Madiston was delighted to sponsor an illuminating discussion with specialists in lending automation on the future of LendTech and PropTech. The discussion was led by Business Reporter's FinTechTalk host, Charles Orton-Jones and Madiston was joined in the panel comprising experts in the lending field from Roma Finance, Midas Advisory Services and MoneyHub.
The discussion looked at many angles of this vast topic including:
- What can Open Banking deliver for Lenders and their clients?
- Who benefits from lending automation?
- What levels of automation can be achieved by LendTech and PropTech?
- How difficult is it to achieve and how do you go about upgrading your systems?
Taking each of those points in turn, here is a synopsis of the discussion…
WHAT CAN OPEN BANKING DELIVER FOR LENDERS AND THEIR CLIENTS?
Open Banking, with the consent of the borrower, can deliver granular data that is current and personalised.
Getting to yes…
For those borrowers who may be on the cusp of a "no" decision, they could benefit from an analysis of their "actual" finances so that the decision is based on their suitability, affordability, eligibility, vulnerability. In other words, an individual assessment not a generic assumption based upon widespread categorisation or out-of-date information.
For lenders, this data enables them to make better informed decisions. In many cases, that will just be for the initial ID and affordability verifications for credit risk analysis prior to granting a loan. It can also be, with the consent of the borrower, at intervals within the term of the loan so monitoring can continue.
Staying in touch…
This opportunity for ongoing monitoring, is particularly relevant for construction, where development loans can be over an extended period. Monitoring via Open Banking, with 90-day consent periods, can represent lower risk for the lender, so lower rates for the borrower. This is because the lender can see that the money drawn down has been utilised as expected and all remains on track. Conversely, where there are red flags, early intervention can help to maintain healthy relationships between lender and borrower by determining solutions together, for any potential issues coming down the line.
Seeing the benefit…
Historically, people and firms have been reticent about sharing financial data but where they can see that they will achieve a better outcome, like a lower interest rate or be able to include more borrowers in their lending products, the motivation for Open Banking is clear.
WHO BENEFITS FROM LENDING AUTOMATION?
The future is now…
Borrowers and much of the nation's workforce have now grown up with technology so any whiff of manual processing is enough to make them look elsewhere - particularly true in relation to loans and job opportunities. Lending technology needs to match the expectations of borrowers - and lending firms need to show they are progressive to attract the best talent.
Build solid, loyal teams…
Where automation is deployed effectively, lending firms can grow their businesses rapidly but without having to increase headcount at the same rate. Technology should be able to absorb a firms' growth plans, enabling them to invest more in upskilling their workforce, providing growth and greater opportunities for their existing staff.
Technology makes time for the human touch…
Borrowers and clients of these lending firms also benefit because, with technology handling the bulk of the processing, skilled team members can provide the human touch where it is needed. As mentioned previously, this may be at the edges of decision-making so individual cases can be carefully considered before yes/no outcomes are applied. Or it could be at any point during the term of a loan where borrowers' circumstances change, requiring sensitive handling to reach acceptable solutions for everyone involved.
Make change painless…
Perhaps one of the inevitabilities of life is that things change, as we've seen particularly over recent years during the pandemic and the cost-of-living crisis. Lending automation that manages change can bring about significant benefits and productivity gains.
Where lending technology provides alternative options for borrowers, like payment holidays or flexing terms, it also needs to manage the processing of those changes completely automatically. That includes calculating and re-calculating interest and repayments, gathering the necessary authorities to proceed, updating payment and collection plans, following compliance requirements, recording decision-making criteria for consumer duty and so much more.
This work could take days or weeks done manually, or seconds done digitally – benefiting lending staff, borrowers and the firms themselves who, because of this level of automation, will be able to head-off potential defaults.
What would you do with 25% to 40% more time available…?
There was detailed discussion about Property Lending and the potential benefits of technology to the many participants involved in the lending and borrowing process. It was said that, of the time it takes to complete a deal, between 25% and 40% of it is spent chasing the individuals involved. Many cite lawyers who have a vital role to play but often cause significant delays – and time is money in these deals. Using technology to bring everyone together focused on the deal at hand, means the technology can do the chasing, transparently and consistently. Everyone, through their own portal, can see what is needed to be done.
What could be achieved if 25-40% of the time to do a deal can be saved – more business can be done, greater productivity achieved, better financial outcomes for all.
WHAT LEVELS OF AUTOMATION CAN BE ACHIEVED BY LENDTECH AND PROPTECH?
One size doesn't fit all…
Technology, like the Madiston platform, can be configured to fit the size and shape of individual businesses and lending models – both Lendtech and Proptech solutions. One size doesn't fit all in this industry and the ability to collaborate with a technology partner to ensure the optimum solution is delivered on time and at the right price is vital.
End-to-end compliant lending…
Where extra specialist services are required, the system should enable seamless integration with third party products to deliver end-to-end compliant processing.
Greater profitability by tackling the back office…
Whilst attention is often spent on the "front end" user experience, it is often the "back office" where technology can dramatically increase productivity and enable greater profitability. Technology, particularly in the back office, should do the heavy lifting so skilled staff members aren't using their valuable time to process manually what technology can do in half the time, consistently and with audit trails to prove compliance. Instead, they should be focused on growing the business.
The path is clear…
So much can be achieved with new technology, that those languishing on legacy systems or worse, paper systems, must bite the bullet and move forward.
HOW DIFFICULT IS IT TO ACHIEVE AND HOW DO YOU GO ABOUT UPGRADING YOUR SYSTEMS?
Fast launch…
The Madiston platform is designed to be quickly configured and easy to change so initial implementations can be achieved in as little as 90 days.
Accommodate future plans…
The flexibility within the Madiston system means that new lending and borrower products and divisions/countries/currencies etc., can be added quickly and easily.
Firms starting with one type of lending, consumer loans for example, could still expand into business lending, property lending or even expand geographically into new countries at a later date. The technology is there to match any growth plans.
Collaborate with experienced technology partners…
The Madiston system is designed for lower-cost launch and higher staff/performance to facilitate the profitable growth of its client lending firms. Proven technology available from an experienced skilled team, with a flexible approach, to deliver clients' goals.
Ends.
View the discussion in full on-demand on Business Reporter's FinTech Talk {link].
Madiston's Global Business Development Director, Wesley Brooks, was joined on the panel by Suzanne Homewood, Managing Director, Moneyhub, Michael Allison, Commercial Director, Roma Finance and Stuart Sykes, MD / Founder, Midas Advisory Services.