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How Small Lenders Can Compete With the Big Institutions

How Small Lenders Can Compete With the Big Institutions

Smaller lenders have a huge advantage over larger financial institutions. Although they may not have as much to spend on marketing, they benefit from a level of personalization and client intimacy and care that a larger financial services company may not be able to deliver.

A recent article in FICO by Matt Stanley asserted that:

Many small financial institutions are stuck with business-as-usual, stagnant, data and analytic-poor strategies. They often believe they can’t benefit from (or afford to use) advanced analytics powered by machine learning.”

That is a belief that simply doesn’t hold true. In fact, cloud-based technology now enables even the smallest lenders to benefit from the speed, data accuracy, and communications systems previously only available to those institutions who could afford complex systems development.

Here is more about that and other ways smaller lenders can have an advantage over their large competitors:

Marketing and Relationship Cultivation

Fancy ad campaigns and daily social media posts may boost awareness, but word-of-mouth marketing and powerful testimonials are still terrific ways to build a business.

Small and local lenders have an opportunity to cultivate relationships with community organizations and local influencers like real estate agents, accountants, lawyers, and consumer groups that have access to hundreds (if not thousands) of qualified borrowers.

By putting a face to a brand (even if it may be on ZOOM these days), you can build a steady stream of leads and referrals. And, as we all know, good customers (and good credit risks) refer other people like them, which saves you on marketing long-term.

Many large lenders will put customers through many levels of communication and contacts — humans and bots. Smaller institutions can often speak directly to clients — live or via e-mail.

Risk Management

Smaller institutions tend to be less bureaucratic and will allow for intelligent decision-making by experienced lenders. Consumers may get buried in algorithms when they deal with larger banks. 

The human factor comes into play more often when smaller institutions make lending decisions. 

Speed and Personalization

Of course, due diligence is essential in the lending process. But, as noted above, large institutions are handling thousands of loans at one time and often don’t have the systems or resources to move quickly.

Automation can expedite the entire lending process. Smaller banks, credit unions, and other alternative lenders can now benefit from a system that results in both accuracy and speed.

Thinking about the cloud as a lending co-op, where smaller banks can enjoy economies of scale because development has already been done for them. Your institution doesn’t need to burden the expense of custom development.

But lending criteria and the process behind writing loans is not a “one size fits all” undertaking, so the best systems allow for individual banks to customize their criteria, graphics, and communications process to comply with their unique requirements. 


What Can Be Automated by Smaller Lenders?

ATTUNE, which was founded by a team of real estate, mortgage, and technology experts who took a careful and objective look at the needs of small banks, credit unions, and non-bank lenders. They then considered the consumer perspective and the frustrations that ensue when a lending institution takes too long to underwrite a mortgage or home equity loan.j

The solutions to many of the common challenges were found in state-of-the-art integrated technology that gives the lending institution fast and accurate access to the information that they need. 

For example, institutions can now verify salary history and income in minutes — a process that used to take days or weeks. Plus, digitizing many steps of the process cuts out paperwork and reduces costs.

Using ATTUNE, the home buying process is distilled to 8 steps from 16. The mortgage approval process can take as little as a week. Despite their resources and scale, large financial institutions would be hard-pressed to compete with that kind of service and speed.

Customization is important to today’s consumers and business owners. You can compete easily and smartly with larger organizations, personalizing the process to your organizations’ needs, lending criteria, and client base.

In short, bigger does not necessarily mean better in the lending world today. Use technology to deliver a highly personalized, simple, fast, and satisfying experience to today’s borrowers and win the “David versus Goliath” battle. That will, in turn, lead to more great word-of-mouth and a steady stream of new business. Use technology to deliver the ultimate in speed and service.

For a demo of how ATTUNE’s platform enables you to customize your lending process, please get in touch.