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The Path to Auto-fund: Improve the Customer Experience for Your Best Borrowers

The key to success in the online lending business is giving out more money to borrowers in order to see more returns. Yet most companies and industry solutions focus on which borrowers not to lend to—disqualifying applicants based on credit factors or denying applications that look fraudulent—rather than increasing their number of good loans.

Strategies designed to reduce friction for best applicants not only boost the number of loans funded, they can also help online lenders compete on an increasingly important playing field: customer experience. That’s what makes auto-funding such a unique proposition for online lenders.

The goal of auto-funding is to take a trusted segment of new applicants and run them through a fast, lean underwriting path. This achieves a higher conversion rate and lower cost per fund by providing a smooth experience for your best customers.

What do customers want? Speed.

In a recent PricewaterhouseCoopers survey on consumer lending, it was found that a lender’s overall customer experience (including speed, transparency, channels, and customer service) was more important than interest rate when it came to choosing a loan. And the most important of those experience points? Speed.

Speed matters. A SOURCE survey found that a full third of borrowers would take the fastest loan over the best rate. And when the average time to fund is 4.5 days, offering your customers real-time auto-funding can be a critical competitive edge.

The key to speed? Auto-funding

Speed is clearly important to customers, but online lenders still need to do their due diligence—and that takes time. How can they find a balance between thoroughly vetting applications and providing an excellent customer experience?

Thanks to advances in technology, that balance doesn’t need to apply to an entire portfolio anymore. Instead, think about TSA Pre✓, which allows pre-vetted flyers to speed through airport security without the added friction of removing laptops from their cases, bagging liquids, or taking off their shoes.

Sophisticated underwriting software can help create distinct underwriting experiences for different customers. And today, everything down to reviewing bank statements can be automated, allowing online lenders to automatically fund loans—provided they can identify a trusted segment of customers.

With TSA Pre✓, that segment is identified through an application and interview process. With auto-funding, that segment is identified using robust identity data to verify an applicant’s identity.

Create your auto fund pre-check path with identity data

When we talk about verifying an identity, we evaluate the five key consumer attributes of name, phone, email, physical address, and IP address. In an online transaction, this may be the only information available to help a lender decide whether the person clicking submit is who they say they are. If that confidence is high, you can then send them through your pre-check/auto-fund underwriting path.

Recently, one online lender found incredible success with this process by working with Whitepages Pro. Their auto-fund program allows them to originate a loan without ever having to physically speak with a consumer or review bank statements. With data from Whitepages Pro Identity Check, this lender is able to speed 10% of their applications through an auto-fund underwriting path based on their confidence in an applicant’s identity.

These 10% of applications become 20-25% of new loans issued. By using identity data at the top of their application approval funnel, the lender has an auto-fund program with a 50% conversion rate — a 2.5x improvement over the rest of the portfolio. They’ve also seen an impressive 65% reduction in cost per fund.

Curious about how identity data can help speed the best applicants through your online lending funnel? Learn more about Whitepages Pro’s online lending solutions.

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