Although thousands of institutions and untold sums of capital flow through the world of alternative lending, most syndicated lending workflows continue to depend on manual data entry, repetitive tasks, and outdated forms of communication.
This dependence on manual and paper-intensive processes results in inefficiencies (i.e., rising costs) and increased risk. A software-as-a-service (SaaS) lending solution can help streamline communications, eliminate multiple task-management resources, and accelerate loan processing.
Today, we will examine the benefits of SaaS platforms for loan syndication.
Current Syndication Challenges For Alternative Lenders
Corporate lending reached $2.9 trillion in 2021 across the investment-grade, middle, and leveraged loan markets. This shows us that there is a consistent demand for capital, even during economic downturns and times of market uncertainty (re: COVID-19).
The advent of digital lending has also bolstered the rise of alternative lenders, fintechs, and other institutions that can provide more capital to a broadening audience of SME borrowers. Of course, this naturally introduces many key challenges to the complex loan syndication process.
First, alternative lenders are struggling to manage disconnected syndicated data sources. Every stakeholder involved in a deal has different priorities and focuses on different information. As a result of this, data processing tends to lack transparency, can be very disjointed, and often requires manual/repetitive tasks.
What’s more, even if lender data is accurate or up-to-date, it’s tedious for lenders to manage. A recent lending survey reported by PR Newswire found that lenders frequently have to enter and re-enter data in different stages of the lending process. 60% of lenders surveyed stated that they enter data in different systems up to five times – and some reported repeating data six times.
Second, a lack of standardization makes it difficult to streamline workflows. Syndicated loans are financial products that can be highly customized. As there is no “standard” loan agreement, every deal is likely to vary, with different structures, requirements, and levels of due diligence.
To add to this complexity, banks can have different protocols pertaining to risk, compliance, approval, and more, making every step of the syndication process unique for each party. A deal can quickly turn into a complicated tapestry of different workflows and data streams, driving costs and resulting in unnecessary risk.
Finally, alternative lenders struggle to effectively manage stakeholder communications. This is mainly due to the low-tech environments in which most alternative lenders continue to collaborate, as well as an over-dependence on outdated forms of collaboration. Inefficiencies in communications and document management are very common today. In fact, 65% of lenders surveyed in the report linked above stated that tracking and following up on ticklers and loan documentation is their biggest nuisance.
The accumulation of these challenges and inefficiencies places a significant drag on dealflow. Around half of all financial institutions report that it takes at least five weeks to close a loan, and can even be as high as eight weeks for others.
If you can speed up your lending workflows by minimizing these common disruptors and implementing a strong loan management system, you can deliver a significant value-add for your customers and syndication stakeholders.
Agile SaaS Platforms: The Future of Syndication
As syndicated lending continues to evolve in the alternative lending market, the development and use of agile SaaS platforms is the next logical step. The right platform will help stakeholders reduce risk and improve inefficiencies while simultaneously managing multiple deals.
Let’s take a look at some of the key features of a modern alternative lending/syndication software – one engineered for a better bottom line.
1. Automated Due Diligence
Due diligence is vital for any alternative lender. A modern alternative lending platform will provide automated form-filling and information-gathering functionalities and will position alternative lenders to better consolidate data points, assess risk, and manage AML and KYC processes.
2. Streamlined Communications
An agile lending platform – one equipped with templates and automatic workflows – will make stakeholder silos a thing of the past. Instead of reinventing the wheel on every deal, technology can help alternative lenders develop repeatable communication processes (including document sharing) to keep everyone on the same page.
3. Robust Data Integrations
Poor data flow can stifle your efficiency and slow down your deals. Integrations can easily solve that. Rather than constantly checking, entering, and refreshing data, API integrations can make life easier for all parties involved via a real-time and single source of truth from which to upload, store, and access data.
Important Saas Adoption Considerations
There are a few caveats to consider before adopting an agile SaaS infrastructure for your lending business. No matter how robust your technology solution is, be sure to put a customer-centric approach at the heart of your adoption.
Start with your delivery channel. To ensure an effective customer experience, your technology delivery should blend an effectively designed user interface, key back-end capabilities, and intuitive customer touchpoints.
Users should have a single log-in for their data, where information can be easily found via keystrokes or data queries. Implementing streamlined data input components, where information is saved and properly delineated, should also be a priority. This will help minimize time-consuming repetition.
To further improve your user experience, look to deploy solutions with a shallow learning curve for new users. A truly effective infrastructure will provide easy-to-follow feedback mechanisms and in-platform support, so users can begin to experience your platform’s impact after only a few trial runs. Learning curves that are too steep will deter users.
Of course, the customer experience will only be as strong as your actual technology’s capabilities.
In order to solve the aforementioned challenges, your lending platform must offer a customizable design that can support or connect to essential loan cycle stages like origination, marketplace access, servicing, and other service lines you offer.
To this end, look to reduce friction in your data flow, and utilize solutions that can integrate with external systems for data uniformity, ideally through an API functionality. This can secure your business’ ability to scale in the future.
Supercharge Your Syndication With Onyx IQ
Onyx IQ was designed to significantly upgrade your 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 personnel, and widen your revenue stream.
Are you ready to discover the intersection of agile technology and alternative lending? Check out the Onyx IQ website to learn more or contact us at info@onyxiq.com.
