Evaluating lending software fundamentals in a challenging market

The automotive lending industry has weathered serious challenges in recent years, adapting to overcome issues like stay-at-home mandates and inventory shortages. And we’re not out of the woods yet: The market is now facing labor shortages, rising fuel costs, inflation and rapid increases in interest rates, which always impact sales. This is an industry that is proving to be resilient, and much of this is due to an increased adoption of automation. 

The sustainability of the industry is even more remarkable given the pace at which change occurred. Many lenders adopted new technology and business practices as quickly as was practical. Few had the luxury of introspection or long-term research.  

As we continue to navigate talent shortages, tight budgets and a potential economic slowdown, it’s important for lenders to get back to basics and review whether their software is truly delivering the capabilities that will keep them competitive and efficient as the market continues to evolve. A cutting-edge lending solution creates efficiencies, allowing lenders to optimize their talent and resources, and helps them maintain an edge even in challenging conditions. But not all systems are created equal. 

Saving time through efficient software design 

Lenders may now find themselves in a better position to determine whether their loan origination software (LOS) and loan management software systems are really aligned with their requirements. After all, lending software should facilitate the lender’s business goals; it shouldn’t get in the way of efficient operations or slow things down due to constraints of the design.  

Here is a checklist of what your solutions should deliver for maximum advantage: 

1. Does your lending solution support your lending process? 

The automotive industry has traditionally been siloed and disjointed, and loan application processes have often followed suit, requiring a multitude of tasks, disparate applications, complicated documentation workflows and cumbersome authentication processes. Automation should be designed to break down those silos, making your processes more seamless and simpler.  

To that end, how much work do your employees have to do to get your lending software to perform? Is it complex and fragmented like the manual processes it was meant to replace? Or does it consolidate and streamline workflows, reducing extra tasks for your staff? To truly reap the benefits of automation, software should combine tasks that were previously conducted separately and manually to save time, mitigate human error and enhance the user experience. 

If users have to jump between platforms such as third-party CRM systems, then your automation solution isn’t fulfilling its role. Integrations with best-in-class partners should be able to seamlessly deliver capabilities like digital document storage, access to top-flight CRM systems like Salesforce and industry-leading analytics and compliance tools — all from a single window. 

2. Does your LOS provide quick access to the right information? 

All loan applications require specific metrics and indicators in order to quickly and accurately approve deals and finalize financing. Your LOS should easily collect and clearly display the data that is required for decisioning. Speed and accuracy are key. The right information needs to be readily available — and prominently displayed — to users, or the value of the LOS software is greatly diminished. 

For example, modern LOS solutions should not only rapidly gather credit bureau data, vehicle values, histories and other indicators — they also need to highlight potential issues or show that there are none. The goal is to make decisioning as fast and easy as possible, keeping applicants engaged and avoiding their abandonment of the process. 

This concept of “intelligent processing” uses artificial intelligence (AI)-powered features that not only collect enriched data from online sources but also highlight key information for users. The best approach is often a combination of good AI and user interface (UI) that facilitates old-fashioned human intelligence. 

3. How quickly does your software respond? 

The more clicks your LOS removes from the decisioning process, the more satisfying the user experience becomes, resulting in faster decisions, more deals booked and increased profitability. If your LOS makes users jump through hoops to perform simple calculations and accomplish simple tasks, your system could be slowing decisioning.  

Just as importantly, you don’t want a system that slows down during peak times or requires you to schedule reporting and analysis around resource limitations. Nobody wants to be stuck with outdated and inflexible software, and cloud-based lending solutions can scale to support any size business if they’re well designed. It is imperative to choose a solution that is agile enough to support your growth without having to spend significant dollars and/or manpower re-architecting a new system.  

Lending automation solutions should enhance processes and save time for lenders and consumers. Now that the industry has become more comfortable with automated cloud-based infrastructures, it’s time to assess these systems to ensure they truly maximize performance. This means looking at how much time users are spending working around or waiting for the system. The right solution can empower lenders to increase profitability while offering the best possible engagement experiences, creating more revenue and building brand loyalty today and tomorrow. 

Sam Heath is the Chief Revenue Officer of Inovatec Systems. Inovatec provides LOS, LMS and direct systems that seek to eliminate friction in the lending process and automate much of the manual work of originating and managing loans. 

Auto Finance Summit, the premier industry event for auto lending and leasing, returns October 26-28 at the Wynn Las Vegas. To learn more about the 2022 event and register, visit www.AutoFinanceSummit.com.