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Lending Enablement Solutions Drive ROA Attainment for Automotive Lenders, Open Lending Survey Finds
New data validates the role of automated decisioning and risk analytics in financial institutions’ performance, with 95% of Lending Enablement users meeting
About this update from Open Lending Corporation
[{"type":"text","content":"\nNew data validates the role of automated decisioning and risk analytics in financial institutions’ performance, with 95% of Lending Enablement users meeting ROA targets\n\n\n AUSTIN, Texas--(BUSINESS WIRE)--\nOpen Lending Corporation (NASDAQ: LPRO) (“Open Lending” or “the Company”), an industry trailblazer in lending enablement and risk analytics solutions for financial institutions, today released its Lending Enablement Benchmark report. The goal of the research is to uncover how financial institutions are using technology to adapt to an ever-evolving auto lending environment.\n\n\nThe report reveals that Lending Enablement Solutions are playing a clear and decisive role in improving decisioning speed, increasing Return on Assets (ROA), and reducing risk exposure for auto lenders. Additionally, the use of Lending Enablement Solutions is allowing financial institutions to better reach near-prime consumers — a segment that’s strategically critical to serve, especially in an economic downturn.\n\n\nOpen Lending gathered responses from leaders of U.S.-based auto lending institutions at or above the director level. Key data insights include the following:\n\n\n\nInstitutions that use Lending Enablement Solutions are meeting or exceeding ROA targets and mitigating delinquency.\n\nWhen comparing auto lending institutions that use a Lending Enablement Solution to those that don’t, a much greater proportion of Lending Enablement users report meeting their ROA targets last year compared to non-users (95% vs. 73%). Lending Enablement users are also far less likely to report a rise in delinquency rates among those in near-prime categories (12% vs. 57%). The marked contrast here suggests Lending Enablement Solutions have a positive impact on curbing delinquency among non-prime borrowers.\n\n\n\n\nFinancial institutions are prioritizing FICO scores and income/employment history for auto loan decisioning — while overlooking the value of alternative data sources.\n\nMany auto lenders take a reductive approach to determine borrower potential, using FICO scores (73%), income and employment history (60%), and debt-to-income ratio (60%) to evaluate and price loans. Without more nuanced alternative data sources — such as rental history, mobile phone payments and account balances — lenders are likely to exclude qualified borrowers in the near-prim...