The Secret to Application & Underwriting Efficiencies

Digital Lending

In today’s tight labor market, everyone working in the banking industry is being asked to do more with less, including loan officers. But, how do you maximize performance and results with fewer resources? Many banks are turning to automation as the answer.

Banks that have historically relied on manual workflows, especially throughout the loan origination process, are realizing the potential that new automated solutions can offer their teams. In fact, 88% of senior bank management are investing in automation for the many benefits it brings to both their employees and customers.

One solution that’s helping many banks and credit unions find success is loan automation software. This blog explores several ways this technology helps banks streamline the loan application and underwriting processes to support a better borrower experience, as well as a better employee experience.

Eliminate redundant data entry in the application process.

A common pain point for borrowers in the loan origination process is the fact that in-branch visits are required for either all or a portion of the application process, depending on the bank. According to research from the American Bankers Association, of the banks that offer digital loans, only 47% have digitized document uploads and only 41% support e-signature. And with more and more consumers moving to fully digital financial products, the banks that continue to rely on in-branch visits may be turning away valuable customers.

To reduce friction, banks should digitize their loan application process and ensure it’s as quick and painless as possible for borrowers to complete. This can mean different things for different people. For example, one business owner may want to fill out certain documents online, print them out at home, and then visit a branch location for face-to-face service with a representative. An early twenty-something applying for a mortgage loan may prefer to fill out their entire application at home and never visit a location in person.

The most important aspect of digitization for your bank is understanding your customers’ preferences and meeting them there with your technology solutions.

Use Automation to Drive Underwriting Efficiencies.

The underwriting process is one of the biggest where banks can see the benefits of automation. A quicker underwriting process can make the experience easier on both institution staff and commercial loan customers. In fact, a study by Oxford Economics reports that loan volumes can grow by as much as 20% with the use of an automated, scalable platform while loan processing can speed up by 25% - 40%.

New tools can help teams move away from manual credit assessment by screening loan applications with specific parameters based on the type of loan. This allows staff to focus on unique edge cases that require more personal attention. Automated tools can also help with decisioning. Today’s technology can be configured to review credit scores and pre-screen applications based on an institution’s credit policies and risk tolerance. This helps team members move through the decision-making process faster, meaning your bank can process more loans without additional headcount. Not only does this boost portfolio performance and profitability, but it also means borrowers get answers about their loan applications faster.

Stop Playing Digital Tag with Loan Applicants.

As more financial institutions realize the benefits of moving to digitized lending workflows, it’s also important to ensure both customers and staff can maintain open lines of communication to troubleshoot issues and answer questions as applications make their way through the origination process.

Many banks make the mistake of having an online loan application process in which customers must continue responding to questions, without knowing why. This can feel impersonal and lack the dialogue that many borrowers expect from their bankers. Instead, banks should provide clear guidance on how you and your customers can communicate during the lending process. One way to accomplish this is by providing a portal where messages about a loan request are stored all in one place. Your bank’s team members can use the portal to update customers, resolve concerns, and make sure feedback is relevant.

A customer-facing portal can also provide a simple and convenient location for customers to upload required documents. Team members can access, review and request documents in a safe and secure way, reducing the need for follow-ups between customers and your bank. Plus, for large, commercial clients where legal teams may need to be looped in or access documents, a portal makes this much easier and more secure.

Drive Loan Volumes Through Digitization.

Ultimately, automated tools will help your bank streamline the manual, time-consuming and error-prone processes that bog down everyone. By harnessing automated tech, your bank can better support your staff and customers while significantly growing loan volumes, despite today’s economic and staffing challenges.

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Resource Guide: Digital Lending Resoures and Strategy

Blog: A Banker’s Honest Perspective on Digitizing the Lending Experience

Podcast: Talking to Senior Leadership About Automated Lending