Launching an Embedded Finance to Accelerate Revenue Growth Across Its Dealer Network in the US

Launching an Embedded Finance to Accelerate Revenue
Growth Across its Dealer Network in the US

About the Client

Our client is headquartered in Virginia and is a global provider of Security Systems, an innovative technology solution that keeps people connected with their home or business and gives people control, comfort, and peace of mind. The solutions include hardware and monthly subscription services. These solutions are sold exclusively through dealers. There are about 9,000 dealers who visit clients, do a site survey, and then present a solution and proposal to the clients. There are currently 7 million customers, with about 1.5 million new customers being added every year.

Background

A customer (home/business) for Security Systems bears the cost of initial hardware and installation, and this can range from $1,500 to $12,000+. The monthly subscription cost can vary from $49 to $69 per month. Our client and some of its dealers currently offer financing through third parties. This has issues like several smaller dealers and customers not being able to secure such financing, longer lead time, cumbersome process, etc. Our client decided to launch an embedded finance program so that, as a part of the sales process, a borrower will be able to seamlessly explore financing options and thus reduce the friction in the buying process.

It is expected that the availability of finance options while the dealer representative is presenting the price proposal at the customer’s place will improve the probability of sales conversion and increase the ticket size for a sale.

To make affordable finance available to customers on an ongoing basis, our client has created its own Point of Sale (POS) finance business. Dealers will work with the customers to sign up for these finance programs. From our client’s perspective, it means larger ticket size, better sales conversion, and additional revenue stream through financing operations. For the dealers, it means seamless & integrated financing solutions, higher conversions, and larger ticket sizes. The client has rolled out a pilot with a limited set of dealers and plans to significantly expand the scope of this financing program across dealers. The client has deployed a lean team of experts for this finance division and is leveraging the LendFoundry platform and team for its end-to-end technology needs, and one of LendFoundry’s partners for managing business processes like customer service, collections, support, etc.

Integrations Used in Lendfoundry
Point of Sale Lending System

Accelitas
worldpay
Lexis_Nexis
docsign
vantage-score
yelp
google_analytics
Google Places
twilio
twillio_sendgrid

Key Business Needs

  • Zero-touch application processing, underwriting, and offer management to ensure instant loans.
  • Highly self-service to keep the cost of lending operations low, and also empower dealers and borrowers to take control of the lending process.
  • End-to-end loan lifecycle management to ensure seamless automation of the business process, i.e., from onboarding to pay-off.
  • Extensible for various sizes of dealers, i.e., offer an out-of-box SaaS solution to smaller dealers, while allowing larger dealers to integrate their CRMs with clients’ digital journeys using APIs.
  • Ability to create customized offers based on dealer participation.
  • Simple application form for borrowers and thus relies on 3rd party data providers to enrich application data for underwriting and decision making.
  • Highly scalable solution as the client will expand the footprint to 100x beyond the pilot.
  • Ability to integrate 1st party, 3rd party, and in-process lending data with its existing reporting and data infrastructure.
  • Agile technology partner, as this is a new business vertical for the client.
  • Technology partner with a robust security framework to accommodate compliance needs from Funding partners, WebBank, Large dealers, etc.

Proposed Solution

Having worked with various Point of Sale Lenders, LendFoundry was able to demonstrate its domain expertise and an end-to-end solution to the client’s leadership team and provide them sufficient confidence to quickly move forward with this relationship. LendFoundry Point of Sales Lending Solution (LF–POS Lending Solution) was proposed and deployed to address the key business needs of the client. This included:

  • A mobile response and simple-to-navigate application intake solution for borrowers to apply on their own 24*7. Includes the ability to easily add co-borrowers and their details, transparently captures consent, etc. from the borrowers, instant bank verification, etc.
  • A mobile-responsive application intake solution for merchants to onboard borrowers while discussing a home security solution with a customer. The solution also includes the ability to easily add co-borrowers with their details. Also supports initiating actions for borrowers like providing consent, adding Identity documents, etc., while the heavy lifting is being done by the merchant.
  • An API based POS Loan Origination Solution which integrates with Experian, LexisNexis, Plaid, DocuSign, Twilio, Sendgrid, etc.
  • An API based POS Loan Servicing Solution to which loans are automatically onboarded from LendFoundry Loan Origination System and which automatically manages daily amortizations, repayments, fees and interest assessments, delays and delinquencies, collections, etc.
  • A self-service borrower portal that enables borrowers to keep track of their loan applications, loans in service, repayments, upcoming payments, statement of account, tools to make a payment, etc.
  • Lender Portal for clients’ team and BPO partners to view applications in progress, loans in service, closed loans, due/upcoming payments, payments received, etc. Also used to overwrite system-generated offers, verify data received from borrower, merchant, and 3rd parties, manual underwriting when needed, perform loan modifications, etc.
  • Okta-based Single Sign-on (SSO) with user access control.
  • Data as a service solution to integrate with the client’s reporting and data solutions.
  • A merchant onboarding portal for merchants to provide their data on their own, and an automated merchant underwriting solution.
  • Customized UI for various portals with client branding specifications.
  • Document Management system to manage documents submitted by borrowers, dealers, and in-process generated documents. Also, tools for the verification team to easily review and approve documents, and if the documents are unverifiable, seamless communication with the borrower and merchant.
  • A large collection of APIs has been exposed to dealers, funding partners, etc., for ease of integration to the LendFoundry POS Finance platform.

As this was a new business vertical for our client, LendFoundry’s product management and implementation teams worked very closely with the client’s business team, data providers, payment providers, funding partners, and WebBank to make sure that our client could launch this new business efficiently.

Features Used in the Solution

The following features of the LF-POS Lending Solution were used to fulfill the client’s expectations.

  • Fully mobile responsive, intuitive, and optimized Borrower Portal for a borrower to complete the loan application process in less than 60 seconds.
  • LF-LOS’s connector-based design lays the foundation for an ecosystem where seamless integration with Third Parties is possible. In this case, the integration was done with the various dealers for Onboarding applications using their solutions, like Salesforce, HubSpot, and also custom solutions.
  • Integration with third parties like Experian, LexisNexis, Plaid, DocuSign, Twilio, Sendgrid, etc. Apart from this, there are 80+ other Third-Party integrations available for faster, better, and compliant decision making.
  • Robust and scalable system design handled a high volume of applications and instant & automated underwriting.
  • Action Menus for different roles helped define role-specific actions and established role-based controls.
  • Auto-scheduled emails are triggered by different events.
  • Api based integration with LOS for seamless onboarding of loans to the Loan Servicing System.
  • Configurable Payment Hierarchies to align with business events.
  • NACHA/ACH enabled payment processing with automated and configurable handling of ACH Rejects, including fee application.
  • Non-perfect partial or ad-hoc pay handling flexibility, including late payment handling.
  • Payment reversals, backdated payments, waivers for loan closure, and settlement. Charge off, sell off, deceased, SCRA, forbearance treatments.
  • Current Total outstanding segregation into buckets to track good standing and delinquencies, with provision to highlight negative KPIs of loans for early warning.
  • Data as a service cloud solution allows frequent syncing of LendFoundry’s reporting data with the client’s data lake.
  • Merchant Solutions like Self-Service Merchant Onboarding, Automated Underwriting, integration with LexisNexis, Plaid, and DocuSign make it possible to scale up onboarding of a large number of existing merchants to the lending program and also easily add new merchants in the future
  • Non-perfect partial or ad-hoc pay handling flexibility, including late payment handling.

Overall Impact

The client achieved automation of the application intake, loan origination, underwriting, decision-making process, loan servicing, dealer enrollment, and underwriting. The LF-POS platform provided an integrated solution where different teams could interact and perform appropriate actions based on the business functionality. The system administrator could control which business users could view which aspects of the application. The client has been able to launch their business quickly, keeping its focus on scaling up the lending operations while LendFoundry and its team do heavy lifting on technology, data, 24*7 support, etc., and thus becomes a partner in growth for our client.

About LendFoundry

LendFoundry is the next-generation, cloud-based, SOC1 and SOC2 Type 2 compliant, full-stack technology platform to enable digital lending.

Available as a SaaS offering on AWS, LendFoundry is built using a microservices architecture and is highly customizable and scalable. Powered by API integration with 80+ traditional and alternative data providers and platforms, it can help digitize a lender’s entire loan lifecycle to deliver faster loans and also add new customer segments.

Key Modules: Borrower Portal, Broker Portal, Dealer Portal, Merchant Portal, Lender Portals, Loan Origination System, Loan Servicing System, Loan Management System, Business Analytics.

Privacy Overview
Lendfoundry

Cookies are brief text files that websites you visit save to your computer. They are frequently used to make websites function or perform more effectively and to give site owners information. The cookies we use and their purposes are described in the list below.

Necessary

Essential cookies are crucial for the basic operation of a website. They enable core functionalities such as maintaining site security, managing network performance, and ensuring accessibility features work properly. These cookies are typically set in response to actions you take, such as logging in or filling out forms. While you can choose to disable them through your browser settings, doing so may limit certain features or cause parts of the website to function improperly.

Preferences

Preference cookies are designed to remember choices you make when using a website, allowing it to offer a more personalized and consistent user experience. These cookies store settings such as language selection, preferred layout, region-specific content, and other customizable elements that influence how the website looks and behaves. By retaining this information, preference cookies ensure that your preferences are automatically applied during future visits, enhancing convenience and usability. Disabling these cookies may result in a less tailored browsing experience.

Marketing (Optional)

Marketing cookies are used to track visitors across websites in order to understand their online behavior, preferences, and interests. This data enables us to deliver targeted content, personalized advertisements, and product recommendations that are most relevant to each user. By analyzing browsing history and user interactions, these cookies help create a more engaging and customized experience. Additionally, marketing cookies assist in measuring the effectiveness of advertising campaigns, ensuring that promotional efforts reach the right audience. Disabling these cookies may result in seeing less relevant content or offers.

Powered by  GDPR Cookie Compliance