your Digital Lending Operation
Running a small business is hard enough as is. But the reality we live in is such that in addition to the challenges of finding customers, paying rent, controlling quality and delivery of goods or services, one has to deal with the fact that more or less 60% of invoices are paid late. The idea behind factoring and invoice financing is to give a helping hand to businesses that struggle with this issue.
How to manage AML and KYC as a digital lender in 2024
If you’re just planning to enter the digital lending market, regulatory compliance may seem like an insurmountable hurdle. But it’s not. In this in-depth guide we’ll break down what you need to know to safely become a digital lender and unlock the improved retention, profits, and client returns. The key terms you will hear in connection to compliance are KYC (Know Your Customer) and AML (Anti-Money Laundering). The short explanation would be that AML is the overall governance framework aimed at preventing money laundering and other crimes. While KYC is a set of processes and tools within the jurisdiction’s AML framework. But to work with those regulations one needs to know a little more. Specific regulations and compliance laws differ by country but the good news is that modern lending management systems come pre-configured for easy export and formatting of reporting data and allow for automatic direct data communication thourgh an API integration. That said, let’s dig right in.
How to Start Offering Consumer Financing Online in 2024
As a business owner, you want to convert and retain as many clients as possible. And some of them won’t be able to purchase your product in one payment. To build meaningful relations with the client and keep the economy working, consumer financing options are now more critical (and intuitive) than ever. In the increasingly digital economy, businesses can’t turn down viable monetization methods. There are two ways to start offering consumer financing. You can go to a lender and outsource crediting to them, or you run crediting as a part of your business model where you act as a lender to your client. Before we proceed, wanted to check if you (or your staff) would like this white paper with all you need to know to become a consumer lender. Also, check out our Pay Later Hub which will guide you through all stages of an in-house BNPL program launch. What is Consumer Financing? Right now, also known as BNPL (buy now pay later), embedded lending, and in-house financing. Essentially, consumer financing is a sales tool that allows your clients to pay for your goods or services in installments rather than in one go. The easier to use and the fairer your consumer financing program is, the more potential sales you can convert into repeat paying customers. And if you treat them well while they pay out what they owe you, chances are they are going to think of you next time they need something. And this doesn’t just apply to electronics stores. Medical clinics, retailers, auto dealers, service providers – pretty much anyone can offer some kind of a credit line to their consumers. Not only because it builds trust, but because with the right technology, you can grow your profits while building it. What consumer financing means to a business owner is that you collect loan applications, process them to understand the risks, come up with the optimal conditions, offer a payment plan to buy your goods or services, and then automatically collect the money, with interest on the financing you provided. And while it may sound hard to implement, every step of the lending process can now be automated. “We know how to make lending cloud-based and accessible to businesses and borrowers anywhere. We’ve been doing it for years. TurnKey Lender is pioneering the development of intelligent lending technology that enables fully contactless crediting for any type of business. Our solution can be launched within a day and from there, our intuitive SaaS solution powered by AI takes care of financing your customers or providing other credit products. This and the expert integration and configuration services are just some of the things TurnKey Lender has to offer.” – comments Dmitry Voronenko, CEO and Co-Founder of TurnKey Lender. How Consumer Financing Works Usually, consumer financing is a credit that gets paid out in a matter of months in equal installments. You charge the down payment and collect the payments with interest every month. The reason why for decades most businesses outsourced financing to banks, credit unions, or alternative lenders was that evaluating credit risks accurately used to require analytical capabilities of an underwriting department. Nonetheless running your own financing program becomes more and more popular with automation taking care of risk evaluation, credit decisioning, origination, servicing, collection, and reporting. That said, there are two fundamental approaches to consumer financing – in-house financing or involving a middleman in the form of a third-party that will finance the clients for you. The same way launching an e-commerce store became available to anyone, bank-grade lending automation isn’t only accessible to large-scale traditional financial institutions anymore, with advanced SaaS providers, like TurnKey Lender, offering intelligent end-to-end automation of lending to businesses in all verticals. Ready-made solutions which are as easy to deploy and operate and don’t put a strain on the operational cost thanks to advanced AI doing all the heavy lifting behind the scenes. Consumer financing: in-house vs third-party options Outsourcing financing to traditional and alternative lenders has been the only viable way to offer financing at scale and not dedicate an entire department to managing loans. Using a third-party means involving a middleman that, at best, keeps just a part of the interest. In that scenario the client doesn’t have a relationship with you past the sale, it’s with the bank. And for some businesses that’s the right way, because administering the loans yourself means that you remain in control of the entire operation and take on all of the risks yourself. After all, that’s the reason why up until recently only a large financial institution would be able to run all the checks and accurately evaluate the credit risks of each application. It’s evident though, that in the digital age, crediting is becoming embedded into the operations of any business rather than a service from a third-party. As lending technology becomes developed enough to provide the market with intelligent easy-to-use SaaS solutions, business owners can finance their clients directly, originating the loans, servicing, and collecting payments on autopilot. While involving a third-party lender in this process may result in delays, loss of data, and reduced repeat sales. Implementing a digital consumer financing program allows you to: Technology Choice to Do In-House Consumer Financing Right Launching a customer financing program shouldn’t be a massive technological undertaking anymore. And the process for the client should be painless, so they want to come back. Enrolling for a payment plan, getting approved, and receiving your purchase should all be done from an intuitive interface of a modern SaaS, not in Excel tables or on paper. The reliability, usability, and intelligence of your operation all depend on the system you end up using to automate lending. Look for a solution with: In-house financing powered by TurnKey Lender TurnKey Lender platform makes it possible for any business to benefit from implementing a consumer financing program. From simple payment installments and merchant or vendor financing, to invoice financing or factoring – TurnKey Lender automates
What You Need to Know About In-House Customer Financing & 4 Business Types That Will Benefit From It in 2023
Throughout the history of lending, it has gone through several stages of democratization. The big banks used to have a monopoly on selling quality credit products and people who didn’t want to go to a pawnshop had no other choice but to try and qualify for an unlikely loan from a traditional institution. But things have changed.
How to Launch and Grow a Peer-to-Peer Lending Business – 6 Critical Components
P2P lending isn’t a trend. It’s an entirely new delivery vehicle that’s here to stay. Borrowers have already pushed peer-to-peer loan volume close to the $1 trillion mark, but launching an infrastructure that supports investor/borrower matching can still be a complex undertaking. Alternative and digital lenders who understand online origination and payments processing are the ones to be well positioned to succeed.
How to Choose the Right Lending Automation Software for Your Business
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.
Digital Lending ROI: Positive Return on Technology Investment
Many lenders, especially credit unions and small local banks, lag behind when it comes to financial technology. It’s a short-sighted business strategy. Cost-benefit analysis shows a positive ROI when digital lending technology delivers a borrower-centric experience and drives operational efficiencies. Digital lenders earn incremental revenue from new accounts (especially Millennials who have a higher lifetime value) and cost savings from process efficiencies. This technology lag represents a wide gap between lenders and today’s consumer. According to a Pew Research Center study (2018), consumers of all ages, income, and ethnicity are embracing technology at an accelerated rate. 95% own some type of mobile device. 77% carry their smartphone everywhere they go. And 22% are smartphone dependent, meaning their smartphone is their only resource for communication and Internet access. Mobile Ecosystem Forum (2017) released a report that shows 61% of consumers use their smartphone for some type of banking activity on a regular basis. This figure jumps to 83% (men) and 73% (women) when the survey question asks how often they conduct their banking from any type of mobile device. Statistics on SMBs (small to mid-size businesses) show a similar pattern of behavior. The top 50 global banks own 68% of the SMB market, and only 13% of these companies apply for loans with a local bank or credit union. The primary reason for this ongoing dependence on big banks is the misperception that they’ll get more sophisticated digital and online banking services. It’s a lost opportunity for community banks because research shows this group has a strong preference for local resources. Let’s Get the Facts Straight There are two misconceptions impacting the lending industry in a negative way. Misconception #1: Consumers believe big banks are light years ahead of community banks when it comes to technology-driven ease and convenience. Fact: Big banks may be further out on the technology curve than local banks and credit unions, but they’re still way behind digital lenders. It looks like big banks are doing a much better job than community banks when it comes to promoting the online products and services they do offer. Misconception #2: Lenders believe technology upgrades require a large financial investment along with a multi-year implementation schedule. Fact: There are a number of SaaS (software-as-a-service) platforms created specifically for lenders. They’re known as lending-as-a-service platforms or LaaS for short. These platforms are customized for each subscriber to reflect their brand as well as their products and services. LaaS platforms are hosted in the cloud, so all maintenance and upgrades are performed by the provider’s developers. It’s a turnkey, fully managed service at a low cost, and lenders retain full ownership and control over their customer data. Recently we published a case study on Meritrust Credit Union. The results speak volumes about the value of an online lending system. They were able to increase the number of booked loans, increase the average dollar amount per loan, and cut funding times dramatically. To put it in a soundbite – their digital platform substantially improved profitability by increasing revenue and decreasing costs. [related-solutions] Improve Portfolio Profits Fintech platforms improve portfolio profitability by: increasing the number of accounts booked increasing the longevity and lifetime value of each account improving credit quality. Lenders who use digital technology can increase the number of accounts booked in two ways. First, they expand their prospect pool to include younger, more tech-savvy Millennials. Digital loans are more attractive to this group. Plus the automated underwriting system closes more loans because it closes loans faster. Remember these borrowers tend to submit multiple online applications, and their business often goes to the first approval they receive. Second, technology-driven credit scoring approves many applicants that traditional lenders reject. Digital lenders use alternative scoring methodologies to enhance traditional credit bureau scores, which allows them to approve applicants with thin credit files. Digital lenders increase longevity and lifetime value of new borrowers in two ways. First, by attracting younger applicants who will remain a bank customer for a longer period of time. And second, by using technology to collect and analyze data on customer behavior in real-time. These insights provide lenders with more opportunities to upsell and cross-sell products like pre-approved instant loans to current customers. Retention experts tell us that every link between the bank and borrower increases loyalty and lifetime value. It’s the first step towards converting a borrower to a brand advocate who recommends you to family and friends and posts positive reviews on social media. We mentioned earlier that alternative scoring models can increase the number of new accounts. These models do double duty. They provide more accurate applicant profiles, which drives more precise account pricing, which increases portfolio yield. Decrease Operational Costs Fintech platforms decrease costs by reducing process inefficiencies. They: automate application submission and review replace paper documents and branch visits with secure online exchanges use omnichannel communications options to accelerate application response time. Remember our Meritrust Credit Union case study. When they automated the lending process they tripled their productivity. Their operational analysis group reported that the new system effectively eliminated 120 clicks compared to the older application procedures. The traditional review process requires a large number of paper documents, and almost every application needs at least a few revisions after the first pass. This is a time-consuming process with plenty of human error. Fintech platforms with pre-populated forms provide a faster, more secure transfer of information with fewer errors. A process that used to take weeks, can now be completed in a few days. Or even the same day for pre-approved offers to existing customers. Applicant response time can be shortened from 1-2 days to an instant exchange when consumers are able to reply via a mobile device, instead of coming into the branch during banking hours. Digital Lending Will Become a Commodity Today’s consumer believes there’s no difference between bank brands. They see financial services as a commodity-driven marketplace where price becomes their primary decision point. As more lenders begin to deploy technology-driven products and services,
Lender’s Cyber Safety in a World of Cyber Criminals
Data protection is one of the top concerns in the banking industry, especially for lenders who rely on digital platforms to originate accounts and manage payments processing. The problem gets more complex – and more difficult to control – when employees use third-party document sharing platforms, and lenders engage in open banking systems.
Here’s How TurnKey Lender Helps You Save Operational Costs and Time (and Here’s How Much of Both)
Since entering the lending automation space in 2014, TurnKey Lender managed to become the industry standard by which the depth and quality of automation of a lending business can be measured. Some of the biggest benefits company’s clients boast include a significant portfolio growth, an increase in operational efficiency, and improvements in the clients’ lifetime value. And for the people who are still undecided as to which lending automation platform to choose, we’ve decided to take a closer look at the benefits businesses powered by TurnKey Lender reap.
The Challenges of Running an Online Lending Business
Women in FinTech Friday Feature – Corinne Bartow
Meet Corinne Bartow, FinTech Partnerships at MX. We are excited to welcome Corinne to the LinkedIn Live stage Tuesday, April 13th at 12pm CST to share her passion and expertise as a leader in the FinTech space. Read more below on Corinne’s day to day and how she became a leading lady in the digital transformation, innovation, and technology realms. Q: How did you end up as a tech industry leader? A: I started my career as an engineer, so when I moved into a sales role it was by default that I started in the technology space. Over time I developed an interest and expertise in creating and scaling partnerships which is what I focus on most in my current role. Q: What is an accomplishment that you are particularly proud of? A: I know some people don’t think of sales as an honorable profession, but it absolutely can be. I’m proud to have helped both customers and partners build successful businesses and better serve their customers’ needs. Certainly I could share many examples to illustrate this, but really, it’s the sum total of that impact that makes me particularly proud. Q: What advice would you give to young women today who are looking to start a career in the industry? A: There are a few things that I think are universally important. Asking lots of questions and learning to be incredibly curious will go a long way. Most people are eager to help when asked to share their knowledge, so don’t hesitate to ask for help or clarifications. Think of your career as constantly evolving. Just because you start on one path doesn’t mean you have to stick to that path. Expertise matters, but so does breadth. Become a clear communicator: Boil down complexity to digestible chunks, lay out ideas, decisions and plans in writing, edit for clarity and flow. Doing these things in your written communication will help you in verbal communication. Take copious notes and make meeting note-taking a collaborative effort. Q: What new advances in technology are you most excited about? A: I am fully immersed in what we do here at MX, leveraging technology to help improve people’s financial lives. I’m working with several partners that are well aligned to that mission and we are seeing some very creative, very exciting initiatives. It’s part of how technology is enabling highly personalized experiences in all of our lives. In some ways that may keep the unadventurous from expanding their boundaries, but I expect most will enjoy the benefits of tuned recommendations and automated mundane tasks. Q: As a female leader, how do you start your day? What are your tips for productivity in the midst of a busy schedule? A: Being here in New York where I’m two hours ahead of our Utah HQ folks, my mornings have become refreshingly flexible. That makes for good focus time, but it also helps me to find time for me, whether that is for exercise or investing time in personal interests. In the morning I review my calendar for the next couple days, reserve any time I need to get “heads down” work done, respond to any urgent items in my inbox and then let my calendar drive most of my day. I am guilty of working just a bit on many evenings and weekends, using that time to get to those things that are most important to me but might not be tactically important during the work week. Q: What are some of your favorite ways to spend your time when you aren’t working? Any tips for relaxation and destressing? A: I love to cook, travel, am an avid reader and enjoy live entertainment. Much of that was quashed this past year during the pandemic, but I am just back from my first trip and it was absolutely rejuvenating. I really think the best way to destress is getting outside. Find a quiet space and just observe the natural world. You can do that even here in NYC, so pandemic or not, get outside and admire mother nature. If you are too stressed to relax your brain, podcasts can be really helpful (as opposed to TV). Q: Is there one piece of technology you cannot live without? A: I love my e-reader and have become totally reliant on Google Maps. Otherwise, I can certainly live without technology, but would not choose to do so other than a few rejuvenating tech-free holidays each year.
