Automated Online Lending Solutions in a Digital World

Over the past decade, alternative and online lenders have been able to rapidly grow as a result of delivering streamlined consumer experiences that traditional banks and credit unions have not been able to duplicate. Taking a digital-first approach to online lending solutions has contributed to the surge in consumer loan growth. Loan decisions are made in a matter of minutes, all within a single online session.

As the economy shifts and competition increases across traditional, alternative, and online models, two questions come to mind – what can lenders do to keep innovating and stay competitive, and how can loan automation platforms and identity verification software providers better support them? 

Incorporate digital identity, address and occupancy verification technologies

Implementing effective identity verification steps within an online lending workflow can have a significant impact on the underwriting process and profitable approvals. Lenders already face the risk of fraud, but for online lenders, that risk increases with two to four times more fraud attempts than other financial services offerings. By incorporating a variety of identity verification technologies and data sources, lenders can help thwart fraudsters.  

Lenders already face the risk of fraud, but for online lenders, that risk increases with 2-4x more fraud attempts than other financial services offerings.

While minimizing fraud is important through better identity verification, lenders must avoid declining legitimate customers, and as a result revenue, just because of insufficient data. In these situations, requests for alternative data like bank or utility account data can be useful in reducing fraud while also improving approval chances for the credit invisible population. For higher risk transactions, layering additional identity verification methods can also weed out fraudulent applicants. 

In addition to reducing fraud risks, online lenders must also rely on identity verification to adhere to strict Know Your Customer (KYC) and Anti-Money Laundering (AML) compliance requirements. In the digital world, identity verification is the starting point for ensuring that KYC and AML regulations are properly followed – minimizing the potential risk of money laundering and protecting consumers from fraud schemes.

Introduce friendly friction

Executing risk mitigation tactics with a consumer-friendly experience can be tricky. Traditional document verification activities using passports or driver’s licenses that work in a face-to-face environment are often too disruptive in an online experience. Incorporating friendly friction allows consumers to take more control of their lending experience while protecting lenders from fraud risks. 

Friendly friction allows consumers to take more control of their lending experience. 

Online lending solutions must ensure that when applying friendly friction, they’re doing what makes sense for the applicant, incorporating fresh data into the decision process, and using automation to maintain efficiency and avoid drop-off. 

 

Read More > A Guide to Friendly Friction

 

Identification methods that occur within an online lending process can simplify approvals and onboarding. One way that lenders can use this method is by enabling applicants to approve the sharing of their utility and telecom bills directly from utilities and telecom providers as an alternative to uploading documents or sending emails. 

With solutions like Urjanet Utility Data for Identity and Address Verification, consumers can connect lenders directly with their electric, natural gas, cable, or telecom provider in a fully digital experience. This method can also transition post-loan proof of occupancy verification for Federal Housing Administration (FHA) and Veterans Administration (VA) loans from face-to-face to a fully digital experience, as well as enrich credit risk models and risk monitoring for all types of loans

Strengthen consumer trust

In a world driven by logins, passwords, PII, and, unfortunately, data breaches, consumers demand greater transparency into what data is being accessed and how.  Consumer-permissioned data, recently endorsed by the federal government and the CFPB, helps address consumer concerns and take back control of their data. It can also reshape the loan origination verification process.

Lenders can empower consumers with more control, and ultimately satisfaction, by leveraging consumer-permissioned data in the online lending process. By incorporating a mix of traditional credit bureau data with banking and other financial data on their behalf, lenders create a faster, more accurate, and streamlined verification process for both parties. In this scenario, consumers have full transparency from the companies using their data and also have the option to revoke access. 

Improve online lending solutions with utility bill data

Automating more aspects of online lending processes stands to benefit both the borrower and the lender. By incorporating automated utility bill data into the verification process, lenders can reduce fraud, better assess a borrower’s risk profile, and improve the overall customer experience. 

To integrate automated utility data into your online lending or identity verification solutions, schedule a call to speak with an expert today. 

 

Learn how to digitize the mortgage proof of occupancy process >

 

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