Have you noticed a recent dip in the performance of your lending operations?
With demand for alternative SME lending at an all-time high, you should be putting your foot on the gas and turning up all the dials. And yet, perhaps no matter how well-trained your staff is or how agile your lending strategy is, you’re just not able to keep up and serve your clients like you used to.
It could be that the tech supporting your SME lending operations is to blame.
Just as you change your car’s tires, your lending software needs some updating every once in a while. Otherwise, no matter how hard you push your business forward, you won’t see the performance that you desire or expect.
If you’ve noticed any of these ten signs, it’s time for a reboot sooner rather than later.
1. More Loan Applications, but Underwriting Is Struggling To Keep Pace
Despite recent drastic interest rate hikes, inflation levels still remain high. As a result, small businesses demand more financing to stay afloat.
You are leaving money on the table if you don’t equip your underwriters with agile software to help them deal with the increased volume. Why have them manually sift through and toss applications that don’t meet your basic internal credit requirements?
With lending software that can process data and provide critical insights in a matter of minutes, you can free up time and energy for your underwriters to qualify eligible accounts that have higher lifetime value for your business.
2. Your Data Is Not Well Integrated
To verify an applicant’s identity and accurately assess their credit, you must source information from multiple places. Not just from the applicant, but also from credit unions, banks, and government authorities.
Without a system that collates, processes, and outputs data in a single interface, underwriters and loan officers struggle to pull the information they need when making loan approval decisions.
To avoid long waiting times for your customers, look for a modern lending platform that acts as a single source of truth so that all data is at hand, all the time.
3. Your Data Security is Fragile
Once your applicants hand over their bank information and credit history, you are liable for information security.
Hackers can infiltrate your data systems by exploiting even seemingly minor flaws in your encryption processes, potentially leading to losses for your customers, and yourself. Not to mention the long-lasting reputational damage that could taint your firm’s image for years to come.
If you think you’re vulnerable, it’s time to consider switching to modern security tools and implementing industry-standard data and quality assurance practices. A few security best practices include:
- Multi-factor authentication.
- Robust password requirements.
- External security audits (e.g., annual penetration and SOC2 testing; quarterly vulnerability scans).
- Disaster recovery procedures.
- Business continuity plan.
To learn more about cybersecurity, check out our recent article on the topic.
4. Your Communication With Clients Is Breaking Down
A 2022 McKinsey report focused on SME lending highlighted the fact that, while digital engagement used to be “nice to have,” it is now “mandatory” if lenders want to survive today’s competitive marketplace.
The takeaway? SMEs want personalized service and multiple touchpoints throughout their journey with the lender.
Offering omnichannel communication options can help. Opt for a lending infrastructure that has an automatic chatbot feature for onboarding and allows you to send automated updates on loan status and payment reminders.
5. Your Stakeholders Engage in Repetitive Tasks
Having your underwriters and loan officers perform manual and repetitive tasks is inefficient. Especially when software can complete the same tasks quicker and with fewer errors.
The scenario is even worse if your customers are entering and re-entering the same information multiple times during the application process.
Don’t risk customer dissatisfaction and incomplete applications, when you can make it easier for them. And more accurate for you. All it takes is a switch to the right modern lending solution.
6. Your Customers Aren’t Happy With Your Service
Unhappy customers? It’s probably because of long and complicated application forms. Your loan origination process should be frictionless—applicants should submit everything in one sitting without having to visit physical branches to collect or submit documents.
Is your lending interface coherent? Does it involve touchpoints at a number of stages of the customer’s journey? If you’re not sure, then ask your customers. If they’re unsatisfied, it’s time for an update.
In this day and age, a great customer experience is essential to your business.
7. Your Customers Ask For Features You Don’t Have
Remember that many of your clients are business owners who may not understand complex financing terms, so you need software that breaks the lending process down into digestible, easy-to-understand steps.
To make sure you’re making it clear to customers, actively collect feedback on features they would like to see in your lending platform and your products.
Can your current system roll out changes and keep it simple? Agile SME lending software is flexible and adaptable to customer demands for new features.
8. Your Indirect Costs Are Adding up Fast
If your lending operation is already stressed, then untimely decisions, idle time, ill-formulated deals, and unfavorable credit terms are holding you back from your full potential. And if the technology underlying your lending lifecycle is to blame, this is an easy fix.
Choose the right software for you and your customers, and make the entire lending process faster and more cost-effective.
9. You’re Taking on Too Much Credit Risk
If you find your credit risk team puzzled by a series of chronic mistakes, have you considered that there might be another culprit to blame? Don’t let faulty operational software be why you take on too much credit risk.
Your credit decision systems should use the most updated data and correctly implement scorecard models. Credit scoring engines with business credit scorecards functionality can help you make more precise credit decisions in less time.
10. You Face Too Many Compliance Risks
Your lending operation should comply with the newest Know Your Customer (KYC), Anti-Money Laundering (AML), GDPR, and data protection laws. If not, you’re seriously putting your business and your clients at risk.
You can limit risk by implementing a lending system with controls that automatically update to comply with regulatory changes—keeping you on the right side of the law.
Emerging Tech Trends in SME Lending
The SME lending journey in 2022 is personalized, digitized, and fast. Advances in SME lending technology have upgraded the industry and helped lenders better align with the needs of the borrowers.
Here are three key points that show how lending software is changing the SME lending industry today.
1. Lenders Are Automating Credit Decisions
Automated credit assessments are cost-effective, faster, and provide a smoother experience for SMEs. Every stage of the process is improved by automation.
Lenders are investing in optimized business identity matching (identity resolution) to leverage data from third-party sources to verify applicant information. This prevents errors that may result from manually reviewing identity verification documents.
In the credit assessment stage, credit decision engines use the data provided by applicants and automatically pull data, such as firmographics and public records, to apply to their credit scorecard models.
Once the application is approved, automated credit decision systems can set the credit limit by considering the loan conditions, the applicant’s credit history, and the lender’s risk tolerance.
2. The SAAS Lending Model Is More Popular Than Ever
SaaS lending solutions help streamline communications, eliminate multiple task management resources, and accelerate loan processing.
SaaS software also expands a lender’s range of capabilities through API integrations, which simplify and accelerate virtually every stage of the lending cycle. In short, APIs empower you to provide your clients with an end-to-end lending service.
One more thing: SaaS lending platforms boast superior data privacy and storage capacity, as data is stored in the cloud, secured with the most modern data security controls.
3. AI and ML Are Modernizing Lending
AI and ML decision systems help underwriting teams by leveraging big data to make smarter decisions. Robotic Process Automation (RPA), Optical Character Recognition (OCR), and Automated Document Recognition (ADR) are proving indispensable in the loan origination process.
AI allows you to provide a truly personalized customer experience, by offering intuitive touchpoints throughout the borrower’s journey.
The KYC, underwriting, and loan disbursal and monitoring processes are no longer static and inflexible. They can be modified for each account based on payment behavior, and data received dynamically throughout the loan lifecycle.
Revamp Your SME Lending Operation With Onyx IQ
Onyx IQ was designed to significantly improve your SME lending business’ speed, efficiency, and scalability. As a dedicated automated lending platform, you’ll gain more control and visibility over your entire lending workflow, reduce unnecessary resources, save costs, and widen your revenue stream.
If you want to experience a lending software that works for you and your client, demo Onyx IQ today!
