Decisioning Tech Key to Lending Success
According to Walter O'Haire, a senior analyst with Boston-based Celent, the quality and speed of a lender's decisioning technology will make or break it in the eyes of customers. "The one point in time where it is crucial to have good technology is at the decisioning point," he asserts. "No matter the channel, after consumers give the lender the minimum requested information, they expect the lender to give them a preliminary decision within seconds. Their expectations are now based on their Web interactions. They want instant decisioning. The borrower doesn't care about the back end. Just get it done, fast. Lenders are starting to understand this. So if they're going to invest, do it in the decisioning area."
Zoot's Lindeen echoes this sentiment. "The leading lenders have mastered automation," he asserts. "The next step is responding to market changes in real time or as close to real time as they can. You want to be able to respond quickly."
In fact, says Metavante's Cy Brin, president of the Milwaukee-based company's lending solutions practice, the whole subprime problem can be traced back to the decisioning capabilities. "The technology today can greatly reduce lenders' risk for loans not meeting underlying criteria," he says. "Our loan origination system has embedded decisioning that works as early as the first conversation with the borrower."
Michael Madsen, CTO and VP of product engineering for banking and investments at Fairfax, Va.-based CGI, takes a more big-picture view of the kinds of technology successful lenders will use. "What's really taking hold among banks to help deal with the lending crisis fallout and in the future is SOA [service-oriented architecture]," he explains. "SOA and BPM [business process management] are going hand in hand. It's imperative for lenders to get their heads around BPM first. This technology will help them become more agile with credit risk and their business in general. BPM will tie everything together. It will let lenders make decisions at the top and drive them down through the organization." (For more on SOA, see related feature, page 32.)
Madsen also sees more lenders embracing technology that allows them to move the loan further out of the hands of IT. "Time to market is important," he says. "I'm seeing much more emphasis on technology that lets the organization move the loan further upstream out of IT. There's frustration on the business side around being able to move new products to market -- they often view the IT department as a bottleneck. So the business side wants solutions that give them more ownership and helps them bring products to market faster."