There are a variety of approaches to applicant validation, including documentary and non-documentary validation, that benefit auto dealers in the loan onboarding process.
The choice of an approach depends on the level of risk tolerance, regulatory requirements, target customer base and available resources. Many financial institutions use a combination of documentary and non-documentary validation methods to balance accuracy, efficiency and risk management.
A dealer portal combining non-document verification and document verification in a waterfall with digital collection tools and dealer rewards provides benefits that contribute to improved JD Power and customer satisfaction (CSAT) scores, and enhanced capture rates.
- Streamline user interface. Design the dealer portal with an intuitive user interface that makes it easy for dealers to navigate and access the functionalities.
- Integrate non-documentary validation. Incorporate non-documentary validation tools into the portal. This may include AI-powered algorithms to assess applicant data and creditworthiness without relying solely on documents. Some non-documentary validation benefits include:
- Efficiency. Methods such as automated credit checks or data analysis streamline the verification process, reducing the need for manual document handling.
- Speed. Non-documentary methods are faster, enabling dealers to make quicker loan decisions.
- Data accuracy. Automated validation methods reduce the risk of human error in data entry and analysis.
- Add a document-collection module. When it is necessary to provide documents, include a document collection module so dealers can securely upload and verify required documents, including identification, income proof and vehicle details. Some benefits include:
- Enhanced verification. Documentary validation involves verifying loan applicants’ documents, such as pay stubs, bank statements and identification. This provides a higher level of confidence in the applicant’s financial situation and expands market opportunities.
- Reduced fraud. Documentary evidence helps reduce the risk of fraudulent applications, as it’s more difficult for applicants to pass off fake or inaccurate documentation.
- Increased compliance. Documentary validation aligns with regulatory requirements and compliance standards, reducing dealers’ legal risks.
- Include real-time analytics and dealer reporting tools. This allows dealers to monitor their performance, track capture rates and identify areas for improvement.
- Automate notifications. Implement automated notifications and alerts to keep dealers informed about upcoming collection tasks, document requirements and their progress toward earning rewards.
- Offer training and support resources. Training materials and resources in the portal can help dealers improve their skills in customer engagement, document collection and non-documentary validation techniques.
- Provide feedback. A feedback mechanism allows dealers to offer input and suggestions for system improvements. This helps refine the portal and addresses any pain points.
- Integrate compliance checks. Compliance checks in the portal ensure that all documentation and processes adhere to regulatory requirements. This helps mitigate risks associated with non-compliance.
- Include customer engagement tools. Provide tools that assist dealers with effectively engaging with customers. This includes automated messaging or chatbots to answer customer inquiries and guide them through the application process.
- Ensure scalability and flexibility. Make the portal scalable to accommodate future growth and adaptable to changing regulatory requirements and market conditions.
By combining these elements in an online dealer portal, lenders create a comprehensive platform empowering dealers to capture more customers and optimize performance. Combining non-documentary validation, document collection, dealer scoring and rewards improves capture rates and enhances dealer engagement, compliance and overall efficiency in the lending process.
Jessica Gonzalez is the director of lending strategies at Informed.IQ and has more than 15 years’ experience in the financial services industry, including tenures at Santander Consumer USA and Visa.
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