The value of partner alignment in lending software

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Automotive financiers receive the most benefit from solutions that offer seamless, broad-based functionality, allowing them to perform multiple tasks through one interface. However, each of those functions has to perform to the exact requirements necessary for originating, underwriting and managing loans. Precision, accuracy and security are paramount, and these stringent demands often require the expertise of providers skilled in one particular domain.

In a marketplace where hundreds of technology providers are vying for business, the dynamic doesn’t always encourage vendors to align. Competition, as well as outdated technology, drives some providers to develop proprietary functionalities that inhibit the ability to integrate with other necessary functionalities, limiting the value that is delivered to lenders.

With the breathtaking pace of innovation, no single company can be all things to all lenders. We operate in an age where data and technology continue to evolve daily. Lenders shouldn’t have to settle for a host of sub-par secondary functions when they opt for a particular loan origination system (LOS) or loan management system (LMS) platform.

It is a strategy that is indeed short-sighted. Instead of expecting lenders to use a siloed set of solutions that may or may not work well together, it is better to advocate for an ecosystem of aligned technology providers that cooperatively create integrated, best-of-breed solutions that deliver on a wide scope of capabilities.

There’s a plethora of companies at the top of their fields in areas such as fraud prevention, risk management, security, alternative data and document management. If the LOS and LMS industry is devoted to providing lenders with best-in-class solutions, the strategy for providers should be to create integrations and partnerships that incorporate these functionalities through open APIs for third-party solutions.

Leveraging risk management tools

Areas like fraud prevention, for instance, are so critical to lenders that there should be no compromise. Synthetic identity fraud is a growing concern that is costing billions of dollars in losses per year, according to Experian. This fraud occurs when factual information like Social Security numbers and mailing addresses are blended with fabricated data to secure a loan for a fictitious applicant.

This is where alternative data sources become critically important. If malicious actors are using top-flight tools to perpetrate fraud, LOS systems also need top-tier tools to combat them in real time. The use of alternative data, such as the automated retrieval and review of utility payment records and job histories, can be instrumental in mitigating fraud. It is a compelling technology, but one that requires deep expertise and technical acumen. That’s why integrations with emerging providers like Point Predictive and Lightico deliver far more value than any feature a traditional LOS provider can offer.

Lenders deserve seamless access to as many best-of-breed capabilities as possible, and it’s up to the technology vendor to deliver not just a product, but an entire environment that leverages the most superior capabilities from proven software providers across several disciplines. This approach empowers lenders to apply industry-leading innovations to a multitude of processes and workflows through a single pane of glass, adding value, increasing efficiency and deepening the relationships between all participants.

Vlad Kovacevic is the founder and chief technology officer at 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.  

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