Lending Technologies Corp. using machine learning to streamline SME funding
Creating the best lending technology doesn’t mean a thing if you can’t attract a continuous customer flow, Markus Schneider said. So his company set out to do something about it.
Mr. Schneider is the CEO of Lending Technologies Group, a fintech company serving clients in the United States and Switzerland by automating and standardizing the SME lending process. Through machine learning, Lending Technologies’ solutions reduce risk while shaving the applicant assessment period from days to hours. Fully digital and mobile-responsive, the solution is seamless, paperless, and comes with a comprehensive back end.
We spoke recently about Leads2Lend, the new marketing platform for alternative lenders. Developed with Lead One Marketing, Leads2Lend is a comprehensive digital solution that identifies and engages with potential new customers. It blends Lending Technologies’ white-label customer acquisition management technology that includes digital onboarding and loan building tools with a digital marketing program to allow designated agents to download leads and create unique lending solutions for clients. Shorter decision times and loan package construction are additional functions.
Mr. Schneider likened Lending Technologies’ initial release three years ago to a new pair of shoes. It was cool and shiny but there were a few issues while working it in.
“The early adopters saw good results, but the challenges was a long sale process,” Mr. Schnieder explained.
That early edition wasn’t as digitally advanced as the current one, so salespeople played much bigger roles. Many found it hard to convince prospective clients of a new technology’s merits, so Lending Technologies worked to improve the application process. They made the application more electronic and they tied it in with the lead generation process. That shortened the sales process, allowing closing to happen on the spot instead of over a week or two.
“They saw the results, used the product and the behavior change became automatic,” Mr. Schneider said. “We can slash costs by five to ten times. We’re becoming a leader in the small business lending space.”
Mr. Schneider said banks are under tremendous pressure to catch up with their technology and to improve the small business lending process. But the process is long, so alternative lenders have jumped in to fill a void and can do the job faster and cheaper than banks’ aging legacy technologies where a $3,500 cost to issue a small business loan is not unheard of.
“Most (big banks) don’t want to lend less than $100,000-$200,000, but most small businesses only want $50,000,” Mr. Schneider said.
Enter Lending Technologies with solutions that allow lenders to issue loans at lower principal amounts and still make a profit. Add Leads2Lend’s customer acquisition cost reduction capabilities and the bottom line effect will be substantial, Mr. Schneider said.
“Non-banks face tremendous pressure to reduce marketing costs. With new transactions costing $3,000-$3,500, if you can introduce efficiency and reduce the closet for the lender the effect will be dramatic.”
Mr.Schneider said the technology helps clients in two unique ways.
“One of the biggest pressure points that ISOs/loan brokers and non-banked lenders are facing is marketing and deal acquisition cost. Our technology, in combination with our marketing services, helps reduce this cost, which, as mentioned above, helps increase the de-banked world increase profitability.”
Mr. Schneider said because Lending Technologies integrates third party vendors, they can enhance data quality and make sure a company actually exists by verifying its address, ownership and other factors.
“It gives you some indication of the quality of the applicant instantly,” Mr. Schneider said. “As you build the database you quickly learn who’s a credit risk, who can receive a loan, and who can’t. You get higher closing rates and reduced marketing costs.”