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Leveraging Technology to Improve Originations for Lenders, Dealers, and Consumers
By Dustin Wesner, Vice President, Product Management, Odessa
Due to the indirect relationship between auto finance lenders, dealers, and consumers, the originations process is rife with inefficiencies and inaccuracies. Technology can help by freeing dealers from playing middlemen, empowering them to avoid unnecessary work and instead focus on new sales and customer relationship management. Technology can also help lenders streamline and shore up the accuracy of their processes and accelerate the process of finalizing car loans for consumers.
Consider the scenario involving credit stipulations. Lenders request information from consumers as part of the credit approval process, often related to such documents as a pay stub, proof of identity, or proof of residence. In a direct channel it’s straightforward for the lender to contact the customer for documentation. But in indirect lending, which is common for most auto loans, the lender must communicate with the dealer who then obtains the necessary documentation from the customer. This inefficient chain of communication is where problems and delays often arise.
When logistical processes like document fulfillment and signatures are complicated and time-consuming, bad results ensue for all three parties involved. The multi-stage process delays contract booking and funding for the dealer, creates multiple touches and inefficiencies for the lender, and delays onboarding processes such as welcome packages, first payment information, and online account registration for customers.
While maintaining the indirect nature of auto finance is necessary, there are strategies that can make the process feel better connected and less error-prone for all three parties. Modern technologies like Odessa can help lenders and dealers navigate these challenges while improving end customer experiences.
Customer engagement software has been effectively used in auto finance to reach out to consumers via easy-to-use channels such as SMS and email. These tools are often used in account servicing but an emerging trend is leveraging them for originations processes.
Consider missing credit stipulations or other required documents. Lenders can use text, email, and document upload capabilities during originations to directly reach out to customers (acting on behalf of dealers) to request missing documents. This outreach removes a logistical burden from dealers while maintaining customer-dealer relationships.
Upon receiving relevant documents from customers, lenders can use Optical Character Recognition (OCR) technology to interpret them. OCR software allows lenders to confirm document types, extract relevant data, and load details into their loan-origination systems.
Lenders can also employ AI and Machine Learning technologies to run predetermined rules, evaluate if any information is missing or if a human agent needs manual review before funding a loan request. Additionally, technology can issue follow-up alerts to customers while keeping dealers informed of progress.
Technology integration improves loan onboarding processes significantly: lenders reduce follow-ups; dealers concentrate on sales; contracts onboard faster; dealers get funded quicker; consumers enjoy a more efficient lending experience—ultimately what they seek from both dealers and lenders.
The auto finance industry sometimes remains stagnant but leveraging technology investments in new ways enables progress toward a future that benefits every party involved.
September 10th, 2024