Origination Phase

Various stages ensure thorough assessment and validation in the loan origination phase. Pre-qualification begins with applicants providing essential details, leading to an issuer's pre-approval. Subsequent documentation and authenticity verification, complemented by application processing tools and underwriting decision engines, play pivotal roles in evaluating and approving loan applications. Post-underwriting, the loan decision process determines outcomes and potential adjustments, while disbursement and contract formalization through digital signatures finalize the process. Here’s an overview of each stage and providers that may aid you in this process.

Pre-Qualification Process

In the loan application process, pre-qualification begins with the applicant providing essential details to the lender or a third party. This information includes identity, address, employment, income, payment history, and desired credit limit. Based on this, the lender pre-approves the customer, allowing the application to proceed.

Traditional credit bureaus offer internal credit scores and detailed credit histories through APIs or batch files to assess creditworthiness. Emerging alternative data sources, such as utility bill payments, social security data, and even private ecosystem information like Uber driver data, are expanding the scope beyond traditional credit metrics.

Experian

Equifax

Transunion

Application Processing KYC/KYB

Upon receiving the application, the credit department conducts a thorough review for accuracy and completeness. Any identified errors prompt the credit analyst to contact the applicant for necessary details.

In parallel, validating the applicant's authenticity, individual or business, is crucial to mitigate fraud and ensure compliance. This process involves cross-referencing user-provided data with multiple sources of truth, often government databases or other trusted entities. These authenticity validation solutions are delivered directly through APIs or SDK integrations within the borrower's user interface.

Truora

Metamap

Jumio

Onfido

Authentix

Underwriting Process and Credit Decision Engines

In approving a loan application, the underwriting process is crucial. The issuer assesses various criteria like credit score, risk evaluation, debt-to-income ratio, and repayment capability. Additionally, some issuers analyze the applicant's digital footprint. This underwriting can be partially or fully automated through specific guidelines and third party integrations.

Furthermore, given the increasing reliance on alternative data sources beyond traditional bureaus, lenders seek solutions to consolidate diverse data sources and establish specific decision-making workflows aligned with risk policies. These Credit Decision engines offer a user-friendly portal integrated with data sources and a decision-tree functionality. This empowers issuers to construct and tailor their risk policies.

Typically, the issuer sets credit risk policies within these systems, reflecting their unique credit risk profile. While some platforms might have default values, the issuer must update and optimize these parameters over time. Although external consulting companies might assist in formulating credit risk policies, we assume this capability is inherent to the lender and won't be covered.

Lendflow

Uflow

Provenir

IQ Decision

Engine

Agreement Signing

To formalize the contracted loan and ensure legitimacy, borrowers may sign through various methods, such as OTP confirmation via phone or email, utilizing a digital signature. The platform captures and saves a timestamp as a digital record alongside the borrower's signature. The lender securely stores this contract, leveraging the validity of the signature to sell the portfolio to a collection agency if accepted.