It’s budget season, and the Informed team is showing clients how incorporating investment in artificial intelligence into their operational model delivers value and a solid financial return. We have unlocked a proven strategy yielding results, turning your originations channel into a profit center.
The following ROI use cases demonstrate the quantifiable value we’ve delivered to lenders, dealers, and consumers. Informed has completed numerous business cases and is ready to arm you to showcase the value of your specific use case. Answer 5 questions to see your potential ROI now.
We start the ROI journey with a simple ROI calculator (below image). We take into consideration the lender’s volume to determine the cost and scalability of the services. Based on your capture, segmentation, and current dealer and customer satisfaction scores (high/medium/low), we estimate the impact of increasing your JD Power and NPS scores and the impacts on your dealer and consumer experience. Combined, these factors ultimately increase your capture rate producing additional revenue for your bottom line.
The more complex a loan process is – with a higher need for manual quality assurance, dealer reviews, and cyclical staffing needs – the greater the opportunity to reduce operational costs. If a lender has a low propensity for fraud, we would assess their fraud rate at less than 2%; a medium fraud rate at 2% – 2.25%, and a high fraud rate at above 2.25%, which correlates to net losses of 30% of the loan value. Fraud losses in this model equate to 4X the number of net losses expected based on LexisNexis “True cost of Fraud.”
Cost avoidance focuses on regulatory and compliance risk and ensures adherence to audits and controls within the organization. The more manual data entry and controls, the higher the risk exposure associated with the process.
Use Case #1 – Dealer/Consumer Outreach
After incorporating Informed’s white-labeled SMS tool to collect consumer stipulations, this dealer with in-house financing is not only compliant with Safeguards Rules ensuring their employees are not collecting PII from consumers on their personal devices but are also benefiting from a:
- 40% reduction in customer experience contact center spend
- 60% reduction in abandon rate
- 8% increase in Dealer Satisfaction Scores
- 11% increase in revenue per contract
- 22% reduction in agent cost
Due to the success of this direct to consumer product, the client is also implementing the CollectIQ API into their digital retailing solution and allowing Informed to process, not only the in-dealership leads, but also all of their digital transactions.
Use Case #2 – Revenue Recovery
Informed designed a revenue recovery campaign for a Prime Lender focused on dealers who submitted falsified or defective documentation on loans that were now being charged off due to performance:
- 16% revenue recovery vs. 3% with the lender’s previous revenue recovery strategy
- 14.6% increase in the average dollar value recovered
- 197% program ROI
As the market tightens and losses become top of mind again, ensure you are prepared to lend to the right customers while reducing delinquency. The focus on budget savings will ultimately lead to the automation of collection strategies that efficiently lower costs. Informed can help.
Use Case #3 – Clearing Dealer Document Stips
This Lender saw a 6X return on investment by focusing on straight-through-processing and ancillary documents. The lender focused on Direct ROI, which showcased a 3X return on investment. This number did not include risk avoidance in operational efficiencies, and the Lender agreed there were additional benefits not included in this executive ROI.
- Dealer Satisfaction – Directly correlated to improvement in NPS and JD Power scores with specific Informed Initiatives associated with the digital collection of documents.
- Revenue – Capture $6M in additional revenue through faster funding and greater ease of doing business. Directly associated with an average loan processing acceleration of 6.5 days.
- Efficiency – Operational improvement/headcount improvement of $291k ($9/hr fully loaded)
- Regulatory – Projecting $8.2M gain from compliance risk avoidance. Based on the percentage of manual controls, manual waiving/ exception process, undocumented credit policies, and reputational risk score (sub-prime portfolio)
- Fraud – $65.2M+ losses avoided; 17,253 paystubs flagged and 30% assumed default
The waterfall efficiency gains of onboarding an entire deal jacket accurately is paramount to the ability to address Quality Assurance, accurate loan performance, risk assessment of portfolio acquisition and the ability to correctly interpret data to enhance efficiencies across the organization. Getting the correct data and documents at the beginning of the customer journey is a critical factor in efficiently servicing a loan.
Use Case #4 – Skip The Stip
Informed decreased contracts in transit and held offerings for this lender with a skip-the-stip program focused on equitably determining consumers who didn’t need to provide proof of income.
The lender benefited by:
- 8% increase in capture rate
- 25% reduction in Contracts In Transit
- 80% reduction in Held Offerings
- 245% program ROI
- 6% increase in employee satisfaction
Read more about this use case in this post: Making the Auto Lending Process Better One Deal at a Time.
Employee satisfaction is top of mind these days and the ripple effects flow through every department. Lenders are focused on increasing employee satisfaction scores which have dipped since the pandemic. Schedules booked out for three months due to car shortages and high prices seem to be coming to an end. Top-performing lenders want to focus on strategic growth goals instead of putting out fires.
Wrapping it All Up
Our lenders use automation to reduce their originations burden in onboarding, streamlining operations, restructuring responsibilities, creating a positive staff experience, introducing operational efficiencies, and improving employee retention.
There are plenty of similarities between the customer experience and the employee experience — from the friction that causes a disconnect to the innovative ways to solve them.
Why? Because customer-centricity is people focused. Systems are composed of people, and when you focus on peoples’ success, the people and the system both win, demonstrating the value of holistic innovation in banking.
How can we use our data and experience to help lenders make better decisions faster with less risk and fraud? Informed.IQ is the industry’s first dedicated holistic and customer-focused AI origination process provider. We create solutions to drive sales and improve the dealer and customer experience while increasing the revenue channels of financial organizations, ensuring that it make sense to implement Informed throughout the lending process.
We provide SLA-backed offerings and have a proven foundation in auto, personal lending, and mortgage. Our clients include Financial Institutions, Top 10 US Auto Lenders, Credit Unions, Payroll Providers, Legal and Compliance Teams, F&I Providers, industry leaders, and more.
Let’s connect about your 2023 plan to drive revenue strategies that grow your bottom line. For an in-depth, personalized ROI analysis, click here. We will walk you through qualifying metrics, key performance indicators, and show your expected results based on your organizational environment.