April 30, 2018

Rising Importance of Third Parties in Loan Process

Rising Importance of Third Parties in Loan Process

Recently, the need for third-party vendors for giving out a loan has been rising. More and more different processes are being incorporated into proper loan management. As it is too difficult for the financial centers to take care of the whole process themselves, they keep third-party vendors in the loop. Even so, the relationship between the loan giver and the taker stays cordial. In case of any issues regarding insurance, assessing risks, or debt collection, third-party vendors, step in to help settle them. Such mediation helps financial centers to ensure smooth coordination with the clients. Whether it is insurance, risk management, or debt collection, an unbiased institution helps to create a win-win situation for both the client and the lender.

1. Insurance

Insurance regulations are very particular, and often unique, in each case. With the help of a third party, it can be assured that none of those are overlooked. Additionally, they ensure that policies purchased by the customers match with the criteria. In cases when they do not, they help to develop an agreement fit for both parties. As a result, any future disputes over claims is eliminated.

2. Risk Management

To offer an effective policy for a certain individual, risks must be calculated. As there is much specific information, risk management is therefore performed by a third party. Based on client’s history, collateral, location, performance and so on, these third-party vendors come to the relevant decisions. As handling such information requires in-depth knowledge, businesses choose to outsource this service for a faster and more accurate risk assessment providers. Also, several providers may provide a broader spectrum of analysis and give a 360-degree view.

3. Debt Collection

To offer the best possible service for clients while maintaining profitability, companies are trying to keep their workforce to the minimum. Thus, debt collection is becoming quite a difficult. The most complicated part of this process is following up with loan defaulters as the complications are very specific. In such cases, it is more sensible for financial institutions to leave the matter in the hands of the third parties who specialize in the field and are localized. This approach helps to ensure that the problem is sorted quickly, following the local legislation and with minimum losses.

The Benefits of Third Parties

To guarantee a good use of the employment of third parties into the processes, specific guidelines must be followed. While not all the companies do that yet, those who do, unquestionably make processes easier and more efficient, which consequentially results in better overall service for the client.
Debitum Network Platform enables multiple third parties to be participating and providing competitive services to borrowers and lenders. Each provider will go through and check procedure ensuring, or requirements are met. Also, service providers will be rated thus giving everyone a chance to not only evaluate investments but service providers as well.

You can read more about the rating in our blog post Trust Rating: Debitum Network and KTU partnership.

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