Changing consumer behavior, tighter regulations and emerging technologies are transforming the lending landscape, challenging how incumbent lenders acquire, service and retain customers.

In the latest edition of the Now Tech series, research and advisory company Forrester explores the loan origination solutions market, providing an overview of 23 different solution providers to help professionals select the right vendor.

Loan origination solution providers use capabilities including application programming interfaces (APIs), artificial intelligence (AI)-enabled data extraction, advanced machine learning (ML), credit decisioning, and smart automation, to make processes faster and more efficient, cut costs, and help underwriters price risk accurately.

These providers help lenders acquire customers digitally, delivering digital portals that support real-time customer input, document uploads, data aggregations and analysis and digital signatures. They also help streamline know-your-customer (KYC) and due diligence, managing the risk of fraud and money laundering, and improve underwriting by incorporating advanced ML techniques for credit underwriting.

The Forrester analysis classifies the loan origination solution market in three main segments:

Credit and fraud risk specialists like Experian and FICO, which offer data management and aggregation toolkits and have strong KYC and fraud capabilities;

Digital lending engagement platform providers like nCino, Backbase, Blend, IRESS and Kuliza, which focuses on designing and delivering intuitive experiences for borrowers and brokers. And

Digital lending processing platform providers like Black Knight, EdgeVerve Systems, ICE Mortgage Technology, Oracle, and Sopra Banking Software, which offer lending applications and support lending processes. The segment encompasses a diverse set of players including core banking providers, lending and non-lending specific software and services vendors.

The analysis also provides an overview of these vendors’ size (by annual revenue), geographic presence (by revenue %), and vertical market focus (by revenue).

For example, the Sopra Banking Platform, a digital lending progressing platform, supports small business loans, mortgages and personal loans. It’s only active in Europe, the Middle East and Africa (EMEA), serving customers including Credit Agricole, CIH Bank, and LCL.

Backbase’s digital lending engagement platform supports personal loans, mortgages and small business loans, and is active globally but primarily in North America, EMEA, and Asia-Pacific (APAC). Backbase customers include ABN AMRO, Lloyds Banking Group, and Westpac.

And Experian’s credit and fraud risk solution, PowerCurve, supports personal loans, mortgages and small business loans. It’s most active in EMEA, North America, and Latin America, and serves banks including ANZ Bank and Barclays.

To conclude, the Forrester analysis gives lenders recommendations, advising them to choose solutions that are built on flexible architecture, are modular, and are open to third-party data, solutions and systems.

These vendors should have access to data via APIs, allowing lenders to gain access to a holistic understanding for a borrower’s financial situation. But they should also have strong data security and privacy practices, the paper says.

They should use advanced AI techniques to elevate credit underwriting and allow for more sophisticated credit risk modeling.

These vendors should support seamless integration with third-party technology products and services, enabling lenders to plug external technology capabilities and integrate with KYC and due diligence providers, underwriting systems, and more.

Finally, lenders should select providers that understand their end-goal and which will help them innovate. For example, this can be a vendor building capabilities around home ownership, embedded products such as e-conveyancing, title insurance, and settlement services, or a vendor that offers cross-selling opportunities.

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