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A couple of years ago, AI and machine learning were innovations that were being tested for their immeasurable benefits to industries and businesses. But they were either in the testing or backburner stages of most organizations. But when the pandemic hit, digital innovation stimulated by Covid-19 has placed AI and analytics at the core of business operations. Automation was accepted by the businesses and was no different from the loan origination software.
Automation of loan origination will gain more traction in 2022, with more consumers looking for easy-to-access and expedited loan products and banks looking to serve them with enterprise solutions, such as those offered by BankPoint.
The benefits offered by automation of the lending business are many, with achievable targets like operational efficiency and increased consumer satisfaction.
Banks, credit unions, mortgage institutions, and other lenders can tide over the supply-demand gaps that exist in legacy banking. The number of loan applications processed within a period is increasing by LOS and adding to the operational growth of a lending business. The momentum driven by automation of the loan origination process is going to continue with enhanced customer satisfaction, efficient and speedy workflow management, fewer risks, and a robust growth trajectory.
The far-reaching and consequential benefits of automated loan origination solutions are manifold, yet we will examine a few core benefits that can be seen immediately when LOS is used to process a loan:
Satisfied customers and smiling staff
A business that caters to the needs of the end-user and the enabling employees will succeed with a multitude of opportunities to scale and grow. Machine learning achieves this simple and basic dual goal, which is both consumer and employee-centric.
Consumer expectations have evolved and they find it tedious to fill out long loan applications after visiting a bank and standing in a queue for their turn. However, automated LOS engages a prospective loan applicant through multiple self-serve channels that can be accessed 24/7. Borrowers can scan and share their financial information from the ease of their laptops or smartphones. All the information fields are filled out by the borrower, with assistance from chatbots. Till all the required fields are filled and the required information is provided, the application cannot be submitted. This feature ensures that the information is true and free of errors.
Once the application is submitted, with help of neural networking and third-party API integration, the data is verified for its authenticity. Analytics display the credit assessment report related to the applicant and the approval and loan disbursal is also automated. All the functions take very less time, are free of errors, and are transparent.
Automations of LOS will give employees of the bank time to work on strengthening their relationships with clients. Their roles are not displaced by machine learning but complemented by transferring repetitive tasks to robotic tools.
Maintains loan-portfolio quality
AI-powered LOS can integrate with all the databases and reduce repetitive tasks like cross-communication through emails. It verifies the financial information of the loan applicant in a few minutes, performs complex spreadsheet analysis, and generates credit assessment reports with approval or disapproval results. The whole process is expedited and credit decisions take a few minutes from the time loan applications are submitted. The process is free of errors and evaluates the merit of the applicant and eligibility with speed and efficiency. Loan applications are rejected automatically if it lacks a credit history or over-exposure to credit.
Even after the loan is disbursed, it is tracked constantly and the LOS sends the alerts for payments. If the quality of a loan product is due to turn risky for any reason, a warning alert is generated. Such a timely intervention can help banks avert bigger losses and take decisions to protect the business’s interests. In such cases, banks can ask for additional covenants or collaterals.
Saves time and money
As automation of loan origination delivers results in a few minutes, many man-hours spent in the traditional lending process are reduced. The whole process is digital and paperless. This reduces the cost of a paper-based process and all the important information is stored safely with the highest standards of safety and encryption.
As the customers can avail of the loans without walking to a bank, the footprint of the customers will decrease and their digital print will increase. Banks can focus on reducing the real-estate space and divert any amount saved to other areas of focus like innovation and consumer engagement.
Operational growth
When automation reduces the time taken to process a loan and does it efficiently, there are bound to be spin-off results like higher customer satisfaction and more loans processed in a period. Since these applications are free of errors and verified with third-party database integration to establish the borrower’s genuineness, the loan portfolio’s quality is deemed good. All these factors translate into more business and better customer relations.
Most banks and fintech companies have adopted digital loan origination platforms, so they are charged up to take on more business. They are attracting customers looking for ease and efficiency when filling up loan applications. If the rest of the banks who are still following aging legacy banking, do not giddy up, they will risk losing a fair share of the market to competition. It is a known tenet of the business that a retained customer is more valuable than a new one.
Conclusion:
Be it the necessity induced by a pandemic or the changing trends of consumer demands, automation and efficient AI-driven lending solutions are changing the way loans are processed. Repetitive simple tasks and complex problem solving are not going to be a lengthy process in the future. These barriers to growth are replaced by efficient, customer-centric models that will protect from systemic risk and scale the operations.
The transition to automation has very few challenges that can be overridden within a few working hours. Nevertheless, automating a loan origination and underwriting procedure will help banks face the competition head-on while serving their customers with adept lending solutions.
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