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Is Fair Lending Software Worth the Cost? 21 Factors to Consider

5 min read
Oct 19, 2017

When your compliance budget is limited, it’s natural to assume that the cost of purchasing a Fair Lending software is simply too expensive for your institution. You’re already shelling out for training programs, resources and other tools to ensure that your Fair Lending strategies are on track, and quite frankly, getting leadership buy-in for another expense can be challenging. But do you know the potential cost of not using a Fair Lending analysis software?

There’s more to consider than solely the sticker price of a product. Maybe the value it brings far outweighs the investment. Perhaps there’s even money to be saved by choosing the right solution. These are the factors you need to examine when deciding whether Fair Lending analysis software is worth the cost. As you think about cost, it’s wise to also consider value, risk, and ROI.

As a compliance officer, it’s in your best interest to leverage the most valuable, cost-efficient, time-saving solutions available. And while the sky is not the limit when it comes to expenses, it’s more important to investigate value than price.

To help you decipher the value inherent in Fair Lending analysis software and make the right decision for your organization, we’ve highlighted some important consideration criteria for you.

After you read this blog, you might be interested to explore this interactive infographic that helps you determine if compliance software is worth it.

Ease of Use

Compliance professionals have enough on their plate without the hassle of trying to learn a complex system. You don’t have hours to spend on tinkering with a new solution and figuring out how to make the most of the software. After all, time is money, and if you have to spend extra time making your solution work for you, the return will certainly not be worth the investment.

If, however, you opt for a “plug and go” software, one that doesn’t require a whole lot of preparation or administration, you have the opportunity to save yourself and others an immense amount of valuable hoursTherefore, when determining the worth of an analysis software, be sure to identify facilitation factors like:

  • User-focused onboarding process.
  • Minimal time to implement. Make sure to consider the time it takes to get the data into the system, any core integrations, and other factors.
  • Dedicated support team (i.e. the TRUPOINT Customer Success Team).
  • Support and technical assistance at no extra cost.
  • Expert guidance on how to use the software and understand the analysis.
  • Function-focused training.
  • User-friendly reports, plus Board- and Management-focused reporting.
  • Simple vendor management assistance.

In addition, you don’t want to have to relearn another system just to conduct analysis on another area of compliance. It’s much easier to have a holistic solution for multiple areas of compliance. For example, can you expand your current Fair Lending software into CRA or Redlining analysis?

Analysis and Reporting Efficiency

Again, time is a for compliance officer’s most valuable resource. Just like you can’t afford to spend copious amounts of time messing with and setting up a new solution, you also can’t afford to burden yourself with time-consuming reporting and analysis tasks. In this case, you should be looking at the cost savings that a Fair Lending analysis software can deliver by reducing the time and resources required to adequately analyze and report on your data.

In many institutions, it takes the compliance team approximately 96 hours per quarter to complete all the requisite analysis and reporting. If you could find a solution that reduced this time to just two or three hours, wouldn’t it be worth the investment? If you could bring 56 annual hours of board reporting down to one, wouldn’t you be more focused on this value than the product price? If you could eliminate the need to hire several compliance analysts by choosing a Fair Lending analysis software that takes just 15 seconds from data upload to report creation, wouldn’t you be having a different conversation?

Be sure to consider this critical component as you think about the worth of software. If the solution makes analysis and reporting so easy that you save hours, weeks, even months, it’s likely to be a solid investment.

regulatory-compliance-risk.jpegAs you evaluate different Fair Lending softwares, consider efficiency-focused features such as:

  • Visualization of loan data comparisons
  • Easy-to-read dashboards with clear takeaways
  • Quick identification of disparities and risk
  • One-click reporting and analysis
  • Interactive mapping and geocoding
  • Advanced filtering for benchmarks, regulators, and more

Personalized Consulting

Not every Fair Lending analysis software comes with direct access to personalized consulting, so this aspect of the consideration phase can often be overlooked. But don’t underestimate its value.

You don’t have the time to sit on hold or deal with the aggravating cycle of generic customer service and call centers. You also don’t have the time to worry about whether you understand the results of your Fair Lending analysis. Therefore, being teamed with one specific account representative who can help streamline your efforts is priceless.

The most worthwhile software solutions are those that actually assist compliance professionals. Some areas that you may appreciate extra help with could include:

  • Reading and analyzing your data.
  • Getting advice on how to correct any disparities.
  • Learning from the experiences of others in the industry.
  • Guidance through a targeted Fair Lending exam.
  • Identifying opportunities for growth and improvement that are indicated by your analysis.

Accuracy in Risk Exposure

The worth of a Fair Lending analysis solution must be judged on its ability to accurately assess risk and highlight disparities in the data. If it can’t do that with a high level of precision and certainty, it’s not worth any amount of money.

Compliance is a serious area of the business, and it bears risk both for the organization at large and on an individual level. As a compliance officer, you understand the magnitude of this responsibility, so it should be no surprise that it’s a major factor in the cost discussion.

When it comes to ensuring that your institution is in full compliance with all Fair Lending regulations, you need more than just a hearty effort and a hope that all is well. There must be proof to back up your assertions. That proof is materialized with the implementation of dynamic analysis software.

When your risk exposure can be systematically calculated -- without the potential for human error to impact results -- you have the power to make informed compliance decisions and protect your institution from costly penalties. This is fundamental to your determination of investment value.

Preparation Capabilities

Because you are required to report to the CEO and/or board of directors on the results of your compliance program, it’s necessary to ensure preparedness for these meetings. Having a solution that produces ready-to-present reports enables you to cut down on the time and stress involved.

If your Fair Lending analysis software facilitates your ability to communicate with the board, keep all members of the leadership team apprised of compliance activities, deliver accurate results to them and garner their buy-in on critical compliance needs, the return is worthwhile. Make sure you’re including this criterion in your cost analysis efforts.

The truth is there’s always more to recognize in determining the worth of a product than just its ticket price compared to the dollars you have on hand. The idea of value is highly relevant to worth, particularly when it comes to Fair Lending analysis software. It is vital to make this decision based on value-driven points of reasoning, like the ones outlined here. Don’t take a short-sighted approach to this line of questioning. Instead, base your investigation on overall value.

For extra guidance, check out our guide on Building Your Own Lending Compliance Management System.

Fair Lending for Credit Unions

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