How traditional finance providers can capitalize on the embedded lending revolution
A large portion of credit has moved to the point of sale forcing traditional and alternative lenders to embrace innovation and adapt to maintain and grow their borrower base. Nonetheless, most financial institutions still can’t meaningfully automate their manual loan origination, loan management, and debt collection processes. For established lenders, reimagining the operations of your lending business is a major undertaking, especially considering these factors: Luckily, these challenges aren’t unique. Consumer and commercial lenders in 50+ countries use TurnKey Lender to digitize all elements of credit and service ~100 million borrowers. But first, would you like to learn how we use AI to automate credit processes for b2b and b2c lenders in 50+ countries? We’ve asked the company’s CEO and co-founder, Dmytro Voronenko, PhD what established large-scale finance providers need to understand and do to improve the ROI of their lending and banking technology investment. How urgent is it for your lending business? Over the last several decades, the talk of urgent digital transformation of financial products and services has been ongoing. And the flood of digitalization during the pandemic set new standards for how borrowers want to interact with lenders. So how can large-scale consumer and commercial lenders capitalize on the lessons of the embedded lending revolution? Dmytro comments: “The embedded finance phenomenon showed traditional and alternative lenders that their place in the marketplace isn’t theirs by default. BNPL trailblazers have paved the way and proven that borrowers are ready to pay a premium for instant, contextualized, and user-friendly digital credit. This created a new sense of innovation urgency in the industry, which we’re witnessing right now despite slower overall economic growth. At TurnKey Lender, we’ve been pushing for AI-powered end-to-end lending automation since 2014. Recent years have shown that even conservative financial institutions have become eager to use a powerful SaaS like TurnKey Lender instead of their legacy homemade infrastructures.” How do large-scale lenders adapt The market has been buzzing about the embedded lending revolution for the last few years, but what changes have happened to the thinking of the traditional finance providers? Dmytro Voronenko comments: “We see more and more traditional finance providers, both consumer and commercial, experimenting and innovating to stand out. For example, every day, more lenders start using segment-specific alternative credit scoring data for automatic low-risk loan decisions. In short, large-scale finance providers have come to terms with the digital-first reality, and right now, we’re going through a massive shift in the marketplace as they transform their operations. And, of course, we’re happy to help them do so correctly.” What’s stopping 70% of lending businesses? Despite the clear benefits of digital transformation, McKinsey & Company reports that only 30% of banks have successfully transformed digitally. If the digital transformation of credit has become so commonplace, what is stopping the rest? Dmytro explains: “Making the jump to a new digital infrastructure is scary, even when you know it’s necessary. Many of the remaining 70% also tried going digital but failed. Most often due to a poor strategy and the wrong technological choices. Every financial institution understands that managing lending processes manually from a branch is not sustainable when more competitors offer instant digital approvals online each day. So what stops them now is a lack of digital expertise and fear of failure in the environment where they may only have one chance to retain their audience in the digital world. In many cases, there’s also resistance from internal stakeholders used to working the old way. That said, the transition to a digital-first process is inevitable, and every day of delay costs the business another fraction of its user base. That is why McKinsey & Company, Deloitte, KPMG, and other prominent companies recommend prioritizing digital efforts now more than ever. As proven by independent reviews and ratings, the TurnKey Lender Platform has all the necessary capabilities to make the digital transformation of the lending business a whopping success.” Why TurnKey Lender to digitize your lending process TurnKey Lender platform automates complex lending processes for creditors worldwide and is recognized as a leading automation provider for consumer and commercial finance providers by researchers at IDC, Gartner and others. For example, here’s one of the IDC reports with TurnKey Lender leading the space in Consumer Lending Decisioning Platforms. Some of the things that make us stand out include What TurnKey Lender lets you do Final thoughts Traditional B2C and B2B finance providers must learn from digital-first lending products to stay relevant and competitive. The shift to digital is not just inevitable but essential for growth and sustainability in the current financial landscape. TurnKey Lender offers a pathway to this transformation, providing the tools and support necessary for a successful transition. For executives in financial institutions apprehensive about digital transformation, the message is clear: the future is digital, and the time to act is now. Reach out to explore how TurnKey Lender can guide your institution through this journey.
Why Auto Dealers Should Consider Digitizing Their In-House Lending Programs
10-point checklist for choosing your new loan origination software in 2024
Companies spend months negotiating with LOS vendors to choose the infrastructure for their lending operations. But same as when picking a car, if you know what to look for, weeding out vendors who’ll turn out incompatible is immensely easier. Initial SaaS filtering criteria There are many loan origination systems. And most of them don’t meet the lender’s most basic Software-as-a Service (SaaS) requirements. So, before we go into the questions specific to loan origination solutions, here are the general quality assurance criteria to consider with any such core technology choice. These criteria are crucial, but it takes a little more to navigate the loan origination software waters. Loan origination software selection must-haves 1. Loan application flow configurability 2. Real-time application processing 3. Scalability to handle growing portfolios 4. Innovative credit product development 5. Credit scoring accuracy and flexibility 6. Keeping up with industry and regulation 7. Supporting digital credit beyond loan origination Fragmented lending solutions lead to errors, higher costs, and inconsistencies in borrower experience. It’s important that your LOS vendor lets you upgrade the system with new features and integrations out of the box. TurnKey Lender LOS is a part of end-to-end lending automation infrastructure that covers all elements of consumer and commercial credit. From loan processing and disbursement to servicing, debt collection auditing, and reporting – TurnKey Lender does it all. 8. Reliable uptime Reputation losses withholding, the average cost of downtime for businesses is $5,600 per minute. This means that even a short outage can have a significant financial impact. TurnKey Lender reliably delivers a 99%+ uptime, ensuring a seamless cloud-based experience, keeping services online and dependable, no matter where operations are based. 9. Borrower’s self-management capacity Borrowers hate being confused about anything concerning their finances. Intuitive user interface and clear communication make all the difference to the person applying for finance. Borrower gets a personalized online loan application process with an instant decision. They can pick their application up and all their lending interactions take place in an intuitive borrower portal. 10. Time-to-market for initial release and updates You need to be able launch credit products, add integrations, and adjust application flows quickly and autonomously. This disqualifies most LOS providers who take months to deliver requested updates due to the software complexities. TurnKey Lender comes with pre-configured location- and industry-specific credit calculations, workplaces, and integrations to ensure 3-5 faster time-to-market. Once in place, most lenders start to handle all aspects of credit on their own, but TurnKey Lender Team is constantly at your disposal for any additional features configuration.
7 Artificial Intelligence Applications in Digital Lending
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
10 Vital KPIs for Measuring the Value of Your Digital-Banking Operations in 2024
There’s no denying that Covid did to digitalization what no technology evangelist could. 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. 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. We met or forced a massive shift in consumer behavior that on its own might have taken 10 years. 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.” But first, wanted to check if you (or your staff) would like this case study of how TurnKey Lender helped National Iron Bank transform their commercial lending process. 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. “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 sure outcomes are net positive for customers, in a pandemic or not.” Lending business KPI tracking in TurnKey Lender TurnKey Lender offers integrated end-to-end solutions for crediting and banking processes automation. The system uses machine learning algorithms to collect, process and presents all of the important business performance indicators at a glance in the Reporting workplace. One dashboard lets you get a working understanding of the business’ well-being, analyze the current effectiveness of staff efforts, as well as explore aggregated assets and current portfolio state. Plus, with the remote work trend being the new normal, it’s critical to be able to clearly see your staff’s performance. The built-in KPI tracking functionality lets you instantly outperform the competitors in terms of quality and accuracy of insights you get about your originators, underwriters, as well as servicing and collateral officers. The evaluation of each employee’s productivity is based on their responsibilities, taking into account numerous relevant factors, and then uses AI to process, cross-reference, and present the data to the lender. TurnKey Lender’s intelligent SaaS provides you with both a real-time and historical insight into the performance of your lending business. Schedule a personalized demo to see how TurnKey Lender can help your business grow.
7 Artificial Intelligence Applications in Digital Lending
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.
A Loan Management System Without Origination and Underwriting Doesn’t Cut It
For many organizations on the precipice of digital transformation, the thorniest parts of in-house lending are the steps known as “origination” and “underwriting.” Some may be tempted to add “loan management” — also called “loan servicing” and “loan collections” — to this shortlist, but insiders know the loan-management piece is pretty straightforward. Sure, handling schedules, rollovers, fees, grace periods, and other intricacies pose challenges if you’re stuck with outmoded technology, but they’re easily met using a robust software-as-a-service financing platform. Origination and underwriting, on the other hand, “can be difficult steps because they encompass all the key analysis and business decisions made with respect to loan applications,” according to Dmitry Voronenko, co-founder and CEO of TurnKey Lender, a top lending-platform-software provider. “Get these initial steps wrong, or take too long to reach conclusions, and your business will suffer — a fact that keeps untold numbers of businesses out of embedded lending in the first place,” he adds. “That’s both unfortunate and avoidable.” But first, wanted to check if you (or your staff) would like this condensed white paper on the things you have to consider when choosing a loan origination software vendor. Trouble is, some businesses think they can simply buy the management piece and handle gathering and analyzing crucial data using spreadsheets and legacy-tech workarounds. That’s a mistake, and the market seems to know it. Reflecting a decided move toward integrated loan management, the global digital-lending platform market is expected to approach $20 billion by 2026 for a compound annual growth rate of 19.6% through the seven years prior. Like trying to build a rocketship with baling wire and duct tape Loan origination is a multi-step process. To start, loan applicants submit financial information such as bank balances, bill-payment history, credit card information, and sometimes even tax returns. Lenders use these origination inputs to determine eligibility and — if it’s deemed a “go” — assign the most appropriate interest rate to offset risks the lender takes for making the loan, a process known as underwriting. But it isn’t just a matter of achieving business viability by means of efficient origination and effective underwriting. It often happens that — just as different businesses serve specific client types (in terms of, say, age, affluence, occupation, and recreational interests — a one-size-fits-all approach doesn’t do the trick. Lenders need customizable application forms to take proper stock of would-be borrowers, and manual approaches are simply too slow and too error-prone to work for most organizations. That’s where a specialist software provider like TurnKey Lender comes in. “We have loan origination and underwriting modules that are time-tested in more than 50 markets worldwide,” says Voronenko. “They can and do work as standalone solutions, but they work even better as parts of our end-to-end automated platform, best exemplified by our Unified Lending Management Solution.” TurnKey Lender’s modules are “extremely flexible, and they allow lenders to adjust application, scoring and decisioning functionalities in minutes from an intuitive platform.” When a business of any size or type — retail or wholesale, B2C or B2B — offers its customers credit from a digital platform, the loan-management piece is relatively simple. The organization sends out due-date notifications and — with prior permission — charges the borrower’s bank account directly. It’s that easy. But for loan servicing and collections to be as straightforward, the origination and underwriting pieces have to be done right. Errors created at those stages and not caught beforehand can cause trouble down the line. It’s where you can really see lenders start getting bogged down with errors and delays that impair customer satisfaction. Ironically enough, however, these troubles are avoidable. As mentioned, some organizations — from banks to non-profits and everything in between — plug into some loan-management-only software and think they’re off to the races. The problem? Trying to cope with origination and underwriting with tools that weren’t expressly built for the purpose means they’ll soon be up to the eyeballs in unsifted data, challenging decisions, and missed opportunities. Why interoperability is so important to digital lenders Meanwhile, they’re committed to a loan management system paired with homemade origination and underwriting modules that may not integrate well with systems software, if at all. So they’re stuck fretting about incompatible updates, clashing data formats, errant calculations, system errors, and all the resultant delays. Businesses looking for solutions to these problems have three choices. The best course should be obvious. Access to an end-to-end, in-house, turnkey lending platform with a highly intuitive interface is the best way to secure an environment where: In addition to these operational benefits, TurnKey Lender’s loan-origination module’s decision engine is fueled by artificial intelligence and machine learning. Unlocking the treasures hidden away in vast arrays of data Artificial intelligence is simulated human intelligence whereby machines and software programs can — to an extent — learn, reason, and perceive, though quotation marks around those terms might be appropriate. Machine learning describes functionality that draws inferences from its environment without being explicitly programmed to reach pre-set conclusions. How artificial intelligence, machine learning, and related concepts help lenders make loans is best understood by comparing traditional lending practices with more up-to-date approaches. In an old-school setup, the creditworthiness of prospective borrowers was determined by scorecards. This approach has several advantages, including accuracy and ease of oversight. On the downside, scorecard methodologies simply can’t handle big-data inputs. That was fine when lenders were content to sort through a limited number of data sources for information on loan applicants — things like loan applications, the lender’s internal databases, and credit-bureau scores. But now there’s a flood of additional data sources on prospective borrowers, including social networks, mobile devices, payment systems, and web activity. Of course, these inputs are highly relevant in gauging the creditworthiness of would-be borrowers — information that, without AI, “would stay locked away in datasets too vast and unwieldy to get at without help from machine learning,” says TurnKey Lender’s Voronenko. “The lending industry has a big-data problem — and machine learning is
What TurnKey Lender platform has in store for the UK and Ireland
TurnKey Lender is one of the pioneers and industry leaders of digital lending automation globally. Over 50 million borrowers around the world work with traditional, alternative, and embedded creditors who use TurnKey Lender Platform to digitize all parts of their operations. In 2022, this leading lending solution is expanding into the UK and Ireland and introducing a host of UK-specific pre-configured integrations and features, allowing businesses in the UK to benefit from the same high levels of automation, flexibility, AI-based credit scoring and enterprise-grade reporting features as the rest of TurnKey Lender’s global community. Through an in-depth R&D process and collaboration on the new features with select clients, TurnKey Lender team ensured the platform caters to the needs of UK lenders out of the box. But first, wanted to check if you (or your staff) would like this brochure with the details of TurnKey Lender edition for UK lenders. The solution automates all elements of the consumer lending process in United Kingdom. It’s compliant with AML and KYC, processes UK’s credit scoring data, and applies proprietary AI to make sure you approve more of the right loans faster. Just some of the important updates include: Dmytro Voronenko Ph.D., CEO and co-founder of TurnKey Lender comments – “We’re very excited that our platform enters the UK’s digital lending space. Apart from our award-winning end-to-end automation, we bring a set of meaningful UK integrations and tailor-fit configuration options. We look forward to working with more creditors in the UK to help them cut costs, reduce risks, grow their portfolios, and provide borrowers with finance on better terms.” The end-to-end lending automation platform now offers the following UK integrations, making the platform a seamless fit for any business in the UK or Ireland looking to streamline their lending processes: TurnKey Lender’s native integration with Plaid allows customers to connect their financial accounts to the platform, making it easier for UK businesses to automate customer payments, quickly retrieve customers’ financial data (for loan scoring purposes), and to display the correct financial details during the loan origination and loan underwriting processes. TurnKey Lender has recently partnered with third-party signature service company SignNow, enabling businesses and their customers to sign loan agreements quickly and easily with electronic signatures. TurnKey Lender’s seamless integration with all of the UK’s leading SMTP servers helps businesses send both manual and automated email updates to customers from the UK and beyond. This integration enables businesses to send regular SMS notifications to customers; nurturing ongoing customer relationships and providing them with important information and instant updates about their loans. Equifax, the UK’s leading credit bureau, provides credit reports for customers across the UK. The credit bureau now natively integrates with TurnKey Lender to enable the most accurate loan scoring and decisioning possible. UK businesses are transforming their lending processes with TurnKey Lender TurnKey Lender platform lets lenders in the UK automate all parts of their loans’ lifecycle from a single intuitive cloud-based solution. With TurnKey Lender, businesses based in the UK and Ireland now have access to an advanced, AI-powered lending automation and decision management solution that allows lenders – as well as enterprises that offer financing – to utilise powerful workflows to simplify their entire lending management process. Businesses in the UK and Ireland can benefit from TurnKey Lender’s powerful end-to-end loan management automation, which allows TurnKey Lender clients to make smarter loan decisions, decrease churn and get faster loans to the right people – on the right terms. With its proprietary AI, enterprise-grade reporting features and the fastest time-to-market, it’s no wonder TurnKey Lender’s powerful lending solution is trusted by hundreds of businesses around the globe. If you’re a UK business looking to take your loan automation to the next level, look no further than TurnKey Lender’s UK edition for a world-class loan management platform. Learn more about the UK edition of the platform or book an intro call today.
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.
Fintech pacesetter TurnKey Lender out to make smaller banks more competitive
TurnKey Lender is best known for its digital lending automation platform, an offering that equips organizations around the world to expend credit in traditional and alternative lending, in retail, B2B, and — well, really any business setting imaginable. But the financial-technology and banking-as-a-service (BaaS) pioneer also provides core banking systems to banks and credit unions, and it supplies them with fully integrative lending modules to any infrastructure. In other words, TurnKey Lender’s Enterprise platform is robust and flexible enough to support all bank operations, not just the credit piece. Aside from all the digital credit automation, TurnKey Lender is fully capable of: Handling day-to-day transactions and posting updates to accounts and other financial records Tracking and reporting on deposits Integration with general ledgers “Of course, banks in need of software to help them track transactions are generally looking for help on the lending front as well — and the ability to handle credit through origination, underwriting, risk scoring, servicing, and collections is what makes or breaks a bank,” says TurnKey lender’s co-founder and CEO Dmitry Voronenko. “Lending, after all, is both how most banks make most of their money, and the most complicated part of banking.” And, he adds, “TurnKey Lender’s market intelligence, scalability, and configurability make it the natural choice for banks looking to modernize their core banking capabilities.” [download] [related-solutions] A case in point Iron National Bank in Salisbury, Conn., became a core banking systems client of TurnKey Lender after a years-long search for a fintech partner to help the bank go “100% paperless, and also be able to provide a user-friendly digital experience,” according to CEO Steven Cornell. “We have very high-end customers who want the option of being able to do everything remotely — and that’s what we now provide, thanks to TurnKey Lender, which was able to give us exactly what we were looking for.” As for the TurnKey Lender credit capabilities Iron National now enjoys, Cornell applauds the fact he doesn’t have to add staff “because the platform pulls everything together — information on the applicants’ assets, all their credit — and it puts it into a format that my underwriters can look at and process without any manual interference because it’s entirely automated.“ Adds Cornell: “In my view, TurnKey Lender has the best tools on the market to equip a bank for core operations as well as the whole complex lending piece.” Industry recognition In fact, TurnKey Lender was selected by Digital.com from a field of more than 70 competitors as one of the five top most reliable providers of banking software solutions in 2021. The independent fintech review site chose TurnKey Lender for: Having proved effective for private, retail, corporate, and enterprise banking with effective online banking supporting each vertical Top marks for credit management, payments processing, loans management and disbursal, account management, transactions, withdrawals, and interest calculation, in addition to other features. Reporting capabilities for measuring business performance, insights collection, and the overall efficiency of the software The recognition by Digital.com comes just months after consulting giant Deloitte identified TurnKey Lender as a top banking technology provider in Deloitte’s “Exploring Innovative Solutions: Digital Banking for SMEs” report, a resource aimed at helping lenders identify, test, and implement the best platforms for meeting the automation needs of consumer and business lending operations. The report takes a deep dive into the digital banking platform market and describes how providers are closing the gap between expectations and reality for small and medium-sized enterprises, specifically by developing solutions that are better adapted to the scale of such organizations. Adding capabilities in Asia BigPay is a digital alternative to old-school banks for customers in China, Australia, Vietnam, Indonesia, Singapore, Malaysia, Thailand, the Philippines, India, Bangladesh, and Nepal. This year, the “digital wallet” provider capped an in-depth search for a personal-loan facility for clients in Malaysia by selecting TurnKey Lender. “Many underserved demographics in Malaysia lack access to the credit they need because they do not have the typically ‘acceptable’ credit history which is required by traditional banks — this directly impacts the ability to build long-term financial standing,” says BigPay CEO and co-founder Salim Dhanani. With this platform in place, BigPay says it can reach millions of users in Malaysia — with a view to taking the platform to even bigger markets in South Asia and Asia-Pacific. “The digitalization of banking services is a demographic certainty,” according to TurnKey Lender’s Voronenko. “Younger consumers like those BigPay targets are unwilling to drag themselves to branches or wait days for decisions.” And yet some banks, weighed down by legacy processes, continue to resist offering a completely internet-based experience and mobile deposits. Other banks have made progress on some fronts — say, online banking — but can’t handle loan origination and servicing. A question of survival Of course, this makes sense: lending is more complex than transferring funds, so digitalizing the easy bits first is appealing. Once the light lifting is done, however, community banks and credit unions that delay bringing their lending up to speed soon find themselves at a competitive disadvantage. Global megabanks have the resources to build digital-banking platforms from scratch. Middle-market banks and credit unions don’t. For them, the capital, personnel, and time requirements for such a project are simply out of reach. Many banks in this bracket turn to TurnKey Lender to help them with their digital transformation — in lending, certainly, but also across the spectrum of retail and commercial banking services. “It’s really a question of survival,” says Voronenko. “Banks that need help gearing up for the twenty-first century will either get the help they need and have a fair chance to thrive as agile and innovative financial-service providers, or they will become relics on a fast track to oblivion.” Iron National Bank’s Cornell agrees. “Thriving for as long as we have for 170 years — through wars, depressions, and financial manias — means you have proved you can roll with the punches,” he says. “You stick to basic banking principles, sure,
A Look Under the Hood at TurnKey Lender’s Game-Changing Artificial Intelligence
In the realm of digital lending, artificial intelligence isn’t just an add-on, or something that’s conceptually nice to have but not really required. On the contrary, a high level of intelligent automation is an absolute must for digital finance, which empowers organizations of all sizes and kinds to make smart, risk-adjusted lending decisions without help from back-office personnel or input from slow-moving credit committees. AI is quite a vague term used for marketing far more commonly than for solving actual problems. Artificial intelligence right now simply refers to processing large amounts of data and gradually improving the way your software understands it. And in digital lending the amount of data to be processed is huge and the means to process it include machine learning, deep learning, natural language processing (NLP), and image recognition. Setting the scene Globally, the digital lending market accounted for roughly $10.7 billion in 2021, according to Research and Markets. By 2026, the consultancy expects the number to hit $20.5 billion, for a five year compound annual growth rate of 13.8%. R&M attributes this growth to several factors: Rapid expansion in Asian-Pacific markets where digital banks and credit unions get the most traction The rise of collaborations and partnerships between technology innovators and name players in finance and payment processing But the number-one reason for the rise of digital banking around the world, according to R&M? The rise and accelerating adoption of AI, machine learning, and related technologies in the five-year forecast period [download] The rise of the AI market is even more impressive — even in a shorter time frame. Technavio sees a CAGR of 29.4% for AI in the years between 2019 and 2023, with 61% of this growth occurring in the US and Canada. In terms of revenue growth, Statista sees the global AI market generating about $71 billion in 2023 and rising to $126 billion by 2026. What’s really going on with AI in digital lending “Lending is becoming democratized, and it’s happening rapidly,” says TurnKey Lender’s CEO and co-founder Dmitry Voronenko. “A lot of that is down to digitalization, which is making turnkey loan origination and management as universal and straightforward for businesses as payments processing.” [related-solutions] But digitalization — the process of converting information into digital formats — isn’t the whole story. “To make the most of the lending opportunities available to organizations through digitalization, AI must be present and focused on rigorously practical applications,” according to Voronenko, who has a PhD in AI. “With robust AI capabilities, you can dramatically improve the performance of your lending business in any setting.” TurnKey Lender’s AI-based scoring technologies, currently used by businesses in more than 50 countries around the world, eradicate guesswork from credit decisioning, allowing for an even-handed and dispassionate assessment of all applicants, even those in “high risk” categories. The company’s decision-management system can take traditional or alternative data and learn, predict, categorize, and match applications for decisioning. To achieve this, the system harnesses the power of deep neural networks and self-learning scoring models to evaluate borrowers in real-time. With other financing-software vendors in play, it can take days for a funding applicant to get a credit decision. It takes TurnKey Lender’s decision-management system about 30 seconds to draw a conclusion — one that takes account of an array of critical traditional and alternative inputs. Bank statement scoring But the value of TurnKey lender’s AI goes beyond mere speed. Using deep neural networks backed by sophisticated mathematical modeling and continuous machine learning, the platform’s Bank Account Statement Scoring Model was engineered to chew through big datasets with ease. This scoring model combs through the applicant’s banking history to characterize cash flow, spending patterns, and other account trends that shed light on complex non-linear interconnections between variables. And vitally, the Bank Account Statement Scoring Model accomplishes this while “teaching” itself new lessons that’s accretive to its overall and ongoing utility. Underwriting and credit decisioning TurnKey Lender uses comprehensive credit decision flows based on proprietary AI-powered decisioning algorithms. TurnKey Lender applies machine learning and deep neural networks to automate credit scoring based on traditional and alternative risk assessment data. This allows lenders to streamline and fully automate their credit processing and achieve almost instant loan decisions. Underwriting of TurnKey Lender platform includes functionality for in-depth risk scoring, borrower evaluation, decision rules checks, loan agreement generation, loan offer management, and more. Collection scoring Collections are the 2nd most challenging part of lending after underwriting. But now that lenders have access to a deep well of data, any suspicious or troubling actions or issues with the borrower can be communicated to the lender before they even take place through collection scoring. Whether it involves identifying delinquency early or determining when and how to send messages to have positive effects, debt collection is backed by a complex system of inputs, algorithms, and analysis. Marketing insights Knowing your customer is a mantra in compliance, meant to combat criminal finance. But it’s also a stable base for pinpoint marketing. With permission, the system determines a rating based on a borrower’s interaction with the platform and staff, as well as behavioral indicators. Equipped in this fashion, lenders can reward highly rated borrowers with special offers and take remedial action to keep low-rated borrowers on track. Functional oversight AI powers key performance indicator tracking that helps originators, underwriters, servicing officers, and collectors zero in on the most important outputs relative to their responsibilities. These evaluations use AI to process, cross-reference, and present the data to the management in report form. Geotracking Just as alternative data points can show a supposedly high-risk applicant to be a good risk, after all, permission-based geotracking linked to a mobile device, wifi, IP, or physical address can help set lenders’ minds at ease. Displayed as insight-rich heatmaps, lenders can track borrowers and their financed assets for follow-up or recovery. Performance analytics Does your business need a robust analytics tool to help stakeholders evaluate performance? TurnKey Lender’s Business KPI dashboard combines data from your lending