A finding by Transparency Market Research suggests that “the opportunity in the global peer-to-peer market will be worth $897.85 billion by the year 2024, from $26.16 billion in 2015. The market is anticipated to rise at a whopping CAGR [Compound Annual Growth Rate] of 48.2% between 2016 and 2024.”

While P2P lending in the U.S. is still in its infancy, it is growing at a faster pace in comparison to other financial services. China’s peer-to-peer lending market is the largest and the most dynamic in the world with more than 4,000 providers operating in the market today compared to just 50 providers at the end of 2011. Although there isn’t much insight into verifiable numbers in China’s market, in June, regulators revealed a figure of about $93.43 billion.

Though it is true that peer-to-peer lending is set to grow exponentially over the next few years, everything has good and bad aspects and that goes for peer-to-peer lending as well. In an article from Investopedia, below are listed the pros and cons of peer-to-peer lending:

Pros and Cons of Peer to Peer Lending

The major benefits of P2P lending for individuals are:

1. Lenders can enjoy returns several percentage points above those for a bank CD; borrowers enjoy similar cost advantages compared with rates at a bank or credit union.
2. Many individuals like knowing who they're lending money to and why they need the money. Not only does it give them a sense of personal satisfaction, but they can also choose borrowers who they believe will repay the loan in full and on time.
3. There's a charitable aspect to the lending. If a potential borrower has a dodgy financial history but a sympathetic story to tell, a lender can willingly choose to forgo a higher return and assume greater risk to fund the loan.
4. There can be a true sense of community at a P2P lender site. Forums tend to be active, with users who eagerly exchange information about lending and borrowing experiences. Proposed changes in the policies of the P2P lender are vigorously debated.
5. Some people just hate banks and will do anything to avoid using them.

Naturally, there is a downside:

1. Many borrowers are excluded because they do not have good credit.
2. Lenders face exposure from defaults, and their funds (with some exceptions) are not insured. The success of P2P lenders to limit loan losses varies by lender and over time. A lender can be talked into making a bad loan with a good sob story.
3. Compared to walking into a bank or credit union, P2P lending can take much more work, especially if the loans are funded through auction. The loan selection and bidding process can demand a level of financial sophistication many people don't have.
4. Although returns to lenders may be higher than those on certificates of deposit, over time, it's not certain they will be higher than those on a publicly-traded index fund, which requires relatively little work to buy and hold.
5. Not everyone wants their financial story published on the internet; for those with some sense of personal privacy, the big impersonal bank has its benefits.
6. Because this is such a new industry, there are bound to be waves of lender consolidation, interface/administrative changes, and changes to the lending practices themselves. This may be more of a burden and risk than disciplined investors are willing to allow.

Now that you understand more about peer-t0-peer lending and the numerous professional platforms available, you can stop worrying about asking that rich uncle for a loan. There are peers out there ready to lend you money.

To help you make quicker and better-informed lending decisions as a peer-to-peer lender, or if you are considering becoming a peer-to-peer lender, check out MoneyThumb's best-selling software for lenders, PDF Insights, the next generation of underwriting automation. You can request a free, live demo by following this link.

The post The Rise of Peer-to-Peer (P2P) Lending in Today's Financial Market appeared first on MoneyThumb.

This report comes via an article at CPA Practice Advisor. The Rules of Thumb blog from MoneyThumb has distilled the most pertinent information from that article and the 2021 Finance Trends Survey for the reading convenience of lenders and other financial leaders below:

More than 475 CFOs and VPs of finance participated in the global survey in July and August 2021. In addition to presenting findings from these CFOs and VPs of finance, the survey report, titled "Security, Data, Analytics, Automation, Flexible Work Models and ESG Define Finance Priorities,” also shares insights from respondents at the director and manager levels. Comparisons of the differences between the responses by level provide additional insights for senior leadership. The full survey findings reflect responses from 1,010 finance professionals worldwide at both public and private companies across a range of industries.

The post Protiviti Financial Trends Survey Shows: Financial Leaders Face Added Responsibility in the Future appeared first on MoneyThumb.

It is not uncommon for the interest rate on a subprime loan to be as high as 18%. Where else can you can get that kind of return on your money? There is no official data, though it’s estimated that at least 100,000 such lenders exist — and the trend is on the rise, says Larry Muck, chairman of the American Association of Private Lenders, which represents a range of lenders including private-equity firms and individuals who are lending their own cash. “We know the number of people who are doing this is increasing dramatically — over the last year it’s grown exponentially,” he says.

Often referred to as hard-money lending, the practice of subprime lending has undergone a significant shift in the past three or so years. It used to be that individual lenders were millionaires who could afford to loan cash and handle the risk of not being paid back. Now middle-income pre-retirees, ranging from chiropractors to professors, are joining their ranks of hard money, or subprime, lenders.

Many of these so-called mom-and-pop lenders are using their retirement accounts — self-directed individual retirement accounts and self-directed 401(k)s — to fund other people’s loans. Unlike regular IRAs and 401(k)s, self-directed accounts permit investing in alternative assets, like real estate. Cash is not technically withdrawn from the account, but rather a portion of the account equal to the dollar amount the borrower needs is invested in a loan. The borrowers’ monthly payments, including interest rates, are paid into the retirement account, which ends up taking ownership of the borrower's collateral if they default.

It’s not just mom-and-pop lenders who are becoming subprime loan officers. The strategy is picking up on an institutional level as well. Experts say a growing number of private-equity funds and hedge funds are pooling together individual investors’ cash and using those funds to lend to subprime borrowers at high-interest rates. Going forward, experts say, it will be difficult to slow down privately funded subprime loans.

MoneyThumb has many customers who are subprime lenders that use PDF Insights to help them quickly vet potential borrowers. PDF Insights utilizes IDR (intelligent document recognition) to identify bank or bank statement formats. Unlike competing solutions, this software doesn’t need to be told upfront which bank or format is being used, yet correctly processes over 99% of U.S. bank statements. The output from each statement is delivered in a standardized format, even for statements from different banks. In addition to text-based PDF statements, PDF Insights also processes scanned or faxed image-based PDF statements. MoneyThumb's proprietary OCR algorithms review questionable fields, look for patterns to self-correct, and then flag transactions that are still unknown or questionable for manual review and correction.

The post What it Takes to Become a Subprime Lender appeared first on MoneyThumb.

Lenders do a lot of technical analysis during the loan underwriting process; however, the process is pretty simple for borrowers. You simply need to collect and provide the requested documentation to the lender and then wait to receive the lender’s decision.

The specific documents you’re asked to produce and the time the underwriting process will take is going to vary depending on the type of loan you’re seeking. The more you want to borrow and the longer the loan term, the more comprehensive the underwriting process will be.

If you are a private lender, then you know that the underwriting process for a private loan is quite a bit different from the process of a conventional bank loan. Banks have certain requirements that must be met, especially good credit. A low credit score will usually end up in instant rejection by a bank, whereas private lenders consider the bigger picture and look at the track record of a prospective borrower. In this way, inadequacies in one area can be compensated for in another, without resulting in immediate rejection.

Today on the Rules of Thumb blog from MoneyThumb, we would like to share the 4 Cs of the private loan underwriting process. By following the advice listed in each one, you will have a much better chance of getting that private loan you are seeking. We have listed the 4 Cs below:

The Four Cs of The Private Loan Underwriting Process

1. Collateral. This is one of the most important factors, especially for a private lender who's underwriting practice is asset-based. For a better chance of obtaining a private loan, you should explain why you believe your assets are a good investment.
2. Character. A private lender isn’t just giving you the funds you need for your project, they’re entering into a business partnership with you. This is also why it’s important that you’re available to your lender during the underwriting process. If your lender calls or emails you with a question or to request additional documentation, make sure to respond promptly because if a lender can’t get an answer from you during the underwriting process, why should they believe they’ll hear from you when the time comes to repay the loan?
3. Capacity. This is your ability to repay the loan. Unlike banks which often have to consider a borrower’s global debt picture and their debt service coverage ratio, private lenders are focused on your assets and ability to repay the loan.
4. Credit. Even though private lenders don’t have the same credit score requirements as banks do doesn’t mean that they won’t want to know about your credit history. What it does mean is that if you have had any credit difficulties in the past, a private lender will want to know the story behind such difficulties and won’t immediately toss your application in the reject pile.
5. Communication. Establishing open communication with your lender will help you get your loan approved and closed faster and will help ensure that you have the funds you need when you need them. It’s also important to keep your lender in the loop after you’ve received the funds. If something unexpected happens, an informed lender is much more likely to work with you through any additional hurdles that arise.

By keeping the above 5 Cs of the underwriting process in mind as a borrower, you have a much better chance of obtaining a private loan.

If you are a private lender just getting started in the niche, these tips will help you become successful, as well as using MoneyThumb's best-selling product, PDF Insights, to help you make quicker and better-informed lending decisions. Follow this link to request a free live demo of PDF Insights.

The post The 5 Cs of The Private Loan Underwriting Process appeared first on MoneyThumb.

However, there are millions of people, many of who are small business owners, who make too much money to qualify for a stimulus check, but they still need a boost to their finances. If you fit into this category, The Rules of Thumb blog from MoneyThumb would like to suggest you check into getting a hard money loan.

Below are the facts about who will qualify for the stimulus payout, which is said to be arriving in bank accounts as early as this weekend:

The full $1,400 goes to single people earning up to $75,000. But it phases out quickly after that and is completely phased out for those earning more than $80,000.

Full payment of $2,800 goes to a married couple filing a joint federal income tax return earning up to $150,000. The phaseout begins after that and ends at $160,000.

If you know you aren't going to qualify for this stimulus and you haven't yet heard of hard money loans, we wrote this post, Understanding Private Lenders and How They Work, explaining in detail what a private lender is and what they can offer. Hard money lenders are one facet of the private lending niche, and they fulfill a legitimate and essential service, providing fast, asset-based loans. These loan providers are distinguishable from traditional banks in that the lenders use their own funds.

Now that you understand what hard money lenders are, your next question may be why you should use one. The short answer is time. In the business world, time is money. From a business perspective, the faster that you can finance and close a deal, the faster you can turn to the next project on your itinerary—the more deals you complete, the healthier your bottom line is when it’s all said and done.

Because hard money lenders do not conduct extensive background checks on applicants, loans can be approved in a matter of days as opposed to weeks. This makes them particularly useful for small business owners. On the opposite end of the spectrum, normal banks can take as long as 30 days to approve your loan.

Whereas traditional financing is premised on the creditworthiness of the borrower, hard money loans are asset-based, meaning the underwriter evaluates the viability of your assets and their inherent worth or potential to produce a reliable revenue stream. This unique form of underwriting gives hard money lenders increased flexibility when it comes to the specific terms and conditions of the loan itself. Even hard money loan payments can be renegotiated in certain situations. The application process for a hard money loan is also much less of a hassle. While these lenders do take your credit score into account, they focus their attention on your assets and ability to repay the loan.

2021 is shaping up to be an active year for hard money lenders and businesses in general. Make sure you take full advantage of the favorable conditions by having the funding you need when you need it in order to accomplish all of the resolutions you made in January! A hard money loan may just be the answer you need.

If you are a hard money lender reading this post and have yet to try out our fantastic product, PDF Insights, now is the time to request a free, live demo. So many lenders use PDF Insights to make quicker and better-informed lending decisions that if you aren't doing so you are missing the boat. This product instantly reconciles bank statements, speeds up your customer onboarding, mitigates credit risk, and standardize your credit approval process.

The post Didn't Qualify for 3rd Stimulus? Consider a Hard Money Loan appeared first on MoneyThumb.

Non-bank lenders are changing credit standards in response to economic volatility, with 49% of respondents indicating that credit standards for C&I loans tightened during Q3/20. At the same time, 76% of non-bank lenders expect loan demand to surge over the coming months as borrowers leave commercial banks in search of relaxed covenants and flexible loan structures.

The above information discovered by the Cerebro Capital survey is great news for private lenders! MoneyThumb has many customers who are private lenders and use our product, PDF Insights, to help them make quicker and smarter lending decisions.

Read on for more of the positive outlook for private lenders uncovered by the survey:

Several key findings in Cerebro’s survey indicate that non-bank lending institutions are continuing to strengthen their foothold in the private debt markets and will be a key resource for middle-market companies as they explore financing options through 2021. With 63% of non-bank lenders anticipating a weakening economy that will disadvantage competitors and provide more opportunities for them to lend, non-bank lenders are seizing the opportunity to land deals with strong middle-market companies. In fact, more than one-third of non-bank lenders reported that they have already lowered rates for high-quality borrowers.

Additionally, 35% of non-bank lenders indicated that there is increased demand for draws on existing loans or lines of credit, providing more opportunities to extend their relationships with existing borrowers. In a similar question asked by the Federal Reserve’s Senior Loan Officer Quarterly Opinion Survey, only 17% of bank lenders are seeing increased demand for draws.

The survey included non-bank lending partners nationally and was conducted by Cerebro as a complement to the Fed’s survey on bank lending practices. While commercial bank lending has been tracked for the past 25 years, non-bank lending credit markets are not studied as consistently despite the market’s growth, according to Cerebro. Non-bank lending institutions are forecasted to hold $1 trillion of loan commitments by the end of 2020, up from $300 billion in 2010, according to the Alternative Credit Council. Non-bank lending is now one-third of the size of bank lending to middle-market companies in the United States.

Non-bank lenders from Cerebro’s lender network were surveyed in October 2020 and lender participation exceeded the number of participants in the Fed’s Senior Loan Officer Survey in the same period by 10%, according to Cerebro. Participating lenders represented more than $335 billion in combined assets managed, with a primary lending focus of loan sizes from $2 million to $100 million.

“Non-bank lending institutions have grown rapidly since 2008 after commercial bank lending was severely constrained,” Kevin Gaughan, director of lender relations at Cerebro Capital, said. “As the non-bank credit market has grown, loan terms have lowered interest rates and fees in an effort to win high-quality corporate borrowers away from commercial banks and competitors.”

More than half of the more than 800 lenders on Cerebro’s platform are non-bank institutions. Cerebro offers middle-market companies a data-driven approach to navigating hundreds of non-bank lenders, which have more variation in underwriting criteria than commercial banks. The diversity of non-bank lenders on Cerebro’s lender network includes mezzanine funds, business development companies, and venture debt, lenders.

Matthew Bjonerud, CEO of Cerebro Capital, said, “A recession or a sudden economic shock like COVID-19 can result in many companies switching lending partners. Wise management teams know that larger and more flexible loans can be a huge competitive advantage and those loans can be easier to source in the non-bank market.”

If you are a private lender and see yourself in the future described by this blog post and the Cerebro Capital survey, it could be time to up your game by trying out PDF Insights from MoneyThumb. You can take a free test drive!

The post Survey Says: Private Lenders Should Expect Surge in Loan Demand appeared first on MoneyThumb.

Sharestates is a real estate crowdfunding platform geared toward private investors and borrowers looking for more access to capital. In mid-March when the pandemic first hit, there was a complete shutdown in the private lending space for about 60 days, but since then, some of the larger lenders have returned to the market. As a result of the frozen market, many smaller lenders which accounted for about half of the private lending market, became a COVID casualty, according to Shayanfekr. He says the number of active lenders has shrunk considerably, resulting in less competition in the lending space.

“We’re seeing a shift in negotiation power from the borrower and back into the lender’s favor,” he said. “From about five or six years ago, borrowers had the lay of the land and were able to get better terms, and we are seeing market conditions change with the lack of competition.”

As a result, he says lenders have tighter credit boxes, more conservative terms, and higher pricing as we move through the pandemic. “Companies that are lending again are offering to price anywhere from 100 to 300 basis points higher than pre-COVID levels and lower loan-to-value ratios, as well as requiring higher credit score requirements.”

A lot of what happens going forward will depend on how quickly the economy recovers, which is dependent on the development of a vaccine for coronavirus and whether cases decline, or we see a second spike, he added.

Investor types react differently to changes

Unexpected events can cause disruptions to market cycles, and investors keeping their eyes open for new opportunities can benefit. Differentiating between the hobby investor and the seasoned developers is important, according to Shayanfekr, as they are reacting very differently to the pandemic and its effect on commercial real estate.

“The hobby investor is taking the wait-and-see approach because they don’t have the same relationships with financial partners and contractors and other real estate professionals. Professional developers are seeing this as an opportunity, even though lender finance is harder to come by.”

Shayanfekr says he’s seeing a lot of borrower demand and a huge appetite from experienced investors to continue doing deals. “With all the government stimulus, we are in an inflationary environment,” he explained. “While the next two years might be rough, we are going to see properties double and triple in value in the long-term.”

As fear subsides, he expects more lenders to slide back into the market, but in the meantime, they are adjusting like everyone else, with slightly lower loan-to-value ratios and stricter requirements. While everyone is unsure in turbulent economic times, Shayanfekr encourages investors and borrowers alike not to panic.

“We all saw how the public stock market reacted in March when everyone was panicking. The government reacted quickly to help stabilize the market, but the virus hasn’t gone anywhere and COVID is still very much a part of our daily life. This is not the first time the economy has gone through this cycle, and while it’s very different from the previous one, it will come back.”

He adds that emotional selling is often the worst thing an investor can do in times of uncertainty and having a detailed and thought-out investment strategy will help investors fare better during these times.

MoneyThumb is the provider of the best selling PDF financial file converters on the market, and many lenders use our product, PDF Insights, to help them make quicker and more intelligent lending decisions. If you are a lender who has backed off over the last few months in your lending efforts due to Covid-19, now would be a great time to take a test drive of this proprietary product that is helping so many of your fellow lenders improve their efficiency and thus their business. It is time to get back in the saddle.

The post Is There Now a New Normal in Commercial Lending? appeared first on MoneyThumb.

What Is a Recourse Loan?

With recourse loans, the borrower is 100% personally liable for the loan amount. Therefore, the lender can repossess or foreclose on the loan collateral as specified in the loan agreement. If the lender is unable to recoup the full loan balance by selling that collateral, it can get a deficiency judgment from the courts and go after the borrower’s other assets. This is the case even for assets that weren’t identified as underlying collateral for the loan and can include garnishing wages or levying bank accounts to pay off the remaining debt.

Credit cards, auto loans, and hard money loans—typically short-term real estate loans offered by non-bank lenders—are common types of recourse loans. In the case of default, the lender can repossess the vehicle or items purchased with the loan (collateral) and sell them to recoup the outstanding loan balance. In many cases, the collateral will have already depreciated or been destroyed and the lender will have to get a deficiency judgment for the difference in value. The lender can then attempt to recover its money by seizing the borrower’s other assets.

In all but 12 states, home mortgages are also considered recourse loans. If a borrower is underwater on their mortgage—meaning the outstanding debt is greater than the value of the home—the bank may not be able to recoup all of its money from a foreclosure sale. In this case, the bank can get a deficiency judgment for the difference between the debt and the foreclosure sale price and then garnish the borrower’s wages or file a lien against other assets.

Even if a lender wins a judgment against a borrower, collecting on the outstanding debt can be expensive and time-consuming. If a lender doesn’t think the borrower has substantial assets to tap, it may never actually collect on the outstanding debt. However, you should always try to avoid this outcome by communicating with your lender if you think you may default.

What Is a Non-Recourse Loan?

A non-recourse loan is one where, in the case of default, a lender can seize the loan collateral. However, in contrast to a recourse loan, the lender cannot go after the borrower’s other assets—even if the market value of the collateral is less than the outstanding debt. Even though lenders are limited in their ability to get a deficiency judgment, non-recourse loans still create some personal liability because the lender can seize the underlying loan collateral.

Even so, lenders that extend non-recourse loans are at a greater risk of not recouping the loan balance and interest payments. For that reason, non-recourse loans are not offered by most financial institutions—but some banks, online lenders, and private lenders will extend this type of debt.

Home mortgages—though generally recourse—are non-recourse in 12 states: Alaska, Arizona, California, Connecticut, Idaho, Minnesota, North Carolina, North Dakota, Oregon, Texas, Utah, and Washington. If a homeowner defaults in one of these states, the lender can foreclose on the collateralized home but cannot go after the borrower’s other assets.

The Difference Between Recourse Loans and Non-Recourse Loans

Regardless of whether a secured loan is recourse or non-recourse, the lender can seize the borrower’s collateral in the case of default. The primary difference is that with a non-recourse loan, the lender can only seize the specific collateral—even if it’s worth less than the outstanding debt. With a recourse loan, however, the lender can seize the borrower’s collateralized assets and—if it can’t recoup the outstanding loan balance by selling that collateral—can then go after the borrower’s other assets.

The best loan option depends on the borrower’s needs, creditworthiness, and confidence in their ability to make on-time payments. You’re likely to get a recourse loan if you:

• Have a weak credit history or a high debt-to-income ratio. In addition to lower interest rates, recourse loans also have more lenient loan approval requirements. If you have a low credit score or have a high debt-to-income ratio—meaning a large percentage of your income goes to debt service each month—you’re most likely to get a recourse loan.
• Want a lower interest rate. Recourse loans are not as risky for lenders as non-recourse loans because lenders have more flexibility when recouping outstanding debt in the case of default. For that reason, lenders can offer more competitive interest rates on recourse loans than they can for non-recourse loans.
• Are taking out an auto loan or credit card. Certain types of debt—like credit cards and auto loans—are typically structured as recourse debt. For that reason, borrowers must agree to recourse loan terms if they want to take advantage of many traditional financing options.

Non-recourse loans may be an option if you:

• Can satisfy more stringent approval requirements. In rare cases, borrowers with a high credit score and a low debt-to-income ratio may be able to get a non-recourse loan.
• Are willing to pay a higher interest rate. Likewise, a higher interest rate protects lenders that are exposed to riskier non-recourse loans.
• Are taking out a home mortgage in a non-recourse state. If you’re in one of the 12 non-recourse states, you’ll automatically get a non-recourse mortgage.

As you can see from the above information, a non-recourse loan is harder to get, except in the non-recourse states we listed above. Whether you are trying to obtain a recourse loan or a non-recourse loan, don't forget to use MoneyThumb's PDF financial file converters to get your bank statements in order to make your potential lender's job easier during the underwriting process.

The post Understanding the Difference Between Recourse Loans and Non-Recourse Loans appeared first on MoneyThumb.

This 12-page PDF that covers the results of a survey by Deloitte Insights is something we feel strongly that our lending readers will want to take the time to read.  The PDF is titled Funding Takes Center Stage for Non-Bank Online Lenders. Of 34 non-bank online lenders who were surveyed, a whopping 77% said that cost of funding was their top concern in running their business. The second concern was liquidity, the third top concern, inability to diversify.

The survey also found that the larger the size of the non-bank lender, the easier time they had with the cost of funding, which is not surprising. What is surprising is the fact that the number of private lending startups has decreased, implying the market as a whole is maturing and that online lending has become a fixture of the overall lending ecosystem.

As far as the trend of larger lenders having an easier time with the cost of funding, the survey offers good news for smaller online lenders in that the investment appetite for online lending continues to grow steadily overall.

In the wrap up of the survey, Deloitte Insights offers several savvy tips for smaller online lenders who are challenged by the cost of funding. These tips are listed below:

• Smaller, non-bank players in the online lending industry could fare well in a down cycle by pivoting to lending as a service, (LaaS.) Some smaller online lenders have done this and the middle banking market has been receptive.
• Non-bank lenders can partner with each other, with other types of fintech, and with banks to expand their relationship with customers and to develop products and services such as budget apps, wealth management services, and even deposits.
• Focus squarely on optimizing their capital structure by partnering and integrating with the broader financial ecosystem.

Of course, we'd be remiss if we didn't add what we feel is one more way that smaller online lenders can improve their overall business, and that is by using PDF Insights from MoneyThumb. you won't believe the time and headaches you will save by using this product to help you in your lending decisions!

MoneyThumb's enterprise-level PDF financial file converters allow private lenders to automatically convert bank, credit card, and brokerage statements into the needed formats to quickly determine an applicant's loan worthiness. Our conversion tool most used by private lenders is PDF Insights. This PDF financial file converter is specifically designed for lenders, and outputs captured data into a standard format for automated consumption into the lenders' bank system. PDF Insights utilizes IDR (intelligent document recognition) to identify bank/statement formats.

Unlike competitors, our solution doesn’t need to be told upfront which bank or format is being used, yet correctly processes over 99% U.S. statements. The output is delivered in a standardized format, even for statements from different banks. Our automated statement reconciliation feature compares transaction totals to summary information on the statement. If all information on the statement is consistent, PDF Insights will identify the statement as reconciled, meaning you don’t have to spend time manually reviewing statements to identify inconsistencies.

We would appreciate it if you would share this blog post with your lending peers on social media so that they too can read the survey from Deloitte Insights and learn more about MoneyThumb and our software designed specifically for lenders.

The post Survey Says: Cost of Funding Main Concern of Non-Traditional Lenders appeared first on MoneyThumb.

The survey is titled How Lenders Asess Their Digital Transformation Efforts. Nearly 200 senior lending executives were surveyed so that we could have a better understanding of how lenders balance front- and back-end digital transformation investment, as well as how they assess the success of each. If you would like to read the full 29-page report in PDF form, follow this link. For your reading convenience, we have created a rehash of the results of the survey below:

• Digitization is rapidly changing how organizations create value and compete. The main takeaway from the survey performed by Fannie Mae was that the majority of lenders are more concerned with improving the front end prospective borrower's experience than on their own back end operational efficiency. As a result, the lenders found more success with front end changes they made in their digital transformation efforts.
• Lenders were also asked to identify the most important areas they focus on when improving the front-end borrower experience. Most lenders cited reducing cycle time, providing more user-friendly loan application platforms, and training personnel to be consultative as the most important focus areas. By contrast, reducing borrower costs were generally considered less important.
• While most lenders cited the implementation of a Point-of-Sale (POS) system as a successful example on the front-end, it is more difficult to implement a single solution to transform backend operations. Lenders who were surveyed said that they found it relatively straightforward to calculate returns on the implementation of a POS system, but that calculating returns on back-end digital transformation efforts are often harder to measure, and, any returns might stay negative for several years as these efforts generally do not yield immediate cost savings.

Taking these survey results into consideration, the beauty of PDF Insights for lenders is that it is extremely helpful with the backend process that plagues lenders in the age of digital transformation. Our software serves as your first set of eyes by automatically processing bank statements. Then, through a side-by-side feature, it empowers an underwriter to manually review the actual bank statements, while also instantly pulling insights and calculations. This dramatically increases the speed and accuracy of the human underwriting process.

Unlike competing solutions, this software doesn't need to be told upfront which bank or format is being used, yet correctly processes over 99% of U.S. bank statements. The output from each statement is delivered in a standardized format, even for statements from different banks. Through simple API Integration, PDF Insights automatically initiates and conducts a statement reading process. It then identifies high-level calculations, such as total deposits and total withdrawals, plus line by line transactions. It can also identify targeted transaction types, such as large deposits or large fees.

In addition to text-based PDF statements, PDF Insights also processes scanned or faxed image-based PDF statements. Our proprietary OCR algorithms review questionable fields, look for patterns to self-correct and then flag transactions that are still unknown or questionable for manual review and correction. PDF Insights can be installed as a web service that can be called to convert several bank statements at the same time (e.g. 3-6 months). This web service can be locally installed on your bank’s servers to function as a powerful batch processing engine for your custom workflows.

Our automated statement reconciliation feature compares transaction totals to summary information on the statement. If all information on the statement is consistent, PDF Insights will identify the statement as reconciled, meaning you don’t have to spend time manually reviewing statements to identify inconsistencies.

If you are a lender who has yet to try out this great product from MoneyThumb that will help your organization make more informed and safer lending decisions, below is a video demo of how PDF Insights works.

The post Survey: How Lenders Assess Their Digital Transformation Efforts appeared first on MoneyThumb.