Opportunities for Automation in the Lending Process: The Complete Overview

Opportunities for Automation in the Lending Process: The Complete Overview

With the latest financial technology, small businesses are gaining a leg up in the fight against extensively staffed lending corporations. Lending is no longer limited to wasteful paper applications, time-consuming origination processes, and lengthy underwriting and reporting. Instead, automation is driving borrowing to a new level of convenience for both consumers and lending companies.

There are few things you can’t do with a computer and an Internet connection today, and lending is the latest in the financial sector to be struck from the list. Cyber-focused loan relationships that manage themselves are the next impactful step in the business of selling money. Here’s the complete overview for lending leaders looking to catch up with the industry’s newest table stakes.

Speeding up the process

Automation takes the brakes off the loan process by removing all of the stopgaps of traditional lending. With loan servicing software from providers like LoanPro, customers can take responsibility for paying their monthly bills online rather than making an easily procrastinated detour to a brick-and-mortar office.

Convenience is king nowadays, and nothing beats loan servicing that’s just a mouse-click away at all times. Your more introverted customers can see their financial needs met while also knowing that quality customer service is only a phone call away should they need it.

Getting away from paper

Collecting data from customers can bog down the early stages of the lending process. With automation, lenders transition from manually entering customer data in printed or electronic documents. Instead, customer data uploads directly from preexisting information in CRMs and other data management systems.

When you’re extracting every last credit history and DTI ratio, your time in the office can creep into the hours. With automation, lenders can quickly verify accounts and move on to the next step in the process. In addition, having access to automated data can remove the need for lenders to rekey data, thus improving processing speed.

Analyzing risk assessment

Risk assessment is another vital step wherein automation can lend a helping hand. Analysts cannot begin assessing risk until all of the relevant identification data is in the application. When the information is electronic, analysts can interpret it using automated ratio analysis and forecasting models in the software. These risk assessment algorithms can use the mistakes of lenders past to safeguard your institution against bad deals. The best part is that you don’t have to spare extra hours for the added security of hedging your bets on the best borrowers.

Underwriting with a scoring model

Lenders can reduce their risk by automating their loan underwriting. Lending professionals can use a proprietary scoring model or one out of the box. By letting a system score applicants, lenders speed up the process and reduce their errors and risks. This scoring model also works well for the accessibility of your vetting process, as new hires can quickly intuit the meaning of higher vs. lower scores.

Making the decisions

Using automation, lenders no longer spend valuable working hours waffling over whether to approve, deny, or return the application for more information. The automated system can analyze the application and decide after verifying financial data, applying the scoring model, and checking for errors.

Taking the decision-making out of the hands of humans gives borrowers quicker responses and lenders fewer errors. The system can share insights with all parties, meaning everyone is on the same page about where money is coming and going. Lenders can choose to make decisions at the human level after looking at the insights the automated system provides.

Automation works best when used as a dial, meaning the human element can be added or subtracted as necessary for optimal productivity and performance.

Final steps

Once the approval process is finalized, the lender can make the offer. The automated system can provide details through a customized portal where the borrower can accept or deny the loan offer, all without leaving the safety of their home.

After the customer accepts the loan, the system can collect legally binding electronic signatures. With a fully automated system, lenders free up their geographic boundaries as borrowers can sign from any computer using e-signature software.

Wrap up

Automation opens opportunities for borrowers and lenders as the process becomes faster, efficient, and accurate. When fully automated systems exist, lenders are no longer constrained by geography, slow data collection, and risk management errors. Embracing automation opens up opportunities to lend to more customers with less risk.

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