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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 dealers to avoid unnecessary work and instead focusing 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 the car loan for consumers.

Consider the following scenario on credit stipulations. Lenders request information from consumers as part of the credit approval process, often related to such credit stipulation 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 the documentation. But in indirect lending, as is the case for most auto loans, the lender must communicate with the dealer, who in turn obtains the necessary documentation from the customer. This inefficient chain of communication is where problems and delays often arise.

And what happens when such logistical processes as document fulfillment and signatures are complicated and time-consuming? Bad results for all three parties. The multi-stage process delays contract booking and funding for the dealer, creates multiple touches and inefficiencies for the lender, and delays the onboarding process for the customer — such as their welcome package, first payment information, and online account registration.

While the indirect nature of the auto finance process must be maintained, there are strategies that can help the process feel better connected and less complicated and error-prone for all three parties. Modern technologies like Odessa can help lenders and dealers navigate these challenges while also improving the end customer experience.

Customer engagement software has been effectively used in auto finance for a while now to reach out to consumers for documents via easy-to-use channels such as SMS and email. These tools are often used in the account-servicing lifecycle, but an emerging trend is leveraging the same tools for originations processes.

Consider the use case of missing credit stipulations or other customer-provided documents. Lenders are able to leverage their investments in text, email, and document upload capabilities in originations processes to reach out to the customer directly (by acting on behalf of, and with the knowledge of, the dealer) to request the missing documents. This outreach to the customer on behalf of the dealer removes a logistical burden for dealers and lenders while maintaining the customer-dealer relationship.

When the lender receives the relevant documents from the customer, they can use Optical Character Recognition (OCR) technology to interpret them. The OCR software allows the lender to confirm the type of document, extract relevant data, and load details into their loan-origination system.

Finally, the lender can use AI and Machine Learning technologies to run predetermined rules, evaluate if any information is missing, and determine whether the loan request is ready for funding or requires a human agent to manually review when necessary. The lender can also use technology to issue follow-up alerts to customers and keep the dealer informed of progress.

Everybody wins when technology comes together to improve the loan onboarding process. Lenders don’t have to do as much follow-up or rely on the dealer to get the information they need. Plus, if done correctly, the lender makes the dealer look good while also establishing the beginning of the future servicing relationship with the customer. Dealers can focus on selling and managing customer relationships, not following up on missing documents. Moreover, when contracts can be onboarded more quickly, dealers get funded more quickly, which is paramount for them. And, most importantly, consumers get a more efficient lending and car-buying experience (which is ultimately what they want from dealers and lenders).

Auto finance, at times, is still stuck in neutral. It’s difficult to shift from the status quo. But by leveraging technology investments in new ways, the entire industry can drive into the future. And that’s a destination every party should be excited about reaching.