The consumer and business lending space is witnessing a rapid transformation with new fintech capabilities changing the typical marketplace norms. Traditional lenders who do not adapt to today’s digital processes and needs fast enough will stand to lose out in this environment. As banks focus on digitizing every service including how borrower’s and lender’s interact, the lending space will also see constant evolution. William “Bill” Nass, President and Director at TCI Credit shares a few thoughts in this interview.
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Can you tell us a little about yourself and the story behind TCI Credit – what inspired this service / solution and over the years, how has the solution evolved to meet changing needs?
That is an interesting story. In 1980, I was in my junior year at the University of Maryland, which is just outside Washington, DC. My father was doing legal work for a company called Telemechanics, which was owned by George Nagrodsky, who later would become my business partner at TCI. George offered me a summer position to work on marketing projects, and then the position evolved my senior year into a part-times sales position. I was calling on foreign buying agents and embassy’s in Washington that were prospects for Telemechanic electromechanical parts. The electronics industry was starting to evolve to new technology and when I graduated from Maryland, George and I decided to start a new company together, and Teledata Communications, Inc. (TCI) was born.
TCI, in the early 1980’s, was a supplier of direct access terminals (credit bureau terminals) to companies in the New York Metro area that needed to access credit bureau information to make lending decisions. TCI expanded its distribution of terminals and grew its base to about 15,000 users throughout the country by the mid 1990’s. As technology evolved, TCI began developing computer software that could be used on customer-provided PC’s and eventually entered the Internet era in the early 2000’s.
In 2003, TCI developed its 1st generation loan origination solution and has continued to evolve the product over the years. TCI introduced its newest and most robust version, Decision Lender 4 (DL4), in 2016. DL4 provides complete flexibility and configurability to users enabling them to make changes real time, which is a “game changer” to any other platform in the industry. The fierce competition has required financial institutions to move at lighting speed. Because DL4 is the sole focus at TCI, we are fixated on a single mission: giving borrowers the frictionless lending experience they have come to expect. Today more than 500 financial institutions rely on TCI’s solutions for their businesses.
How [according to you] will the new innovations in the peer-to-peer lending / B2B lending space transform the way individuals and businesses approach their loan requirements?
Consumer Lending (CL) of all kinds including autos, credit cards, student loans, etc., is a data-rich environment, and we are already seeing a new breed of Automated or Artificial Intelligence (AI) being utilized in the lending space. Machine Learning (ML), is a sub-field of AI and is one of the most promising technological innovations in recent years. Both AI and ML have definitely caught the eye of a very broad audience – especially technology and LOS providers.
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For example, at TCI, we have incorporating AI/ML technology to help our customers offer the best products to their customers. The technology can also assist and help advise the consumer on products they qualify for when inquiring for a loan or deposit account.
In a typical lending scenario, between the borrower’s credit history, employment, etc., more data is captured that can be used to provide valuable insights into the consumer. Getting this information is a time-consuming process and often, a very manual one. How much of this data is even relevant? How much is useful in predicting borrower behavior? These are questions that we at TCI think are perfect for AI/ML to answer. Using ML algorithms can tell us how to optimize the use of the data.
Over the years, new fintech platforms have allowed people and businesses to approach non-banking institutes for their funding/loan and finance needs; how do you see this segment shape up over time – how will innovations here change this niche? Let’s say, 5 years from now – will taking a loan be as simple as clicking on a button without any steps, for instance?
We have read many articles and seen statistics showing that the non-bank fintech lenders have eroded the traditional brick and mortar lenders (banks and credit unions) business model. Unfortunately, those traditional lenders were very slow to adapt to digital processes and thus lost a significant market share of the personal loan business. We do, however, believe that non-traditional lenders will have a difficult time retaining customers over the long term. Banks and credit unions are continuing to advance with digital technology offerings that will help them compete and gain back market share. They can provide a multitude of loan and deposit products at very competitive rates, and that will make it more difficult for the non-banking institutions to thrive.
If I were to look into my crystal ball, I would bet that as the digital product offerings from banks and credit unions continue to evolve and become more sophisticated, so will the technology that enables them to make a very frictionless experience for the consumer. Today’s consumers are becoming more and more savvy, and they will expect a seamless and very easy process – maybe only one that’s just a few clicks of the mouse to begin and finalize the process.
In what ways do you feel fintech innovations should focus more on reducing the processes required in a typical loan generation – what are the steps that can be nullified or simplified further according to you, to reduce the cycle?
The vast amount of data sources has helped many financial institutions automate many of their lending processes that were previously manual. New AI-type tools, leveraged with analytics and unlimited data sources, can help financial institutions make better decisioning at faster speeds and reduced costs, that will ultimately benefit the consumer.
We have continued to see a larger demand for digital products as many of the banks and credit unions have realized that their customers are choosing to do business online and not in the branch. In addition, the low interest environment is forcing financial institutions to reduce cost and improve yield, and it is easier to achieve those goals when you can reduce labor cost in a process.
Before we wrap up, would you like to share specific finance management or business tips for Marketing and Sales or Finance teams struggling through this uncertain time?
Unfortunately, it took a pandemic for many financial institutions to see the need for providing online lending, account opening and deposit products for its customers. The fintech-type lenders have been capturing significant market share of loans from consumers over the past several years. It should not have taken a crisis to show financial institutions how to conduct business in the ways their customers have wanted for years.
At TCI, we continually see many businesses being reactive instead of proactive in their planning. It is important for companies to understand that they need to listen to their customer and adapt to doing business the way they want; you need to be flexible in your offerings. We have seen many times over the years that those companies that do not change and evolve do not survive. One of the primary reasons of TCI’s success is that it provides flexible products and thus lets the financial institution do business however its customers want, mobile, in-branch, call center and 3rd party channels. Our focus continues to be on making responsive, configurable online and mobile, direct and indirect lending accessible, safe and easy for financial institutions, so they are able to keep pace with fintech disruptions while giving their borrowers a frictionless lending experience.
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Teledata Communications, Inc. (TCI) is a leading provider of software-as-a-service (SaaS) loan origination solutions for credit unions, banks, and finance companies.
William is the President and Director of TCI Credit (Teledata Communications, Inc.)
