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The Value of an End-To-End Auto Lending Platform

Written by Andrew MacDowell, Director, DecisivEdge™

In my role, I often meet auto financing professionals who are looking to upgrade their existing auto lending platform. A common thread among these lenders is trying to manage three, four, or even more disparate software systems, analytic tools, and spreadsheets to effectively manage their growing business. Many desire an end-to-end solution.  

Let’s discuss what end-to-end really means.  Investopedia defines end-to-end as: “a term used in many business areas referring to the beginning and end points of a method or service. End-to-end theory embraces the philosophy that eliminating as many middle layers or steps as possible will optimize performance and efficiency in any process.” Sound simple? Well, we all know this isn’t always the case.

Here are five things to think about as you and your team consider analyzing end-to-end auto lending platforms:

  1. Is the solution modularly architected?  
    • Although your long term desire is to have a fully integrated software platform, for whatever reason, your business might not be in a position today to take on an end-to-end implementation all at once.  Having the option to implement one or two modules at a time to control the cost and time investment is something many enterprises like to consider.    
  2. Is the solution specifically tailored for your industry?
    • You hear the term “industry specific software” quite a bit.  If it is not industry specific, then it is “generic software.”  Which would you rather have?  Most lending professionals prefer industry specific software solutions for their business because it gives them comfort knowing the IT engineers that developed the software took the time to understand their industry.  If they are not well versed in the industry, it is critical these IT engineers work closely with potential customers and partners who know the specific nuances of the business to tailor functionality within the platform.  A fully integrated modular solution from a market leading vendor that is aligned with your specific line of business will ultimately reduce the cost of conversion from an existing platform; improve data flow and content, and establish a better exchange of customer information among functional areas and with customers.
  3. Is the solution tech friendly and well supported?
    • A platform designed for your specific needs is pretested and the modular interface bugs are removed at no expense to your company.
    • A huge benefit of an end-to-end platform is the ease of which your implementation and support partner can seamlessly render customization and integration. For example, suppose you purchase an off the shelf loan origination solution. There are countless challenges when retrofitting; including issues with data definitions, insufficient storage for relevant data descriptions, and incremental programming costs to assure compatibility between seemingly disparate modules.
    • The biggest challenges with disparate systems are varying data structures, interoperability, building and maintaining multiple custom interfaces, and non-synchronous upgrade cycles.
  4. Does the solution reduce risk from regulatory requirements?
    • An end-to-end solution assists lenders in maintaining tightly controlled consumer data movement, improved interface reconciliation, and user acceptance controls. This fully integrated functionality is comprehensively tested by the vendor before installation. Any required regulatory loan or leasing related documentation is continuously updated by your provider systematically thus reducing risk from increased regulatory scrutiny.
  5. Better dealer support and improved customer experience:
    • With comprehensive functionality for dealers, the integrated solution helps establish a closer tie between lenders and dealers to provide a seamless customer experience. Work queues can be established to allocate applications to different underwriters or teams based on product type, funding type, underwriter, application status, application sub-status, state, channel, dealer type and dealer.

Fully integrated platforms fit together like a puzzle.  You may have to adapt your process and change the way you do some things, but with the ease of plugins and customization, you still have a differentiator in the marketplace that will continue to set yourself apart from the competition.  My advice is if you are currently not ready for a full scale upgrade, at least select a solution that allows implement one or two or more modules and gives you the option to eventually fit all of them together and finish the puzzle. Putting that last piece of the puzzle in place will no doubt give you tremendous satisfaction.

I hope this month’s post was insightful.  If you would like to connect with me to talk about our lending and leasing solutions and services, please email me at andrew.macdowell@decisivedge.com or call 302-299-1570 x414.  To learn more about our Lending and Leasing practice, please visit https://www.decisivedge.com/lending-leasing-as-a-service/.