Build, Buy, or Partner? The True Cost of Standing Up a Credit Decisioning Engine

You can take three approaches to create a Credit Decisioning Engine: build your own, buy an existing solution, or partner with best-in class providers. An analysis of each option reveals one clearly stands ahead of the pack.

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By 
Jon Fry
 | 
 | 
August 23, 2022

What’s at stake with the latest credit decisioning innovations?

Advanced credit decisioning engines help companies facing the strain of the economic downturn do more with less. With human capital at a premium and many companies facing the possibility of significant layoffs, Lendflow helps fintechs operate at a higher capacity with less human capital and other resources.

For lenders, today’s higher interest rates mean a higher cost of capital. With smaller margins, now is the time for lenders to drive added value by increasing operational efficiencies. Fraud typically spikes when borrowers become more desperate for capital. The most advanced credit decisioning engines build a complete picture of each borrower using powerful data services, empowering lenders to stay clear of borrowers that might flag as default risks.

3 options: To build, buy, or partner?

If you’ve decided to offer credit solutions to your customers or already do, moving forward with an advanced credit decisioning engine is a step towards streamlining your lending operations. Now it’s time to figure out the best solution — the one that gives you the best and fastest ROI.

Option one: Building a Credit Decisioning Engine

Although building your own credit decisioning engine may sound appealing at first glance, it’s important to note that building a full-stack solution requires a lot of work and resources. Companies often underestimate the scale of the undertaking — and what it takes to build a new solution. Building your own credit decisioning engine from scratch by no means automatically boosts your business or enhances your valuation.

Developing your own credit decisioning platform isn’t the only time-consuming part of the process — continuous, consistent maintenance is required to keep your engine firing on all cylinders once installed. You must write code, navigate individual contractual agreements with each data provider, deal with a wide variety of legal ramifications, and so much more.

As a result, your credit decisioning engine takes resources away from your core competencies, creating a tremendous opportunity cost that can negatively impact your company. It’s no wonder, then, that investors usually frown upon companies that take this route.

Instead, it’s best to do what you do best and leave the credit decisioning technology to the experts.

Option two: Buying a company with a Credit Decisioning Engine

Buying a company that offers a credit decisioning engine also presents many challenges. For one, there aren’t a lot of companies for sale out there that are producing high-quality credit decisioning technologies — and those that are for sale most likely have untenable valuations given current market conditions.

If you do choose to spend millions of dollars on a ready-made solution, you’re likely acquiring a company whose product won’t be fit to scale with your company nor evolve with industry best practices.

Purchasing a company that specializes in credit decisioning technology also rarely enhances your current suite of offerings, but rather functions as a standalone operation that requires its own set of resources and expertise to maintain. The result? You end up running two separate companies — your own, and the newly acquired credit decisioning company.

Banks, lenders, and credit unions may be tempted to purchase a company with its own credit decisioning engine that offers its own marketplace in order to increase market share and find more qualified customers. And yet, this purchasing route still presents more problems than benefits because they’ll be stuck managing a product they lack sufficient expertise for.

Option three: Partnering with Credit Decisioning experts

So if it doesn’t make sense to build and it doesn’t make sense to buy, what’s the best way to generate optimal value from the latest breakthrough credit decisioning technology? Try finding the right partner!

When you partner with a company like Lendflow, you get a turnkey credit decisioning solution created by industry experts. An all-encompassing, end-to-end platform that is ready to go right out of the box and seamlessly compliments our broader credit ecosystem.

Our state-of-the-art technology is constantly improving to provide a service that enhances your core competencies, not detracts from them. Plus, you’ll benefit from simple and transparent pricing on a product that grows with your company — so you never pay beyond your current needs.

The value drivers that matter

The idea behind Lendflow’s Credit Decisioning Engine is intuitive. The value in becoming more agile and efficient is even clearer. Fintechs, SaaS companies, and lenders, can now launch more high-quality credit solutions, faster thanks to Lendflow.

For Lenders, we asked: what does optimized underwriting look like? Lendflow’s revolutionary Credit Decisioning Engine equips lenders with the intelligent data profiles and credit decisioning tools they need to efficiently identify qualified borrowers. More automation, less manual review, faster decisions and less risk. This is advanced credit decisioning on your terms.

For Fintechs—Build, and launch first-class credit solutions, in record time, and accelerate your growth strategies. Tap into dozens of data sources through a single API and contract, optimize your underwriting process and launch new credit products faster - whether they’re credit cards, BNPL or SMB loan products.

For vertical SaaS companies—Diversify your core product suite and embrace on-demand servicing without breaking the bank. Delivering your customers critical point-of-need capital within a seamless, contextual financial experience amplifies your brand’s value and takes customer engagements to the next level. Providing this springboard positions your SMB customers to thrive. With your help, they can keep investing in the growth of their business — minimizing business risk and maximizing LTV.

Lendflow’s revenue-share program means you can monetize your customers’ financing needs — receiving a percentage of each loan originated from within your product. What’s more, with stickier customer relationships, revenue per customer increases, boosting your company’s valuation.

Confidently kick-start your Credit Decisioning Engine

Capital markets are tighter. With rising interest rates, never has the SMB demand for non-traditional borrowers been greater. Lendflow offers fintechs and SaaS companies the ability to drive new revenue streams with little lift and capital required.

In today’s environment, to stay ahead of the competition, lenders similarly need to stay agile and nimble. The configurability of Lendflow’s credit decisioning engine and larger credit ecosystem enables companies to stay flexible — providing lenders the latitude to adapt their program as their policies, requirements, and circumstances change. The ability to adjust data use and customize workflows in real-time significantly enhances the due diligence process and decreases the cost of underwriting.

At Lendflow, we anticipated the problems a recession might create for the credit decisioning space, and set out to tackle them head-on. We’ve devoted years, a full team of engineers, thousands of hours, and millions of dollars to building multiple iterations of our industry-leading product.

We continue to take a consultative approach to our work in developing the most robust embedded credit ecosystem on the market. Our experts will help you implement best practices and connect you to other tech partners in the embedded credit space to ensure you’re getting the most out of our service offerings. We deliver the data and capital program insights you need to expand your financing capabilities and set yourself apart from the competition.

Perfecting modern credit decisioning technologies to meet the moment is what we do. Leverage our expertise so you can focus on yours. Get started with Lendflow today.

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