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  • Writer's pictureRoy Urrico

Creating Open Integrated Lending Systems

By Roy Urrico

Many credit unions, as well as other financial institutions, have respective lending capabilities restricted by legacy core processing platforms and siloed systems, according to Peter Longo, senior director, product management digital banking, at financial technology company Finastra.

Peter Longo, Finastra.

Longo spoke with Finopotamus about how the U.K.-based Finastra, which also has U.S. headquarters in Lake Mary, Fla., can provide an integrated lending environment to solve some of those issues. He explained that by creating a more efficient loan and underwriting process, it is easier for credit unions to branch out into new markets, particularly in a competitive and increasingly technology-driven environment.

Opening Bank Lending to Change

“We live and breathe open banking. We built upon what we feel is an innovative, best-in-breed core platform, Fusion Phoenix. But really the day-to-day is all about providing open access to technology,” Longo told Finopotamus. He explained Fusion Phoenix’s open application programming interfaces (APIs) make it adaptable to new emerging technologies.

He added, Fusion Phoenix can support a fully integrated lending platform from origination to servicing, through Finastra solutions, “But we can also offer niche lending opportunities and functionality through, the most limitless integration to fintechs.”

For both credit unions and community banks, Longo said Finastra’s solutions cover the full gamut on the retail and commercial spectrums. “However, as we know and we saw with the pandemic and the changing environment of the new normal, certain financial institution (FI) needs can change and flip around at a very fast pace in lending.”

Longo noted, “(Finastra) provides access to a variety of third parties in an open marketplace, which we do through, where financial Institutions can build their own apps, they can bring other vendors, without fear of competition or crossover to meet their needs and get to market.”

Timing Important to Replacing Siloed Systems

“We follow a pretty similar process both with our internal solutions and the fintech solutions so that it doesn't become a friction point with our partner FIs,” said Longo. He pointed out Finastra looks for an end-to-end lending solution, whether it be through or through a combination of external and internal solutions.

Longo described how on the internal side, FIs might use Finastra Originate, which offers a consolidated and compliant digital platform for loan, mortgage and deposit account applications. He noted that Finastra Originate offers integrated onboarding for apps, and underwriting through a variety of lending solutions, both on the consumer retail side and commercial side like Mortgagebot, an end-to-end mortgage platform; and Credit Quest, a unified, relationship-centric view of customer financial data and supporting documents.

Longo held that siloed systems have been a traditional problem for credit unions and bank lending solutions that have a strong retail onboarding and servicing component, but may not have a strong commercial component. Or it might be strong, but it's in a separate system with a separate logon and a separate user interface (UI) or user experience (UX). “So ultimately we try to avoid that by providing a seamless experience to the front end, end user, all the way through the back office or operations folks, commercial underwriters, lenders, et cetera.”

Finastra canalso help FIs find partners through the FusionStore if a credit union or other Fis chooses a best-of-breed third-party origination app for their specific use case. “Then on the core side, we can integrate to everything and we can service both consumer and commercial loan applications of pretty much all types; it becomes a pretty seamless experience,” Longo said.

Longo added from a credit union standpoint, Finastra can supply a lending platform regardless of whether the credit union is a core customer of theirs or uses the core of another provider. “We live and breathe open banking, we’re here to help our FI partners including on the credit union side in a big way.” He noted that Finastra can work with various solutions and the development portal to connect with almost any core banking provider.

Modular Fintech as the New Normal

Longo considers modular banking the new normal for financial services. “We provide modularized core banking. If they just need lending, we can do that. If they need depository services, we can help do that. We can do it all if you want. Because what (a credit union) plans for in Fiscal Year 2023 might be dramatically different, and they may pivot to a niche product or service in Fiscal Year 2024.”

Longo also suggested use case scenarios where a credit union might want to offer a sub-product for indirect lending, or get into commercial mortgages. “We can go right to the app store and say, ‘here is the fit we can get.’”

That is a big change, emphasized Longo. “In a legacy environment, it was ‘this is what the core does’ and you are beholden to the core. That is not how we operate. What we want to offer is scalable and flexible deployment of products and services.”

“It’s very important to remove silos,” said Longo. “We try to provide a truly integrated experience across all the lines of business for our credit union partners. Finastra can help legacy-locked credit unions unleash from silos.”

Best of Both Worlds

“What we can offer is essentially, if they want to get into embedded finance or spin up a new niche brand, we can offer an embedded finance option or a digital-only bank option where they can kind of sidecar it,” said Longo. “We understand your legacy business is locked down, so to speak, for better or for worse for x number of months or years. However, if this is very important to the credit union, we can spin this up in a matter of months and get you rolling on this area of growth.”

Longo continued, “We're honestly like the best of both worlds. We are a rock-solid, stable technology provider on the core and lending and digital front. However, because of our open ecosystem, open APIs and the marketplace, we can play in those gap areas and the startup world without exposing the credit union to all that risk. Because a lot of them want to get involved and want to turn the boat fast. But they ultimately do not pull the trigger because they can't stomach the risk for a variety of reasons.”

What traditionally happened in the marketplace, described Longo, is that credit unions have a great consumer lending or retail lending experience where they can do an auto loan in five minutes. “And the application is great, the process is great, the approval time is great. But then they tried to get involved in the commercial side and it is a completely different user interface. It is completely different time to decision.”

Finastra’s integrated services, both on the front end and backend, can not only remove the silos, but provide a much better member experience, Longo told Finopotamus. Longo explained data that is collected once is allowed to be reused, as part of a commercial app or a consumer mortgage. “So, it creates a faster origination, a faster analysis for the back office, a faster time to decision, and ultimately just a better overall member experience, which I think is what all our partners would want. So, I think we are really entering into that time where we can offer that.”


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