How Lending Automation Helps Make the World a Better Place

Blog Post Digital Lending

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.

A decade ago running a fully fledged lending operation would be possible only to a large bank. It would require a huge staff and multiple branches. Now, the whole process can be automated and within days you’re safely issuing a loan in 9 minutes where it used to take 9 days. For lenders, this automation brings reduced operational costs, more reliance on technology, and therefore less human error.

All that is thanks to FinTech which grows alongside digital lenders. The thing is that to automate digital lending for your business these days, you don’t need to create your own custom platform to take care of origination, underwriting, servicing, and collection. FinTech companies, like TurnKey Lender, specialize at creating solutions to automate the entire lending process for anyone willing to sell credit products. And, as a lender, if you choose the right lending software provider, you get an easily-deployed bank-grade platform that takes care of the whole lending process at the same time making it safer, error-free and more secure.

So from the perspective of small to midsize business, lending automation is a great thing already. But it gets better as it can be used to address some of the big humanitarian issues and help NGOs in their work aimed at solving big economic, social, and ecological challenges. And here’s exactly how lending automation solutions helps in these causes.

Reaching underbanked and unbanked demographics

In 2019 there are still 2.45 billion people without access to proper banking. And as the customer acquisition rate in developed countries grows, businesses are forced to branch out into those new markets and serve the people who were overlooked before.

Percentage of unbanked and underbanked by region.

(Source: G2Crowd)

Why were many of these people unserved anyway? Often because they either didn’t have a proper credit history or weren’t eligible for a loan due to some other factors, being evaluated subjectively by a human. The old-school risk evaluation techniques are outdated. Now, thanks to advanced AI, software is able to make more of the right loan decisions faster. It also reduces risks for the lenders and gives chances to some of the previously underserved people since the algorithms make decisions based on more accurate and sophisticated predicting factors.

Lending automation plays a critical role in reaching underbanked audiences and providing them with access to financial services and products. Due to reduced operational costs and human error, as well as reduced interest rates and more intelligent decisioning and risk evaluation, businesses can safely loan money to those in need. And then, of course, make back more than they invested.

Another model that reinforces this point, would be P2P lending. In the peer-to-peer model, people in the same community get to be both investors and borrowers and the lenders need even less money to get the ball rolling. Just as alternative lending, peer-to-peer is also on the rise globally and can also be fully powered by intelligent automation, like that of TurnKey Lender.

Stimulating small and medium business

Automated lending stimulates small to mid-size business in two ways:

  1. It provides striving lenders with bank-grade software that instantly takes them ahead of even big banks in terms of technology. As technology becomes more accessible and easy-to-use, more entrepreneurs start to try their luck in launching all kinds of alternative lending operations. For decades lending has been a prerogative of large banks. Only they had the resources and the funding sufficient to run all those branches and issue all those loans. But luckily, the market has changed and due to the development of technology, you already don’t even need to have a single physical branch or develop your own custom solution. Thanks to automation, digital-only lending operations cost less to run, rely on technology and therefore have faster processes with far less bureaucracy and paperwork.
  2. With growing competition and reduced operational expenses, lenders can afford to finance people at lower interest rates and still make a profit. This way for the wider audiences it becomes cheaper and easier to start a business, make money, and grow the economy of their country.

In-house financing for ecologically and socially important projects

Being environmentally aware isn’t cheap for a business. And if you’re fighting for the cause of helping the world switch to sustainable energy, the more selling points you have for the potential customers, the better. One of such selling points is in-house financing.

When a company provides in-house financing, things like getting a loan for the installment and maintenance of solar panels instantly becomes much easier. The client neither needs to give their data to any third-party providers nor to go across town to a branch of their bank. Companies for whom lending isn’t the main revenue source can use lending automation to power up their in-house financing programs. This way they both make it easier for their clients to purchase their products and get an additional revenue stream in form of the interest rate.

The thing about lending platforms like TurnKey Lender is that they are fully customizable, making it possible to adjust business flows, decisioning rules, and interest rates without editing source code significantly reducing time to market.

And there are plenty of cases showing that this actually works. For example, staying true to their convictions, TurnKey Lender team provided a technological platform with customization options to a solar panel company in the US and a smart energy company in France which are wholeheartedly focused on environmentally conscious manufacturing, installation, and maintenance.

Lending automation for non-profit financial organizations

Starting a small business in many countries is still a privilege. And even more so getting a loan to start one. You may have a great credit score and have been an exemplary citizen for your entire life, yet it’s often a challenge to get a small business loan at a fair rate. In each and every community there are those who are ignored by the establishment.

Luckily, there are NGOs that address these specific issues and finance specifically those disadvantaged. In the light of the current geopolitical events, often those people are refugees and asylum seekers. A brilliant example of a company making the world a better place in this domain would be Thrive Refugee Enterprise. And I’d like to take this particular case apart in more details in terms of their cause and how lending automation helped it.

Thrive Refugee Enterprise is a not-for-profit organization whose primary role is to provide microfinancing and business support that can help refugee entrepreneurs start and grow viable new businesses. Thrive was established in 2017 to help refugees start businesses with financing and mentoring support. The company assists hundreds of potential refugee business owners and helps build a happier striving community where everyone gets a chance.

Thrive Refugee Enterprise uses the Turnkey Lender’s cloud platform for their microfinancing needs. They implemented it to help refugee entrepreneurs start and grow viable new businesses. The company has been looking for a software solution to automate the multistage process of loan submission for the customers with a high-risk credit score. The basic TurnKey Lender’s system feature-set advanced the organization processes with the loan servicing functionality, provided loan managers with financial reports and multiple other tools.

Due to a number of specific requirements, Turnkey Lender’s platform underwent deep customization to meet the needs of the Thrive’s business model. Nonetheless, the ready-to-use solution was delivered in only a few months. The lending platform was adapted to the complicated loan application process which comprises of filling some documents online and generating others which are required to be signed as hard copies. The system brings the customer credit reports to the loan manager thanks to the direct integration with a credit agency in Australia. Based on this data, along with that provided by a customer, the system performs the customer credit scoring which helps a loan manager to make a decision about a loan.

Why TurnKey Lender is the optimal solution for socially important initiatives

TurnKey Lender is an intelligent all-in-one platform that automates the whole lending process out of the box. And we’re devoted to the cause of helping those in need whenever we can. That’s why the company places top priority on environment-friendly projects for clients and partners. But it’s not just about being the good guys. TurnKey Lender is also objectively the optimal technological choice for those companies as the first SaaS to put bank-grade lending software on a commodity cloud. The platform is flexible enough to adjust to each business’ specific needs and versatile enough to meet most business’ needs and be deployed ASAP.

The intelligent solution covers the whole lending process including loan origination, underwriting, collateral management, borrower evaluation, risk management, debt collection, loan servicing, reporting, supervision, and regulatory compliance. The platform is driven by an advanced artificial intelligence which lets it analyze and evolve to match the specific clientele of each customer and approve more of the right loans faster.

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