Lending a Hand with Portfolio Analysis Automation

The pandemic has created challenges that have had a unique effect on the auto industry. A lack of supply, specifically a computer chip shortage, has led to less new cars on the market today than what is considered “normal.” Due to this lack of inventory, prices are going up in both the new and used markets. Now, sub-prime borrowers cannot afford these new prices, so many lenders have either had to lower rates or extend terms on their agreements.

All of these factors are drastically changing the way lenders are used to doing business. The “same old” strategy likely does not work in today’s environment. Because of these challenges, it is more important than ever that lenders are keeping tabs on their portfolios to ensure the success of their business. Lenders must be constantly analyzing and optimizing their portfolios to drive success now and in the future.

Portfolio Analysis
Portfolio analysis is all about assessing the current situation, setting goals and aligning the business to meet those goals. This process must be ongoing and constantly refined. Even when there are not a host of market challenges, portfolio analysis is crucial for lenders to ensure they are being the most effective – and the most profitable.

Today, with so many shifting factors in play, lenders must be keeping a watchful eye to ensure their profitability. For example, understanding their dealer portfolio will ensure that pricing models are adjusted accordingly by the dealer. Analyzing the portfolio by model segmentation is a pre-requisite to understanding negative equity situations, collection strategies aligned to make and model valuations, and pricing based on the anticipated models holding their value long-term.

While this can be a big task, technology can step in and help. There are solutions built to help lenders automate this process and when these tools are combined with the right lending platform, portfolio analysis becomes a simple task, rather than a tedious one.
Using data from the lending platform, reporting tools can give lenders more visibility into their portfolios – which loans are doing well and which are not. Lenders must utilize the vast data resources in LOS and servicing systems for enhanced visibility into dealer portfolio performance, new pricing opportunities, targeted communications, customer retention opportunities, and successful collection strategies. Additional features like built-in accounting functions also use the data lenders have in order to help them get a better idea of how their business is performing financially and how it can improve.

Portfolio analysis automation saves lenders time, effort and costs so they can focus more on how to optimize their business. Lenders have so much data in their lending platforms – it is important that they also have the tools to put that data to use in order to more easily manage their portfolios.

Future Planning
As important as it is for lenders to make sure they are successful right now, portfolio planning and analysis is what sets them up for success in the future. Though no one is able to predict the future or control where the market goes, lenders do have control over their own business. Getting more visibility into their portfolios allows them to plan ahead to make sure that they are set up for success, no matter what comes down the line.

While portfolio analysis is a substantial business function, automation not only makes it faster and simpler, but puts the lender’s data to work to provide better visibility into the health of their business.

While no one knows what the future will hold, having the right tools in place helps lenders plan for success in the present and frees them up to adapt to change in the future.