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Midsize and regional banks shouldn’t have to cede market share to national lenders who are adopting new technologies like advanced analytics, artificial intelligence and the cloud to streamline the lending process and make instant credit risk decisions.
That’s the premise behind a joint venture formed by three companies to develop a “credit risk decisioning-as-a-service solution” to enable midsize banks and credit unions to build turnkey digital lending programs.
The partners in the joint venture — data analytics and solutions company EXL, automation software provider Corridor Platforms, and management consultant Oliver Wyman — say they’re out to help smaller banks that haven’t been able to invest in big data technology “become competitive immediately” with the most advanced lenders.
“When it comes to lending, current consumer expectations are that they get to choose between relevant offers from multiple sources and receive real-time answers,” said EXL Chairman Vikram Pandit in a statement. “Regional banks and credit unions, used to a loyal and captive base, are dealing with acceptance rates that have fallen sharply in recent months.”
The former Citigroup CEO, who joined EXL’s board in 2018 and became chairman on Jan. 1, said the the plan is to bring “the collective power of the industry’s leading technology, analytics and governance experts together to create a solution that will make lenders competitive quickly, while transferring critical know-how so that they become self-dependent in the long run.”
The joint venture’s credit risk decisioning solution will harness EXL’s experience in data and analytics, Corridor Platforms‘ decision workflow automation capabilities and regulatory compliance expertise from Oliver Wyman, to deliver instant credit decisions for mortgage approvals and other digital lending initiatives, the companies said. EXL and Oliver Wyman are both investors in Corridor Platforms, which is majority owned by its founders.
To ensure that corners aren’t cut, the joint venture’s solution will utilize traditional credit risk measures including credit scores, purchase and payment histories and bank statement data. But it will also harness nontraditional data, real-time fraud screening and risk rating tools based on data generated from each new transaction, the companies said.
“While speed is clearly the goal, it cannot come at the expense of robust risk controls,” said Corridor Platforms Chairman Ash Gupta, former chief risk officer of American Express, in a statement. “With our risk decisioning as a service solution, we’re giving lenders a turnkey solution to deliver real-time credit decisions with the risk governance necessary to meet their fiduciary requirements.”
EXL has more than 18 years of experience in the mortgage industry, providing end-to-end services from loan origination and servicing to default management.
“We combine outsourced business operations alongside cloud-native digital transformation solutions to optimize the operation and convert it to a future-ready operating model,” the company boasts on its website.
Automation has become a priority for mortgage lenders as rising interest rates take a toll on their lucrative refinancing business, fueling more intense competition for homebuyers and creating pressure to cut costs.
Maxwell, a technology startup that’s focused on helping small to midsize mortgage lenders streamline their processes, raised $52.5 million in additional Series B funding last fall and launched a new solution in December that’s designed to help lenders employ machine learning to accelerate the document review process.
The solutions offered by tech vendors often run in the cloud, with Amazon, Google, Microsoft and Salesforce promoting services tailored to help digital mortgage service providers digitize and process mortgage applications and documents.
Rocket Mortgage, the biggest mortgage provider in the United States, has also begun making its mortgage origination technology available to financial institutions as an end-to-end “mortgage as service” through the SalesForce Financial Services Cloud.