There are thousands of traditional lenders in the U.S. Many of them have been in business for years, have established reputations, and a have decent-sized customer base. It is habitual for them to follow the same high-touch model they’ve been using for decades. But the emergence of online lenders has led them to bleed business slowly. Online lenders, with their hassle-free processing and real-time credit approvals, have drawn the attention of the digital-first generation. But, as they say, every coin has two sides.
The same could be said of brick-and-mortar lenders. They offer a personal human touch, which online lenders cannot offer, similar to what big retail stores like Home Depot or Target have to offer. Customers who buy from retail websites can return items at a physical store, but if a customer buys from Amazon, returns have to be sent through the mail.
TCI (Teledata Communications Inc.) povides web-based lending software that helps traditional lenders automate processes while leveraging technology for better customer service.
In 1998, TCI launched the first cloud-based SaaS loan origination solution developed with the changing technological environment and lending landscape in mind. Co-Founder and Chairman George D. Nagrodsky brings more than 30 years information processing experience with a solutions business. Co-Founder and President William S. Nass brings more than 25 years of experience in the consumer credit industry.
In their endeavors to take the company to the next level, TCI recently hired Mark Gleason as director of sales for consumer finance industry. He was hired to expand the sales activities of the company. Mr. Gleason brings more than 10 years financial services technology experience and more than 30 years of technology industry expertise.
Offline lenders understand that online marketplace lending is here to stay. That’s why TCI has enjoyed a lot of traction as more and more legacy companies realize they can use their experience as an advantage against online lenders. TCI offers solutions that cover everyone from the millennial who wants to do everything online to a boomer who may not be as comfortable with technology. TCI specializes in facilitating workflows online or offline.
The latest TCI solution is Decision Lender 4.0, which automates and manages the automobile loan origination process and helps meet in-house compliance regulations, thus helping organizations save money on expensive IT resources. Auto Use, an independent finance company that serves car dealers across the U.S., and Charter Oak Federal Credit Union, a credit union with assets worth $935 million, are two companies that have deployed Decision lender 4.0 for automated decisions and loan processing.
Today’s lenders realize the magnitude of issues facing their businesses and why they are losing customers. The real work starts when lenders transition from a manual to an automated process. Overcoming corporate inertia can be difficult for an organization, so having a partner like TCI is a near necessity.
Brick-and-Mortar lenders are short-handed when it comes to customer acquisition costs since they are dependent on legacy technology and processes that involve physical branches and various layers of risk assessment. Hence the cost of customer acquisition is on the high side for traditional lenders, which translates into a higher APR and a longer-than-necessary turnaround. That is one reason customers opt for online lenders. On the flip side, physically interacting with a borrower helps stem identity fraud. A face-to-face meeting often ensures the bank will be paid first as compared to the faceless online lender. The reduced default rates are an essential element that helps balance the advantage online lenders have in acquisition and servicing costs.
Lately, a new drift has emerged in the loan market; instead of focusing on new loans, lenders are leaning toward the refinancing market. The market being saturated with lenders and customers stuffed with debt are deciding factors on why refinancing is gaining popularity. It is beneficial because the cost of refinancing is cheaper than originating a new loan, and it’s less risky, as well. That’s why a lot of lenders are moving in that direction. TCI products come in handy because companies can look at credit reports and analyze data to pick up loans and market them to customers. Additional analytics can help decide which micro market is attractive and which market is not profitable due to overaggressive underwriting by other lenders.
Partnering with TCI has helped some traditional lenders fight back against online lenders. TCI helps turn their weaknesses into strengths while providing customers the added convenience of a physical location. A SaaS solution helps ensure there is no upfront expenditure for the lender. A working hybrid model is not only the winning strategy, but the only way for brick-and-mortar lenders to survive.
Written by Heena Dhir.