TurnKey Lender

In-Depth Guide to Digital Transformation of a Bank

Even before the COVID-crisis and the overwhelming social distancing trend, traditional banks were forced to play catchup with nimble alternative and in-house lenders who offer a fully digital crediting process. Now, relying on clumsy legacy solutions and paper-based workflows is simply not sustainable. Large-scale lenders need to either embrace the digitalization of credit or they won’t be able to retain their customer base and grow it. 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 An in-house or an outdated solution can turn this process into a nightmare with endless downtime, errors, and countless hours of development.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But the lack of competition made them stick to old systems without transforming and reforming their enormously complex outdated processes.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.

How Much It Costs to Automate a Lending Business 2024

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To get into the real lending game thirty years ago, one needed immense resources. And not just cash in store for funding the consumer or business borrowers, but also money for opening and maintaining offices and branches, originators, servicing managers, underwriters, collectors, analysts, etc. Even ten years ago, when FinTech craze was conquering the business world at full speed, only a big-name bank could afford to run a digital lending operation which would still be incredibly cumbersome and would take developing proprietary solutions for all elements of the lending process and integrating systems which would hardly be able to communicate with each other.  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: 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: 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: 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

How to Choose the Right Lending Automation Software for Your Business

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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. 

10-Step Plan to Become a Digital Lender

Building a viable lending business is no easy task. But in recent years, the democratization of technology and the rise of numerous FinTech startups has led to a great lowering of entry barriers into the digital lending niche. With 82% of businesses failing due to cash flow issues, the lending market, especially that of digital SME loans, presents a great entrepreneurial opportunity.

7 Artificial Intelligence Applications in Digital Lending

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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.  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: 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: 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

Here’s How TurnKey Lender Helps You Save Operational Costs and Time (and Here’s How Much of Both)

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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.

How Lending Automation Helps Make the World a Better Place

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Like it or not, lending is one of the vehicles of progress. Thanks to lending, people get funding for their ideas, their entrepreneurial dreams, and business expansions, families get their first homes and a teenager gets their first car. And like all the other financial products and services, lending is evolving.

How Lending Automation Helps Make the World a Better Place

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Like it or not, lending is one of the vehicles of progress. Thanks to lending, people get funding for their ideas, their entrepreneurial dreams, and business expansions, families get their first homes and a teenager gets their first car. And like all the other financial products and services, lending is evolving.

7 Artificial Intelligence Applications in Digital Lending

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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.  

9 Things SMEs Look for in a Commercial Lender in 2024

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As lending niche entry barrier lowers due to the development of FinTech, competition grows. Big banks have established names and loyal client bases going for them, and alternative credit providers keep improving user experience, simplifying onboarding, and lowering interest rates. That leaves new lending market players in a tricky position where they have to compete both among themselves and with the big banks. But with the right groundwork, outperforming banks and your fellow alternative lenders is possible. Our team has worked with alternative and traditional lenders for decades. We have seen every tactic in the book: what approaches work and what simply doesn’t bring the expected ROI. That’s why we’ve decided to go over the most important things that will help borrowers make a decision in your favor. Flexibility of plans A huge chunk of lending operations targets the same market segments within the SME niche. And the thing is that different small to mid-size businesses need different things. They may be looking for SBA loans, bad credit loans, secured loans, unsecured loans, long-term business loans, and whatever else you can think of. [download] As a lender, you want to offer a variety of products to your clients to make sure as few as possible get lost in the conversion pipeline. In addition, these products need to work pretty much on autopilot, without extensive human involvement. What you want to do here is to put together a list of credit products you are willing and capable of providing. Then you do thorough competitor research. You need to take apart your rivals from the business, marketing, sales, and growth perspectives. Make sure to also take into account your local regulators who won’t stay idle as you conquer the market. This means that from the getgo you need to build your product lineup with a compliance blueprint in mind. We go into more details on how to take care of that here. [related-solutions] Developing and launching a new credit product takes time and effort. And in today’s day and age you got to also offer all those products digitally. So in addition to thinking through all the details and workflows, you need to take care of making your business digital. And if you have to create the software infrastructure for each new product from scratch, delivering a product suite to help every one of your potential borrowers gets really hard. That’s where TurnKey Lender’s all-in-one lending software comes into play. The platform comes with a list of major credit products built-in and is flexible enough to meet the specific needs of your business. Feel free to check out the comparisons of TurnKey Lender automation to its closest competitors, nCino and Cloudlending. Fair interests based on advanced evaluation techniques In the end, what matters to a borrower is the interest you’ll charge them. This one also is quite a pickle. As a new business you need to hurry to make a profit: you have paychecks to cover and utilities to pay. But should your interest be one-tenth of a percent higher than that of the competitor, you run a high risk of losing the lead. So how does one offer better interest rates than the market average: Smaller operational costs: you can’t pay your employees less than the competitor because the market will take them away from you. So the only valid way to achieve the reduction of operational expenses is to automate everything that doesn’t require human creativity and analysis. You’d be surprised to learn what percentage of lending operation’s workload that is. For example, AI-powered lending automation by TurnKey Lender improves operational efficiency on average by 275%. Considering the fact that we’re talking about bi-weekly or monthly expenses here, I don’t have to tell you how big of a deal that is. Loans issued at lower risks: now, risks are harder. Lending game is all about the risks you’re willing to take as a loan issuer and the borrower trying to convince you they are reliable and can be trusted with a lower rate. TurnKey Lender has got you covered here. Namely, the part of our system that is responsible for loan origination and decisioning. We put together a credit decisioning engine that is powered by deep neural networks that learn about the types of clients each lender has and adjust over time to approve more of the safe loans faster, based on the behavior of your previous clients. Your competitors will most probably be solely relying on the client’s credit scores they get from a credit bureau. TurnKey Lender went an extra mile to help you deal with risks. Our software takes into account traditional and alternative data sources and analysis approaches and runs them through our proprietary machine learning algorithms. There can be no risk-free loans. Just as there will never be risk-free insurance. That’s the whole point of the two industries. TurnKey Lender reduces risks to a minimum helping you weed out the vast majority of unreliable borrowers and letting you make informed decisions of who to fund and what interest to charge considering the business’ risk score. You’ll see that quickly that will be the sole most important metric you rely on in your credit decisioning. [related-solutions] Easy application Technology makes people more impatient by the day. Users who’re used to getting what they need in minutes won’t tolerate a lender that makes them go through a tedious application process. Consider making the first contact with your business easy. Don’t force the user who’s just researching your offering go through a 20-step application form. You just need to get the basic details from them and once they are on your hook you’ll be able to get everything else. The application form within the TurnKey Lender platform is fully customizable. So you can collect exactly the borrower data you need at any point. Narrow specialization Observing the market for as long as we have, you start to see tendencies. And one thing is very clear. The businesses that try to please everyone at the

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Flexible loan application flow

Automated payments and loan servicing

Efficient strategies for all collection phases

AI-based consumer and commercial credit scoring

Use third-party data and tools you love.

Consumer lending automation done right

Build a B2B lending process that works for you

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Lending automation software banks can rely on

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Thank you! Get in touch with any questions at [email protected]