How to Choose the Right Lending Automation Software for Your Business

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

3. Cloud-based vs On-Premises

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

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

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

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

• SOC 2

• ISO/IEC 27001:2013 and risk management

• ISO/IEC 27002:2013 clauses and controls

• ISO/IEC 27017:2015

• ISO/IEC 27018:2019

• GDPR 2016

• NIST

• OWASP

• IMDA Singapore

• PCI DSS

Read more about our information security policies here.

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

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

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

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

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

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

Here are some loan origination features and functionality to consider:

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

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

5. Ease of business logic customization

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

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

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

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

6. User-friendliness for the employees and borrowers

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

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

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

7. Smart Automation and Proprietary Credit Scoring

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

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

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

8. Easy to Deploy, Easy to Learn

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

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

9. Proven Track Record

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

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

Where TurnKey Lender stands in those regards

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

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

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

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

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