We didn’t really expect you to guess it first time, as to be fair, the subject matter is a little obscure.

So here’s the deal!

We have just carried out some analysis on a lender who, within the past 12 months, transitioned from a manual loan underwriting process to automated credit decisioning using ADP by LendingMetrics. The findings were astonishing.

  • 700 ms is the average of length time taken by ADP to process live customer loan applications.
  • 38% is the amount by which loan origination costs (including 3rd party credit search costs) were reduced.
  • £8000 per month is reduction installed costs achieved whilst also seeing a 15% increase in loans processed.

But how?

Let’s deal with the easy one first. Frankly we were not surprised by the 700 ms number. ADP processes decisions fast and its speed capabilities are backed by contractual SLA’s guaranteeing these high velocity decisions. There’s nothing more we can say on this one really, it’s simple, ADP delivers.

Now let’s see how loan origination costs were reduced by 30%.

When engaging with new customers we often see the same loan origination inefficiencies taking place time after time. These inefficiencies can exist equally in a manual underwriting process or within and inadequate automated process, they include:

  1. Carrying out costly credit searches and ID checks on applications which would fail other underwriting criteria in any event. This makes the credit search purchase futile and wasteful.
  2. Being compelled to purchase leads at a higher price than would otherwise be possible due to inadequate “tiering” within the decision engine matrix.
  3. Executing repeat credit search requests when consumers apply to the same lender multiple times, either in a bid to circumvent decisioning algorithms or by mistake.

We also see number 3 repeated many times over when some lenders look at the same consumer from a lead provider (or multiple providers) and their systems don’t pick up the duplication correctly, resulting in multiple credit search costs.

LendingMetrics has ensured that ADP comprehensively addresses all of these issues and many more, thus delivering a more robust and cost-effective loan origination strategy.

The final finding is one that usually divides opinion, not least because it addresses the issue of staffing levels. Sadly, it is a commercial fact that lenders who streamline and reduce costs (often by reducing relative staffing levels) are usually able to compete with their competitors more favourably. In other words, their reduced overheads can translate to more competitive rates for their customers (or higher profits for the business of course!)

At LendingMetrics we have seen time and time again how ADP has delivered huge efficiencies in the loan origination process that have allowed more loan applications to be processed whilst utilising less staff. The result is that lenders can grow their lending volume without necessarily growing their payroll costs.

We could go on to talk about how real-time lending decisions make for a better customer experience, or how automated decisions are more consistent than manually driven subjective underwriting, but we can tell you all about that, and more, when we meet to demo the platform!