Vince Passione

By Vince Passione, CEO

Last Friday I had the pleasure of joining several industry leaders to discuss the future of lending at the Digital Lending and Investing Conference. On my panel, “DIY: Capturing the Best Aspects of Build, Buy, or Partner for Digital Success” my colleagues and I discussed the merits of DIY (Do it Yourself) approaches to digital lending and the approach lenders need to take for DIY success.

There’s no denying that the lending industry as a whole is in flux with the emergence of digital disruption. Online lenders are growing market share, and community banks and credit unions cannot afford to surrender this market. Therefore, these traditional lenders must empower themselves through DIY solutions to compete on this new playing field.

As a firm that was founded over nine years ago with a vision to provide a “lending as a service” solution to banks and credit unions, our team at LendKey is pleased to see that the focus has shifted from buying loans from marketplace lenders to how banks can digitally originate these loans themselves (DIY). Now, LendKey is proud to assist over 275 clients to implement secure, profitable and seamless consumer lending programs.

So what’s involved in a DIY approach to digital lending? Here are my top five takeaways from the panel discussion:

1. Decide on your DIY approach.
Should you build, buy or partner?

2. Know what you want to achieve in setting up your lending program
Whether your goal is to open a new market like millennials, boost an existing program’s ROI or reduce existing lending costs, prospective lenders must take the time to solidify the overarching goals for the program.

3. Align internal stakeholders on the organization’s approach to online lending
When implementing an online lending program, banks have the option of building their own digital lending solutions, buying them from Fintech vendors, or developing a referral partnership with non- bank lenders. With these distinct approaches, ensuring all levels of the organization are aligned on the approach is imperative. To implement a DIY program properly, internal stakeholders at all levels must be committed to a true partnership and trust their partner firm to be reliable stewards of their brand.

4. Learn who all the providers are and get a good handle on the differences in their product offerings
There is the understanding that both parties will do their due diligence in vetting all possible options before settling on a partner when entering into any professional relationship. This is especially important in the online lending space as each provider has a unique approach to lending and require different levels of control by the lender itself.

5. Prioritize a partner that will support you through all aspects of the lending process
Online lending is complex. From issues around regulation and compliance to security and customer service, lenders are responsible for remaining above-board, for themselves and their borrowers. The partner you select to implement a DIY program must understand that compliance and regulatory exams are a cost of doing business in banking and understands how to manage that process. In order to properly capitalize on the opportunities in online consumer lending, look for turnkey solution that offers marketing support, compliance assistance, balance sheet management and digital servicing to efficiently grow your business and serve your customers.

As the industry continues to change, banks and credit unions are looking for a partner to launch, scale, and maximize their consumer lending. Partnering with Lending-as-a-Service (LaaS) options give financial institutions like community banks and credit unions a chance to digitize their lending operations and allow those partners to get back in the driver’s seat in the consumer lending space.

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