Open Lending Corp. recently released initial findings from a survey polling 95 leaders at credit unions, banks and captive finance companies of all sizes in an effort to illuminate the challenges financial institutions are facing in 2023 and how they are using lending enablement solutions to compete in the market.

In a tenuous financial environment, Open Lending discovered finance companies and other lenders are under pressure to mitigate risk while improving return on assets (ROA), a financial performance ratio that measures a company’s profitability by comparing its net income to its total assets.

The survey results showed that traditional underwriting methods are leaving financial institutions more vulnerable to market volatility, while lending enablement solutions are playing a strong role in improving decisioning speed, increasing ROA and reducing risk exposure.

Additionally, Open Lending said its findings show that near-prime borrowers are generally more accustomed to financial hardship and are therefore more resilient during economic downturns.

Set to release on May 11, the full report highlighted:

—Institutions that use lending enablement solutions report more success meeting ROA targets.

—Across financial institutions, improving loan-decisioning speed is a top priority for 2023 — but it shouldn’t introduce avoidable risk.

—Lending enablement users are far less likely to report a rise in delinquency rates among borrowers, especially those in the near-prime category.

Open Lending chief revenue officer Matt Roe explained that using a combination of software applications, data analytics tools and integration capabilities that streamline loan origination, underwriting, and servicing, lending enablement solutions can allow financial institutions to efficiently manage and automate their lending processes.

Roe mentioned effective lending enablement solutions include features such as loan origination systems (LOS), loan management systems (LMS), credit scoring and risk assessment tools, and automated decision-making capabilities. He also said they can also include integrations with third-party data sources to help lenders make more informed decisions.

“In market downturns, it’s critical for financial institutions to have a balanced, resilient portfolio. But that requires reaching borrowers across credit segments with personalized, risk-mitigated loans — and fast,” Roe said.

“Our research found that lenders are really feeling this pressure right now, and those who aren’t using lending enablement solutions are falling behind. With risk-based pricing, automated loan decisioning and default protection, financial institutions can engage the borrowers they need to stay competitive in this market,” he went on to say.

Go to this website to receive the full report and attend the Credit Union Times webinar State of the Industry: Lending Challenges Facing Credit Unions in 2023 on May 11, at 2 p.m. (ET). Roe will share report findings, market insights and tips to improve the loan decisioning process while minimizing risk.