As the Marketplace Lending environment continues to evolve, one area of opportunity that continues to gain traction is the cloud based Lending-as-a-Service (LaaS) model. Many online lending platforms continue to seek partnerships with traditional lending institutions. Through a branded or white label approach, the LaaS model allows credit unions and traditional banks to leapfrog into the digital age. These platforms financial institutions to bypass internal technological hurdles and more rapidly meet the expectations of their customer base and prospects to transact digitally.
Decisioning-as-a-Service (DaaS) is also gaining traction in the online lending arena. Under the DaaS model, banks, credit unions and other type of lenders will look to DaaS platforms to provide flexible and robust underwriting and risk analytic capabilities while they retain ownership of the underwriting personnel, establishment of risk polices and the ongoing servicing of the loan. The DaaS provider may take on certain aspects of the underwriting processes such as verification of ID and Income if it cannot be systematically determined. DaaS can be viewed as a sub-set of the services delivered under the LaaS model.
Whether adopting the LaaS or DaaS models, securing best in class third party software or building internally, or a mix of these approaches, it is clear that the ability to extend financing of all types to prospects and customers digitally is a strategy that all lenders need to adopt to be competitive.
To read my full, in-depth thoughts on these subjects, visit my President’s Perspective Insight page here.