Lendly is an authorized servicer of a bank that offers personal loans to underbanked consumers who struggle to access credit.
The servicing platform helps borrowers avoid becoming delinquent by linking their loan repayments to their payroll direct deposit, which may help improve their credit score.
In 2021, Lendly reached out to Pinwheel to create a faster loan origination process for the bank that was more effective at reducing fraud and would have an even better customer experience.
Manual processes hampered loan origination and repayment setup
Before partnering with Pinwheel, the loan application process for the loans serviced by Lendly and repayment setup were manual. This created challenges for applicants and required frequent interventions by the operations team.
The applicant had to manually upload documents proving their employment status, followed by a manual review of the information by the Lendly team. This slowed down the process for both parties and created more work for the team.
Lendly also wasn’t happy with the repayment setup because the customer had to manually update their direct deposit settings to repay the bank loan from their paycheck. Customers would often incorrectly input their details, so the Lendly team spent a lot of time intervening to solve these issues.
As a digital loan servicer, Lendly also knew it had to invest heavily in identity and employment verification to prevent fraud. Manual document uploads just weren’t going to cut it, considering how easy it is to create a fake pay stub online. Lendly was also vulnerable to more sophisticated fraud schemes, such as synthetic identities, where fraudsters combine fake and real personally identifiable information to access credit.To tackle these challenges, Lendly approached Pinwheel and implemented two of our solutions – Pinwheel Deposit Switch and Pinwheel Verify.
Lendly turns to automation with Verify and Deposit Switch
Pinwheel immediately stood out to Lendly due to its high conversion rates and extensive coverage (the highest in the industry at 1,700+ payroll platforms.) As a result, the employer coverage that was eligible to pay by direct deposit significantly expanded – an essential aspect of Lendly’s mission to make credit more accessible to underbanked consumers.
Lendly implemented Pinwheel’s solutions at the beginning and end of the bank’s loan origination process. When a borrower first applies for a loan, the applicant is asked to log into their payroll account to verify their identity and employment. This process is supported by Pinwheel Verify, which pulls payroll data directly from the applicant’s account and includes their name, date of birth, Social Security Number, employment history, and income.
If the customer’s application for the bank loan is approved, the last step for the borrower is to set up automatic repayments from their payroll account. With Pinwheel Deposit Switch, Lendly was able to create a simple process that’s easy for customers to execute. The customer simply logs into their payroll account, inputs the amount that will go toward paying off their loan, and Pinwheel handles the rest. Any room for error is dramatically reduced by Pinwheel's automation of the process. Once again, the customer only has to log into their payroll account and input the amount that will go toward paying off their loan. Pinwheel handles the rest of the process automatically, so there’s no room for error.
Lendly reduces defaults and manual reviews with Pinwheel
Once Lendly had Pinwheel’s solutions up and running, it immediately benefited from a decrease in manual reviews. “I think our operations team, specifically the application processing team, has benefited a lot from Pinwheel automation. More automation is creating fewer manual document review needs. This, in turn, allows our team to focus more on answering customers’ questions than processing their documents,” says Nick Schubert, Chief Marketing Officer, Lendly, LLC.
The loan servicer also finds it fantastic that the team no longer has to worry about customers using incorrect details when setting up their repayment. Customers are empowered with an easy, automated deposit switching process that takes less than a minute and is already paying dividends. “The Pinwheel flow is becoming one of our main sources of funding direct deposit loans. In the last 30 days, we’ve funded $2.5M in loans through Pinwheel alone,” says Nick.
After automating the repayment setup process, Lendly also saw a reduction in first payment defaults (FPD) on the bank loans. The team believes that using technology to increase the accuracy of the repayment setup rather than letting customers do it themselves is one of the reasons for an FPD decrease.
Fraud prevention is another area where Lendly saw an improvement with Pinwheel.
“People logging into their payroll has really helped us reduce the level of fraud claims we are seeing. It has also helped us with the banks’ KYC requirements. We get the personal attributes back from a trusted source the customer has to log into, which is another service we can make use of for identity verification,” explains Nick.
By automating critical aspects of the bank loan origination process, Lendly has decreased operating expenses and created more time for its employees to focus on meaningful conversations with customers. Lendly sees a bright future ahead with Pinwheel, and we’re looking forward to discovering new ways to support their mission.
Contact us to learn more about Pinwheel’s solutions, from automated direct deposit switching and income and employment verification to real-time income data insights.