5 Solid Reasons Retailers Should Consider Point-of-Sale Financing
Though relatively new as a web-enabled technology, digital point-of-sale financing had already topped $100 billion a year in the US when the coronavirus descended early in 2020. Now it’s in sharper focus among retailers striving to do two big things: boost sales that have been impaired by lockdown-inspired social distancing, and lay the groundwork for a post-Covid recovery. We’ve created this post to help businesses decide whether providing point-of-sale or POS, financing makes sense for them in these uncertain times. “POS financing, similar to the in-store financing US consumers knew 50 years ago, occurs when a merchant offers customers the opportunity to make specific purchases on credit,” says Dmitry Voronenko, CEO and co-founder of lending-technology maker TurnKey lender. “In this equation, either the merchant or a third-party vendor — a bank, say — functioning as creditor and administrator.” Appealing to consumers looking for help in hard times For consumers, Voronenko adds, tech-assisted POS financing has several advantages, such as: It’s fast and easy: In-store loan applications are processed quickly, at any point of sale, before a purchase occurs — ditto for online purchases. It’s getting popular: Thanks mainly to retail giants like Amazon and Walmart, which offer POS-financing options for online checkout, shoppers and sellers are more aware than ever before of POS-financing options, especially for bigger-ticket items. It’s dynamic and up-to-date: Lending-software firms like TurnKey have automated administrative functionality and they’ve improved credit origination and processing with artificial intelligence and customizable scoring models. It’s not a credit card: Millennial and gen-Z consumers, many of them anticipating or already struggling to meet student-loan obligations, are warier of credit-card debt than boomers. It’s a positive step: Rolling lockdowns enacted to slow the spread of the coronavirus have also slowed global supply chains and commerce. Fighting back, some retailers are providing new financing options against an economic backdrop of a sharp recession and record unemployment. POS lending in the US will account for $162 billion by 2022, McKinsey & Company says in a pre-Covid analysis of the point-of-purchase marketplace. Whatever the pandemic may do to upset this prediction, the forecast marks a sharp climb from 2015, when US retail purchases under POS arrangements amounted to $49 billion, according to McKinsey. The five critical advantages of point-of-sale financing Retailers eyeing POS financing stand to benefit in several key business areas, including: Sales and order value: By giving your consumers more time to pay, POS financing effectively increases their buying power, leading to higher sales (32% higher, according to Forrester) for you. You may also expect higher average order value as POS customers opt for higher-end products and services. Cash flow: Whether you opt for turnkey software to run your POS program, or turn to an outsourcer, a swift, accurate, and flexible credit-decision engine means less time between closing a sale and getting paid. Fees: The greatest fee advantage in POS financing is reserved for businesses that use lending technology rather than an outsourced solution. Customer base: Having consumer financing — especially when it lets your business set its own criteria — means you can attract buyers who might either struggle to qualify for personal loans, or feel disinclined to commit to a lengthy wait period for approval. Customer experience: Don’t underestimate the marketing value of providing an effective POS program. People talk, and they talk a lot about their good and bad retail experiences. A smart, customizable financing program helps create customer loyalty and long-term relationships. But how to get started? First, decide whether a third-party lender or an in-house option makes more sense. The first option — outsourcing — is great for retailers eager to avoid: Having to wait for the money. For businesses that use POS-financing outsourcers, loan settlements are between the outsourcer and the customer. The retailer gets paid in whole quickly. The intricacies of underwriting. With an outsourcer on deck, risk assessment and “decisioning” is built in. Complicated financing. Outsourcers are great for “no frills” POS financing; less so for retailers who want to probe alternative credit scoring, offer specials and other incentives in POS-lending programs to reach customers who — though not risky — might not qualify for financing using traditional underwriting rules. Weighing outsourced against software-assisted point-of-sale solutions But more and more retailers are choosing cloud-based lending technology for POS financing over outsourced solutions. This offers several advantages, including: Enhanced data integrity and security. All client data is held strictly between your business and its customers so you can cater to clients who demand complete confidentiality. You also run no risk of customers getting lured away by competitors introduced to them on the loan-servicing web pages of third-party lenders. Less checkout dropoff. A simple checkout process that doesn’t call for submitting additional applications to third parties increases the chance of the customer deciding to back out of the transaction. Sensitive underwriting rules. The retailer sets its own criteria for credit decisions and controls which customers they want to approve while ensuring that your interest rates are both profitable and adequate through risk-based pricing. The ability to use customers’ transaction records for more accurate credit decisions may result in: Operational efficiency supported by artificial intelligence to enable fast and smart decisions. Optimized portfolio yield with technology that helps retailers identify the most profitable customers on the most favorable terms. No transaction fees payable to third-party lenders — which can be as high as 15%. Encrypted apps to ensure secure functionality at any location there’s wifi or mobile data. For retailers facing headwinds from the coronavirus, measures to prevent its spread and a closely associated economic recession of uncertain depth and duration, “giving customers the option to pay for items over time through POS financing can reduce ticket shock, cement loyalty, and help retailers close sales, now and in the future,” says TurnKey Lender’s Voronenko. “So, beyond reducing the risk of unsecured lending, beyond making customers happier, a rational approach to POS financing can also boost enterprise value.” Schedule a personalized demo of TurnKey Lender tailored to your
10 Vital KPIs for Measuring the Value of Your Digital-Banking Operations
Back in May, PNC Financial’s CEO Bill Demchak told CNBC of the astonishing speed of his customers’ shift to digital banking under coronavirus-inspired social distancing. For several years prior to 2020, digital banking usage at PNC had increased at the steady rate of about a percentage point every quarter — until it went ballistic during the lockdown, said Demchak. “It jumped from the beginning of the year where digital was 25% of our sales to almost 75% of our sales last month without much volume fall-off,” he told CNBC. “We met or forced a massive shift in consumer behavior that on its own might have taken 10 years,” he added. “We just did it in two months.” If measures to contain Covid-19 have hastened the digital future of banking permanently, bankers must be wondering how to measure its success. The hunt for digital-banking benchmarks One measure with broad acceptance is ROI, short for return on investment, which gauges the financial success of a particular investment initiative, comparing its financial return to its financial cost. It’s calculated by dividing the net profit of a project by its total expense. For some organizations, this measure is too broad because it may “reflect expenses that aren’t consistently impacted by, or substantially supportive to, the project under review,” says Dmitry Voronenko, CEO and co-founder of digital-banking tech maker TurnKey Lender. To skirt this problem, many businesses look to KPIs, or key performance indicators. These are metrics the organization considers vital to achieving its goals, derived from applying ROI calculations to the expense of specific business functions that contribute to (or are impacted by) the project in question. In short, adds Voronenko, “the KPIs of a project are business-specific values that provide a sharper measure of how successful a company is in reaching its strategic objectives rather than ROI alone.” What’s the main value of KPIs? For most executives, its value is in supporting (and helping to shape) vital business objectives. It’s also important for managing staff performance and strengthening employee morale. KPIs help executives understand what’s “working” and what isn’t as aid to making strategic and tactical adjustments as needed, potentially shaping factors such as resource allocation and hiring plans . Examples of KPIs tracked by banks include everything from revenue, expenses and operating profit to findings around sales, profits and assets under management on a per-employee basis. In fact though, the number of KPIs is virtually limitless — especially for retail banks, which can engender hundreds of key indicators linked to the impact of expenses, investments, cash flows, debt, and customer service. For many bankers struggling to find ways to measure the success of newly popular digital-banking services, the sheer number of considerations may obscure the view. Success metrics for online banking To help them out of this predicament, here are 10 KPIs banks can use to help them measure the effectiveness of their digital offerings. Functionality. Banking applications should enable anything that can be done in person at a branch. KPIs for apps shed light on what works and doesn’t in online interfaces. Activity. Tracking — whether daily, weekly or monthly — how customers use a platform can lead to user-experience improvements and positive word-of-mouth. Retention. Of course happily engaged digital-banking customers are also apt to stick around. Your retention rate for digital customers — measured by return business or satisfaction scores from surveys — can tell a tale of engagement over longer periods than measures of activity can usually convey Net Promoter Score. Another, arguably wonkier, way to measure long-term growth of your digital-banking operations is an NPS, a way to understand how many of your customers aren’t just happy, but likely to promote services they enjoy to friends and family members. Typically gleaned from surveys, an NPS can help banks understand what it takes to turn customers into active promoters. Lead Generation. Do your online banking applications introduce customers of one digital service to up- and cross-selling opportunities? Banks with apps that don’t readily introduce customers to ancillary services may be losing business to other providers. Launch and load times. How long does it take your online-banking apps to load at different times of day, especially during peak hours? Ideally, the interval between click and engagement is brief. Online banking customers are notoriously impatient. Unusually, this is a KPI you can measure with a stopwatch. Task completion. This is another user-experience metric that measures the rate at which a digital-banking app accomplishes what it’s supposed to for customers. As a KPI, this is a measure of an app’s user-friendliness and ability to deliver. Abandonment. This is the flip side of task completion. Slow and unintuitive apps can drive customers away before they’ve finished what they set out to accomplish — apply for a loan, say, or add a new payee. In turn this can create not “net promoters” but active “net detractors.” Just as practically, this KPI can point to services design or technology flaws in need of immediate redress. Preference. Understanding how customers feel about online banking as opposed to in-person banking can point the way to more effective communication strategies that take such preferences into account when promoting new or unused services. ROI. We’ve already touched on this KPI, but it bears repeating. Anything that sheds light on how expense relates to returns from digital banking will tell a tale of comparative engagement. Here, a relative lack of engagement may hint at customer frustration and a need for better apps, not, as it may be tempting to conclude, a lack of interest in digital banking itself. “Each KPI should be judged on the merits of the insights it brings,” says TurnKey Lender’s Voronenko. They don’t apply in every digital-banking situation, and your bank or credit union may refer to some that other institutions wouldn’t even consider.” The overriding point is that KPIs can help banks understand the value of their digital services, according to Voronenko. “And I would add this,” he says. “KPIs have an interesting habit of creating learning cultures grounded in a willingness to test assumptions, challenge norms, and make
Digital Banking Transformation Under the Shadow of a Pandemic
Digital banking and transforming an institution to embrace this, isn’t the same as implementing online banking. Where online banking refers, broadly, to financial-service delivery over the internet, digital banking relies on process automation in support of any and all web-delivered banking services. To accomplish this, open banking is implemented and application programming interfaces, or APIs, are used to enable technology integrations in support of particular transactions and products, virtually in real-time. In this light, digital banking supports online delivery, whether it’s via desktop, ATM, or mobile device. “Here’s another way to see the difference,” offers Dmitry Voronenko, CEO and co-founder of banking-tech provider TurnKey Lender. “Online banking typically involves ‘front office’ tasks, transactions that might otherwise involve a teller at a branch — so, opening accounts, withdrawing cash, depositing checks, paying bills. “Digital banking supports sharing information across a company’s front, middle and back offices in ways that please customers — via faster, more inclusive credit scoring, for example — and result in more precise business-development opportunities for the company,” adds Vorenenko. Under the shadow of the pandemic, digital banking makes more sense now than ever The rise of digital banking was an ongoing and seemingly inevitable process before the coronavirus sped things up by creating an irksome new normal of masks, social distancing, and remote work. Although it has long been feasible to shop, pay bills, and apply for credit online, the public-health crisis has accentuated the need for advanced, access-anywhere technology for use in everyday life, including all aspects of banking. Already in 2015, bankers saw “digital” as a way to improve customer relationships (47%), achieve competitive advantages (44%), reach new customers (32%), and enjoy lower operational costs (16%), according to a report by Celent, a technology consultancy. Meanwhile, consumers have signaled a willingness to see more services shift to online options via digitization. A 2017 study by online-ad agency Verve Mobile shows that 63% of US consumers would prefer to use their smartphone for banking in preference to in-person visits, ATMs, and other online access points. Newer studies by integration-software maker MuleSoft indicates that: 27% of consumers would switch banks to get a better digital-banking experience 34% of consumers would consider using banking services from tech giants like Amazon, Apple, Facebook, or Google instead of a traditional bank 33% of consumers think it should take no more than an hour to hear back on a loan application Benefits of digital banking include speed, accuracy and the ability to say “yes” More recently, industry experts have extolled the business benefits of digital banking in the terms outlined above — efficiency, cost savings, improved competitiveness — while expanding the list to include these advantages. Enhanced accuracy Paper processing has an input-error rate of up to 40%, with particular data-verification steps taking more than five days to process due to such mistakes. Digital banking relies on simplified verification processes that reduce errors and make it easier to integrate particular solutions with core business software systems. Increased accuracy also makes compliance best practices easier to document More agility The straight-through sharing of data from different sources speeds up processing times, apparently up to the delight of consumers, says McKinsey. In fact, the consulting firm contends risk-management software, as an API-linked add-on, for example, might spot and adjust for market changes more quickly than a team of seasoned professionals Improved security In a world where even the US Internal Revenue Service can be hacked, banks can always benefit from digital-banking apps that provide extra levels of data protection Tucked into the “cost savings” aspect of digital banking is a profound customer-experience enhancer that stems from being able to say “yes” to loan applicants, more often and with greater confidence. With machine learning and artificial intelligence streamlining data for use in specific tasks, banks can use scoring methods that go beyond credit-bureau scores and basic biographical information. With digital banking, loan “decisioning” inputs include permission-based insights on things like household budgeting and social-media interactions that paint a fuller picture of the loan applicant, giving rise over time to more financial inclusion, and happier customers. Finding a tech partner to facilitate digital banking for your business This stands to reason, according to Dmitry Voronenko, TurnKey Lender’s CEO and co-founder. “When AI-fueled loan processing and other digitally enhanced banking services are in play, speeding up approval times, reaching more customers and processing more loans, the result is likely to be a measurable bump in customer loyalty,” says the software executive, who has a Ph.D. in artificial intelligence. When it comes to adapting to a new normal imposed by the coronavirus through true digital banking, banks must either build it all in-house or outsource to a trusted and specialized technology vendor that can facilitate: Quick time to market and ability to make quick changes to support emerging needs Fast scalability and adaptability An end-to-end platform that provides institution-wide integration Dynamic API integrations Security at every level and juncture Lower total cost of ownership The growing competition from alternative lenders willing to experiment with digital platforms accustoms users to well-designed interfaces and quick money disbursement. To convert new users into loyal customers, an established name of a reliable bank simply isn’t enough anymore. Borrowers expect their lender to be as easy to work with as getting an Uber. Lengthy approval procedures, high risk of non-return, uncompetitive interest rates, tons of paperwork, and outdated legacy solutions. Many financial institutions to this day struggle with these and other problems that can be solved by means of intelligent automation. TurnKey Lender is a trusted provider of enterprise-level solutions to banks and credit unions. The team has worked with National Iron Bank, HSBC, RHB, Citi, Bank of America, and others which helped distill the needs and wants of a large financial institution, regarding lending automation as a whole and the loan origination process in particular. The company makes a special focus on credit decisioning and loan origination because these are the parts of the loan lifecycle banks struggle with most. The Enterprise platform TurnKey Lender offers to banks was built with a special focus on scalability, security, and flexibility.
Open Banking As The Permanent Disruptor of Lending
Open banking changes everything “Open banking” is a financial-information exchange methodology and a source of innovation that’s transforming banking as we know it. It gives third-party financial-service developers and providers permission-based access to customers’ financial data from financial institutions via “application programming interfaces,” or APIs. In plainer terms, open banking has the potential to change everything about banking, from who gets to be a customer to who provides underlying services (and on what terms). Philosophically tied to the information-age principle of “open innovation,” open banking includes the “open data” concept, which holds that some data should be freely available for everyone to use as they wish, without restrictions from copyright, patents or other claims to exclusivity, according to one study. At root, open banking is based on the idea that data can be used to improve customer outcomes along the lines of faster, fairer, and more accurate service delivery — and that without it, the potential for innovation is blunted by considerations of data ownership. “Many financial institutions welcome APIs begrudgingly, as a cost of doing business,“ says Elena Ionenko, co-founder and business-development head of lending-software maker TurnKey Lender. “But we see them as powerful tools for making the most of relationships between customers and banks — or bank-like entities, keeping in mind that it’s not just banks playing a role these days.” The case for open banking In fact, lending by retailers, medical-service practices, capital-equipment providers is on the rise, and their success is as dependent on unhindered open-banking inputs as any old-line bank. Just in terms of mortgages, non-banks originated 53% of US loans in 2016, but 64% of home loans for black and Hispanic borrowers, according to a Brookings Institute report cited by the Washington Post. With open-banking coming to the forefront as an equalizer in the marketplace, fintech innovators have APIs in mind at virtually every turn. “Part of the agility you need to compete as a lending-tech provider these days is reflected in how configurable you are,” says Ionenko. “Nothing is hardcoded here because we know we have to be ready to support any lender anywhere in the world at any time. We win business because we’re API-minded, and have been from our inception.” Meanwhile, informed consumers see putting their (usually anonymized) financial information out there for use by third parties via APIs as a fair exchange for better service at better prices and, in some cases, for more accurate credit scores. Imagine paying for your daughter’s guitar teacher for this week’s Zoom-based lesson with your smartphone. That’s something you can do right now, and it’s all thanks to open banking, which allows you to buy items or services with a phone app that’s linked to your bank card or PayPal account. The fact you can pay that way involves a veritable ecosystem of permission-based data sharing, but the technology and necessary protocols are more than up to the challenge. Integration and interpretation of data In practical terms, open banking is dependent on database integration, and the mining and management of data that provide relevant customer insights. The timeliness of a loan applicant’s rent and car payments can shed light on the ability and willingness to meet additional financial obligations. This can help determine loan scores that are more nuanced than old-line credit scores — which have in turn have been criticized for perpetuating race, gender, and age disparities in lending decisions. In fact, innovations in loan-servicing software show how open banking can work to everyone’s advantage. Typically, lenders participate in open banking in one of three capacities. They seek to originate loans as a lender They want to create a proprietary service that complements their loan products, like an enhanced credit score They are partnered with such complementary service providers Whether the offering is a direct loan or another service that can help establish or improve relationships between lenders and customers, it can function as a lead generator that owes its power and durability to an open-banking environment. Open banking as a permanent disruptor The fact that customers have to “opt-in” to benefit from open-banking programs puts a constraint on lenders and related service providers because customers have to see a clear-cut benefit from participation. Incentives of this type in the lending realm include: Easier access to loans through point-of-sale loan-origination systems More nuanced loan decisioning derived from more credit-score inputs with better consumer outcomes “Favored client” status with access to offers and incentives that can help establish enduring customer-lender relationships In some jurisdictions, oversight of open-banking systems has been formalized. In this category are the European Union, the UK, Australia, and Hong Kong. Meanwhile, in most of the Americas, and in the Asian-Pacific region, open-banking protocols are on — or quite close to — near-term legislative agendas, according to news reports. And it’s safe to assume that compliance criteria will change as open-banking technologies evolve. “The future of open banking and API development is exciting to contemplate,” says TurnKey lender’s Ionenko. “The concept and the interfaces that make it real add up to a disruptor for which pre-digital legacy systems are a clear hindrance. The future of banking belongs to providers who are technologically nimble enough to align themselves organically to the brand at the front of every customer engagement.”
Direct Lending: Manage the Risks, Reap the Rewards
Direct lenders are well positioned to capitalize on the growing demand for non-bank loans. Consumer and SME borrowers are turning away from big banks because traditional lenders are declining more loans than they approve. Direct lenders who understand the dynamics of non-traditional funding can earn superior returns on their portfolio, without taking on undue risk.
Loan Origination and Loan Management Made Easier and More Lucrative with AI
Artificial intelligence, or AI, is changing the face of lending, empowering digital alternatives to outdated business processes while encouraging new entrants — from retailers and medical practices to trade-order financiers and equipment-leasing firms — to become effective lenders in their own right. AI takes account of data to inform decisions or predictions, broadly mimicking human cognition. It’s supported by “machine learning,” which employs algorithms and statistical models to perform many binary (“if this, then that”) tasks at once, drawing on patterns and inferences rather than requiring explicit case-by-case instructions. This helps lenders process loads of data from different sources by enabling them to identify, categorize, and make decisions based on multiple data points from multiple datasets — all in less time, typically, than it takes to wink. Before AI, the credit-worthiness of prospective borrowers was determined by scorecards “filled in” by consumer-credit agencies such as TransUnion and Experian. All the checks, third-party data gathering and analysis can take traditional risk assessment approaches weeks. If we take TurnKey Lender’s Decision Management System for comparison, it does the same in under 30 seconds. “This approach has several advantages, including accuracy and ease of oversight,” says Dmitry Voronenko, co-founder and CEO of TurnKey Lender, a lending-software maker. “On the downside, scorecard methodologies simply aren’t equipped to handle the very big-data inputs that can make a lending operation more efficient.” Artificial intelligence as a tamer of change agents This was an acceptable trade-off as long as lenders were content to sort through limited data sources — like loan applications, the lender’s internal databases, and credit-bureau scores — for information on applicants. But now, thanks to the widening sweep of digitization, there’s a deluge of alternative data sources on prospective borrowers, including social networks, mobile devices, payment systems, and web activity. The speed and accuracy of AI mean lenders can use it to manage one or more of the following business-change agents, from which no lender is wholly immune. Customer expectations: Consumers, accustomed to online banking and e-commerce, expect easy, convenient, and personalized borrowing experiences characterized by fast decisions and fast fund delivery. Machine-learning-backed AI makes loan-underwriting decisions within minutes or seconds rather than the hours or days it takes to do it the old-fashioned way. Operational challenges: AI (deep neural networks) improves the quality of insights you get from data to ensure the correct decision formulations are applied to the type of data in question. Without AI, lenders are forced to apply data-integration models that simply weren’t designed to handle the amounts and varieties of data inputs available these days. Sub-optimal customer overviews: A wider variety of inputs about loan applicants doesn’t just aid in AI-fueled underwriting. It also builds a more complete picture of the customer than pre-AI accounting systems do, even with new inputs. Regulatory requirements: Lenders fighting to stay competitive by monetizing the reams of customer data available to them are under scrutiny in many jurisdictions to ensure they’re actively safeguarding that data and harvesting it compliantly. Best-of-breed AI processes adhere to local rules and restrictions and allow for intuitive compliance workflows tailored specifically to your business model and local regulations. These solutions benefit businesses looking to distinguish themselves from rivals with the speed and accuracy of their loan origination. “False declines” — loans not granted for due to faulty data interpretation — impacts 15% of US consumers, and costs lenders nearly $120 billion a year, according to research firm Javelin Strategy. With a modern AI-driven loan origination and management solution, this enormous opportunity can turn into a part of your portfolio and a lifeline for thousands of SMEs and individuals in need of financing. Built-In AI in TurnKey Lender TurnKey Lender applies deep neural networks and machine learning algorithms for a variety of purposes on many stages of the loan’s lifecycle. The biggest and the most important is the Decision Engine. The AI within the scoring models analyzes millions of data points based on both traditional and alternative evaluation approaches and data sources. Working with the client data, the system learns to use prediction, classification, clustering, and association to process loan applications. For safety purposes, the system doesn’t just use the data client is providing but also pulls the available information from the databases it’s synchronized with (like the credit bureaus). All the data is processed by the TurnKey Lender’s algorithms and is then presented in the form of a risk evaluation. Some other unique artificial intelligence applications in TurnKey Lender include: Business performance analytics AI-Driven Bank Account Statement Scoring Employee Performance Management Psychometrics scoring Borrower’s Geolocation Tracking and Analysis Customer Rating More data, and more capacity to make sense of it AI makes loan origination less prone to human error and more reliable. It does this by freeing lenders from having to rely on credit-scoring agencies and customer inputs to evaluate loan applications. Would-be borrowers can in fact grant lenders permission to access “alternative scoring” inputs around things like customer’s spending and budgeting habits, social-media usage, and family situations to the extent they shed light on the customer’s ability to repay a loan on schedule. This, and AI’s role in making sense of all this additional data, makes false declines less likely, and lays a foundation for better overall loan-portfolio performance. AI can also play a role in loan management by helping lenders spot behavioral patterns that could lead to default — and trigger outreach to the borrower that’s geared to avoiding this outcome, or lessening its impact for the lender. Reducing default risk in this way not only prevents loss, but it can also even preserve available credit for worthy borrowers. “It’s hard to overstate the importance of AI to improving loan origination and management, which in our case is proprietary,” says TurnKey Lender’s Voronenko, a data scientist with a doctorate in artificial intelligence. “This approach to scoring is making consumer lending and business crediting faster, more secure, and more rewarding for lenders and borrowers alike.”
Seven Ways to Tell if an LOS Provider is Right for You
With hope for a quick economic recovery from coronavirus lockdowns seemingly dashed by the contagion’s resurgence around the globe, financial-service firms, retailers, and business-to-business providers are looking with renewed intensity for adaptations to the pandemic and nascent post-pandemic protocols. For some businesses, COVID-conscious office layouts, plexiglass partitions, and staggered shifts have come into view as components of workplace social distancing. For others, remote and contactless commerce will be make-or-break, with e-lending playing a prominent role in helping businesses and consumers rebuild around an amorphous new normal. Rising demand for loan origination systems E-commerce has been around since the mid-1990s at least. But fully supported e-lending took wing later, during and right after the Financial Crisis of 2008. Its first iterations formed the underpinnings of web-based lending through traditional players such as banks and credit unions, along with some direct-to-consumer forays by fintechs. Since the mid-2010s, however, online lending has emerged as a force in retail, equipping businesses to extend credit to consumers at the cash register or on the road, with decisioning analytics performed in minutes rather than hours or days — and in some cases without the need for financial intermediaries. “The point is to give businesses more opportunities to close more sales and deepen customer relationships while creating stronger loan portfolios and providing mission-critical business intelligence,” says Dmitry Voronenko, CEO and co-founder of lending-platform provider TurnKey Lender. “We’re seeing rising demand from traditional lenders and retailers, as well as from businesses involved in capital-equipment factoring, trade facilitation, and lease lending.” Adds Voronenko: “Boiled down, it’s at the point now where a business that wants to extend credit can do it intelligently, efficiently, and on its own terms. All you need is internet connectivity.” That’s all great, of course, but how does a business shop for a loan-origination system, or LOS, in the midst of a pandemic? Best practices for LOS shopping For Voronenko, like most experts in the field, it comes down to matching needs with options in the marketplace, a process that starts with establishing a basic understanding of the lending space. To help lenders, whether novice or established, succeed in their search for a flexible and reliable LOS, we’ve compiled the following checklist. Get a good overview. TurnKey Lender recommends that lenders, especially new ones, start getting up to speed on their understanding by visiting online resources, including its own website. Operating on the premise “an informed customer is the best customer,” an LOS’ salesforce is another great resource for prospects looking to match their needs to particular system providers. In addition, user-rating platforms like Capterra and G2 can be great sources of information about particular offerings’ real-world performance. Every lender is different. Find an LOS provider that understands that. Effective responsiveness requires speed as well as precision. Lenders want digital capabilities they can roll out quickly to support customers in the current crisis and beyond. An LOS provider like TurnKey Lender provides solutions that are configurable for each client firm using flexible flow-building and rules-management tools that makes its time-to-market hyper-competitive. Increased importance of data security and customer privacy. TurnKey Lender demonstrates its readiness on this front through third-party certifications. The main gauge for best practices in safeguarding the lender’s data and their customers’ peace-of-mind is the Open Web Application Security Project, or OWASP, standard. TurnKey Lender is compliant with this standard, complying with the widely recognized ISO 27001 standard of information security, and the ISO 9001 standard for its quality management. These certifications ensure TurnKey Lender meets or exceeds all statutory and regulatory requirements. Lenders want a one-stop solution. Banks and other tenured lenders are turning away from siloed solutions for different stages of loan origination and processing, and for different credit products. TurnKey lender is at the forefront of this convergence, with the flexibility and power to support loans of every sort — all on one platform that features consolidated reporting for immediate insight on credit portfolios across product types. An LOS should equip the lender to compete, even with the big guys. TurnKey Lender is the “Intel Inside” many large- and middle-market lending platforms, through which it has processed millions of loans. These institutions achieve fast and accurate application processing, and superior customer experiences. An LOS provider that knows how big lenders operate can make its clients competitive with established digital lenders on all fronts. The right LOS will simplify operations, not complicate them. Does your business have the staff and the institutional knowledge to develop, maintain, and manage an advanced lending software platform on site? If not, you may take a cue from many small- to midsize lenders and opt for a cloud-based “lending as a service” model — which is also the choice these days for many large organizations eager to balance cost-savings with data security. In the current crisis, speed to market is paramount. Because its uses flexible workflow and rules-management tools, an LOS provider like TurnKey Lender can get your lending operation up and running quickly, so you can get to work extending credit where it’s needed most. As an additional incentive to businesses contemplating the move to e-lending, it’s worth noting that consumers’ online habits seem to have changed in the pandemic, with some assuming the transition will stick. Lenders, welcome to your digital future According to an early May 2020 survey of consumers by payments-industry tracker PYMNTS, 26% of generation X who shifted routines to online platforms don’t plan to move back offline once the pandemic is over or under control. Perhaps more impressive, 21.7% of boomers and seniors say the same, as do 23.8% of millennials, and 24.6% of “bridge millennials” (between age 32 and 40). “The stage was set for an accelerating migration to e-lending before the coronavirus pandemic — as much a function of raw demand as where smart technology is taking us as a society,” says TurnKey Lender’s Voronenko. “But this unfolding event, as tragic and disruptive as it is, has significantly heightened both need and awareness of it. In short, it’s a solution whose time has come.” Reach out to the TurnKey Lender team today to learn more.
P2P Lending Is Set To Take Off. Here Are The Reasons Why
Peer-to-peer lending is primed for significant growth, fueled by lower operational costs for lenders and broader availability for borrowers in a period of market disruption and innovation linked, in part, to the coronavirus pandemic.
Credit Scoring in the New Economic Reality – How AI Helps Make Better Decisions Much Faster
Your company’s lending program is only as good as its credit scoring. More than any other non-macro factor, how — and how deeply — your company assesses prospective borrowers will determine the size and profitability of its lending program.
TurnKey Lender and REPAY: Instant Disbursement and Repayment Capabilities – Step-by-Step Demo
To create lifelong consumer advocates in the digital age, you don’t need to spend more on advertising. What you need is a quality product and to provide a superior user experience. In this video, we’ll show you how easy digital lending can be for your customers. Below is a demo of how the TurnKey Lender Unified Lending Management solution integrates with REPAY, which allows for instant loan decisioning and funding as well as fully automatic repayments. First, let’s login to the TurnKey Lender dashboard and see that the REPAY integration is active. Navigate to the System Workplace > Integrations. Find the payment processing section and check the: API Login Secure Token And Merchant ID Note, you can get these details from your REPAY account. Next, let’s proceed with creating a loan application in this TurnKey Lender Portal as a borrower. This is the starting screen your borrower sees when they want to apply for a loan and that’s where they specify the basics of their funding needs. The borrower needs to provide an email and a password to create a profile in the lending portal. Next up, the user needs to fill out the form with their personal details that will help make a credit decision. You can edit this form from your TurnKey Lender Dashboard to collect custom data points. Please note that we’re using automatically generated customer data for demo purposes. The user needs to accept the disclaimer and they can then submit the application for credit scoring and decisioning. The next screen that opens is the TurnKey Lender Borrower Portal which is already populated with the data that has been provided in the previous step. While the loan request is being processed, the borrower needs to add the Bank Details for disbursement and repayment to their account. Next, open the loan application we’ve just created and click I accept to sign the electronic loan agreement. You can attach a custom agreement from the System Dashboard. As you can see, our borrower here has qualified for the loan they requested, it has been approved, they can see their upcoming payments and the funds are being transferred to their bank account. The borrower can repay the loan in full or just the upcoming installment at any point of time from the borrower portal if that’s permitted in your credit product. The payments are processed and the schedule updates with new payments’ data instantly. Lender’s Side of The Deal Now let’s switch back to the lender’s side of this deal. We’re back now in the TurnKey Lender Dashboard Servicing Workplace. Let’s see what this loan looks like from the backend. You can see that the same payment details are available to the Servicing Officer in the Borrower’s Loan Application. You can also check the specific transaction data in a dedicated tab. In case you need to export this data to excel, the export feature is located right there. And if we set this example for the loan repayment to a month from now, when the next payment is due, we’ll see that the System charges the bank account automatically having warned the client about an upcoming payment beforehand. TurnKey Lender Payments’ Reporting Now, let’s see how the payment data looks in the Reports Workplace. The TurnKey Lender system provides lenders with a number of built-in reports. It also processes the borrower data and the performance of your operations to present in an easy-to-understand and analyze manner so you can present it to stakeholders, investors, auditors, or for any other purposes. In case you need to create a custom report for your business, TurnKey Lender comes with a powerful Reports Builder that allows you to build informative and dynamic reports right from the System Dashboard. Exporting Payments’ Data Next, let’s navigate to the Tools Workplace > Export > Payments Export. As you can see, you can filter and sort the payments’ data to your liking and analyze it from the workplace or export it into your preferred format. That’s all there is to it! Instant Loan Disbursement and Repayment Capabilities with TurnKey Lender and REPAY. Reach out today and talk to us about automating your lending management.
Lending Approval Process: Keeping Pace with Next Gen Borrowers, Part One
There’s a changing of the guard, but it’s not at the palace. Millennials are pushing Baby Boomers out of the top spot for most coveted consumer demographic as this latter group ages and shrinks in size.
SME Borrowers: Perfect Match for Alternative Lenders
Demand for business loans continues to rise, especially when it comes to SME borrowers. On the other hand traditional funders like banks and credit unions continue to decline the majority of these applications. And they use a slow, paper-based process to come to their negative conclusion. This is good news for alternative lenders who can leverage technology to approve far more loans with a faster, easier process that supports better credit decisions.