Combining Buy & Build: Hybrid Approach to Loan Management Software [Build or Buy Guide]

If you’re unsure whether to buy or build a loan management solution, exploring the hybrid approach might be the answer. 

(This post is the last chapter in our series ‘Build or Buy? An Executive’s Guide to Choosing the Right Approach to Loan Management Software’) 

Hybrid gives you the speed and efficiency of a pre-built platform with the customization and flexibility of a tailored solution. 

• But is it the right choice for your business?  

• Do you have unique requirements that justify a hybrid solution?  

• What advantages come with this approach? 

We’ll explore all that, but first, let’s consider two key points about the hybrid approach from TurnKey Lender CEO, Dmytro Voronenko: 

1. Business complexity: Many businesses think their processes are unique—whether it’s their credit products, workflows, or risk management rules. However, many of these “unique” features can often be configured using existing solutions. It’s crucial to assess whether your needs truly require custom development or if current solutions can meet them. 

2. Flexibility requirements: Consider how flexible your solution needs to be. If you don’t foresee major changes in your market, like new regulations or disruptive technologies, a hybrid approach might not be necessary. But if you expect market shifts, evolving customer needs, or competitor actions, a hybrid solution offers the flexibility you need. 

A hybrid approach allows you to use a vendor’s platform for most functionalities while customizing only the specific features that are truly unique to your business.  

This gives you the best of both worlds.

A flexible, easily configurable platform that can be tailored quickly when needed without being hard-coded or rigid. 

Advantages of a Hybrid, Build-And-Buy Approach to Loan Management Software

Faster time-to-market
You can launch a functional lending platform quickly using pre-built components and develop custom features as well. This helps you get your platform up and running faster so you can start generating revenue sooner.

Reduced Development Costs
Save money by using pre-built components. And let your team focus on developing unique features that make your business stand out.

Scalability and flexibility
Pre-built platforms are often designed to scale. That gives you room to keep adding custom features as your business grows and your needs change.

Expert support and maintenance
You’ll benefit from ongoing support and expertise from the platform vendor. This frees up your team to concentrate on custom development and other strategic initiatives.

Partnering with vendors for a hybrid approach to lending automation is generally straightforward.   

Most established vendors are accustomed to working with clients who have specific needs that go beyond the standard functionalities of their platform.   

They often have experience in integrating custom-built modules and can provide guidance and support throughout the process. 

5 Key Aspects to Consider in a Vendor for a Hybrid Approach

When choosing a vendor for a hybrid solution, look for a lending platform that is highly flexible and configurable in at least these five areas: 

1. Application Form: You should be able to configure all interaction windows and dialogue screens for both front-office and back-office operations. 

2. Workflow and Business Process: The platform should allow you customization of workflows and business processes to match your unique needs. 

3. Decision Flow and Risk Management: The system should let you adjust decision-making processes, whether for credit risk or operational decisions. 

4. Credit Calculations: The platform should offer flexibility in configuring calculations for credit product parameters. 

5. Third-Party Integrations: It should support seamless integration with third-party services, like a reseller API, credit bureaus, or AI tools. The platform should be so customizable that your solution feels entirely unique.

Questions You Should Ask to Select the Right Vendor for Your Loan Management Software Needs

1. How will the vendor change the system for unexpected market changes? 
 
Can the platform quickly update policies or products in response to big shifts, like new regulations or economic events?  For example, if you had to change your credit policies quickly due to something like Brexit or a newly introduced regulation. How would they handle it?  
 
Can they show how they’d update risk assessments, data collection, reporting and lending rules across the system without causing much disruptions? 

2. How can the vendor set up unique credit products for special promotions or customer needs? 

For example, is the platform flexible enough to support customized lending offers, such as a special 0% interest loan for Christmas?  Can it easily activate or adjust changing terms, like a 5-month zero-interest loan for customers with a 3-year history or an even better offer for 10-year customers?  
 
Additionally, can their platform support dynamic configurations that can be easily turned on and off when promotions end? 
 
3. How adaptable is the vendor’s platform to future technology changes? 

Explore how future-proof their platform is by asking about potential technological shifts. For example, if voice interfaces or AI-driven systems become dominant in the next few years, will their platform be able to adapt? 

How easy are the reconfigurations? Is their platform hard-coded, or is it built on a no-code platform for easy customization with API capabilities? 

Transformative Hybrid Approach: How a US Car Dealership Achieved 50% Growth in One year

This US car dealership company wanted to rebuild its auto-financing process to better serve its customers and stay competitive.  

To achieve this, they: 

• Chose TurnKey Lender’s existing software platform for its quick setup and specialized tools for car dealerships. 

• And collaborated with us to create extra features that fit perfectly into the platform, allowing them to offer specialized financing options and unique options like GAP and CPI insurance 

This enabled the dealership to provide specific financing choices and meet the varied needs of their customers. You can find more details in this case study. 
 
A hybrid approach can bring both successes and failures, largely depending on your chosen vendor and their configuration options.  

It’s important to assess your specific needs and involve your team in the decision-making process. 

Think about how it affects different areas of your organization: technology, strategy, market trends, competition, and operations. Collaborating with colleagues from various departments can provide valuable insights. 

Here’s the previous chapter of the guide for your consideration: 7 factors to consider when building or buying loan management software.

Prefer to read the entire guide at your own pace? Download it as a PDF version.