Open source lending solution for online lenders and startups

introduction

Online lenders are quickly becoming the first port of call for lending and have garnered strong funding interest from VCs and PEs. This demand for a digital lending experience has also forced traditional lenders like banks and credit unions to find the technology that will allow them to issue loans in a flexible yet scalable way. They have two options: Buy or Build.

The build option can be extremely expensive and time consuming. But the purchase option leads to a limited digital experience because you depend on the features and functionality of the provider. Plus, there’s no way to really differentiate yourself in the eyes of the digital customer. The solution is DigiFi: an open source technology platform that also allows you to customize with a layer of additional services such as hosting, support, platform implementation, etc.

DigiFI

DigiFi was founded by Joshua Jersey and Bradley Vanderstarren in 2014. It started life as Promise Financial, an online lender, and raised $110 million in loan capital. It built its own proprietary technology because there was no solution provider in 2014 offering an end-to-end loan origination platform that could automate the entire process. They sold the technology to a major lending institution in 2017 and turned to DigiFi, one of the world’s first open source (LOS) loan origination systems that equips lenders with flexible and modern tools to create unique digital platforms and experiences.

The company’s ideology is simple: it’s about giving other startup lenders, branches, credit unions, and digital lenders a platform where they don’t struggle to build basic lending capabilities. from zero. The company used 2017 and early 2018 to grow its platform and began working with clients in late 2018. The 10-person company has raised $4 million in equity to date and is based in New York.

The weak points of the market and the DigiFi solution

The “build or buy” question creates space for a platform that can bring together the qualities that meet the basic requirements of the lending market while being customized to give the client a competitive edge over other players. DigiFi gives its customers control over functionality and UI/UX to meet the specific needs of their unique customer base. Legacy technology vendors force lenders into a rigid structure that limits flexibility to differentiate and provides the exact same experience for all customer groups.

DigiFi gives the best of “buy versus build”. So DigiFi customers don’t have to start from scratch and yet have the power to adapt the technology (buy and build, a win-win!). The company’s main platform is open source and the source code can be accessed on Github. Revenue is generated by acting as a layer that provides hosting, support, platform implementation, and customization services.

At its core, the company’s platform has features like comprehensive lending CRM, decision engine for lending decisions, machine learning environment and open API architecture, and it can be configured for deployment across a range of lending verticals that include consumer, mortgage, small business and commercial. DigiFi distributes the open source platform and its documentation free of charge.

The company’s platform is currently operated by Sprout Mortgage, Mariner Finance, Constant Energy Capital, Greenwave, and Home Point Financial.

The platform in detail

The company provides its platform to lenders for free and charges for additional setup, installation, support and fulfillment services. Depending on customer requirements, DigiFi offers support plans for a monthly fee. Customization and implementation of the platform are billed on an hourly basis. Implementation time and cost vary. Implementation can take up to 4-8 weeks minimum and can take up to months if the lender needs to build features from scratch. Compared to the years and millions of dollars needed to build an in-house model, the DigiFi solution is typically in the 5-6 digit range.

The company’s platform is built on the JavaScript technology stack and uses two well-established coding languages ​​that are easy for customers to use and engage with. DigiFi focuses on end-to-end loan origination and ends with integration into a post-funding servicing system.

The future

According to the DigiFI CEO, incumbents improve over time as they have a lower cost of capital and existing customer base, which positions them for success. Getting the right technology partner on board is therefore the key to building a successful moat.

DigiFi offers a platform for lenders looking to tap into the online lending market that not only equips them to get the most out of the buy-vs-build system, but also provides full support and customization. It provides the lender with out-of-the-box solutions, fast implementation, support and training, feature controls, unique customizations, flexible hosting options, and a community of contributors. It offers the ability to integrate all major data sources – Transunion, Equifax, Experian, MicroBilt, LexisNexis, etc. With over 45,000 hours of development, the DigiFi platform offers customers a high barrier to entry with full configurability with other APIs, true scalability with AWS, and built-in AI ML solutions.

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Written by Heena Dhir.

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