Financial institutions are increasingly turning to fintech companies to gain access to their cutting-edge technology. This makes sense as lenders need enhanced verification methods to improve customer experience, prevent fraud and become more competitive. With fluctuating interest rates, high refinancing activity, and changing regulations, lenders must adapt to meet the demands of the digital age, and fintech is the driving force.
Maximizing efficiency is a common goal, and there are several strategies to achieve it. The following are the technological “leverages” that lenders can use to overcome their current difficulties.
Reduced operating costs
The goal of “doing more with less” is achieved by reducing operating costs. One way to do this is to automate document-related processes. Streamlining day-to-day tasks and minimizing the manual labor required for repetitive activities such as data entry, validation, transformation, reconciliation and compliance results in reduced human resource requirements and reduced document processing costs by more than 50%. By allowing software to do boring, repetitive, low-level work, the extra “human time” can be reallocated to more valuable or customer-focused work.
Create consistent and scalable processes
Consistent and scalable processes can be created through automation combined with policies, procedures and standards. Implementing a set of policies, procedures, and standards that define how an organization will optimize and reduce operating costs is critical to long-term cost savings and scalability.
Proactively conducting a comprehensive assessment of a lender’s potential risk is essential to effective risk mitigation. Once assessed, lenders can develop a risk management strategy that is in line with the business objectives and risk management approach. Continuous monitoring and adapting to changing threats, technologies and regulations is the key to success.
North American auto lenders recognize the benefits of automation, but there are often concerns about accuracy and scalability, which are critical for lenders looking to grow their loan or leasing portfolios.
Automation or fintech companies should provide performance metrics demonstrating the accuracy and scalability of their systems. This includes metrics such as error rate, processing time., and throughput, as well as case studies highlighting real gains when automation improved efficiency, reduced errors, and scaled to fit the lender’s needs.
Providing accurate data for understanding
Manual document processing, prone to human error, can have disastrous consequences such as non-compliance and fines if the data is inaccurate. Decisions must be based on accurate data. Automating document processing can help lenders improve accuracy.
Document intelligence platforms provide benefits such as document intelligence that helps businesses interpret, collect, validate, transform, and reconcile data from documents. This allows you to make informed business decisions and simplifies analytics even from unstructured documents.
Lenders can use this quantitative and qualitative information and data to see and evaluate more deals, win competitive deals, and develop their portfolio for future investments or M&A.
To ensure success, set key performance indicators (KPIs) to measure program performance and identify areas for improvement. Providing ongoing support to customers helps ensure that their systems remain accurate and scalable over time, which is important for long-term return on investment. This includes regular updates and maintenance to fix problems and keep your system running optimally. Best practices include an account team that conducts quarterly client meetings and quarterly business reviews.
By providing KPIs and best-in-class practices that demonstrate the accuracy and scalability of their systems, fintechs build trust with their customers. The end results will vary depending on the specific needs and objectives of the lender, but often include achieving compliance with industry standards and regulations, reducing the organization’s overall risk profile, achieving more with less, and improving security.
Jessica Gonzalez is the director of credit strategies in Informed.IQ and has over 15 years of experience in the financial services industry, including Santander Consumer USA And Visa.