Taking the Risk out of Loan Documents

Taking the Risk out of Loan Documents

Financial institutions have always struggled with document management.  The issues have ranged everywhere from archaic storage methods to untrained bankers not getting all the required documents and signatures to documents just simply disappearing.  The latest challenge has been the flow of regulatory changes and the need to adjust instantaneously to these new modifications.

Trying to keep current on regulations adds a layer of risk to an already-complex process.  It is a challenge to make sure all relevant documents remain current and accurate throughout every single transaction.  There is no need to add more risk to the process.  The mandate is actually the opposite – minimize the risk inherent in the loan process.

When it comes to ensuring compliant loan documentation, financial institutions are typically bogged down with the following:

  • Rekeying errors – Most studies show that there is about a 1% error rate on most rekeying efforts. 4Institutions need to look at how they can leverage a true end-to-end approach to their lending process.
  • Inefficient processes – outdated and manual processes increase the risk of errors while also reducing productivity. Redundancies cause slow-downs in the lending process.
  • Lack of enterprise-wide consistency in branding – inconsistent branding can foster customer confusion.
  • Clunky high-cost support and maintenance lacking a single-point update process – even if your institution has a compliance doc prep solution in place, many require costly support contracts and don’t integrate with core systems causing the need for multiple software solutions and redundant data entry across platforms.
  • Unwieldy content chaos – with so many state-mandated forms, multiple versions, and variances between departments, there is a sense of uncertainty and inconsistency in document selection

Every institution has the desire to cut costs, streamline processes, increase efficiency, and support productivity all while mitigating risk. This can seem like a tall order when you throw compliance on top of it.

When looking for a technology partner, here are features we suggest looking for to get the most out of your solution:

  • End-to-end integration – Risk increases with every touch point in the lending process. If you can leverage a system that is fully integrated from the point of loan application capture to the point of documentation and booking, you have significantly reduced the overall risk.  Technology should be agile, scalable, and deployed in a number of environments to support any lending process. So ask yourself, can your current solution integrate with other solutions your institution is implementing?
  • Risk mitigation – Make sure there is an ability to add rules and condition content to come in and out of play for document creation. The pace of regulation changes and market shifts have to be addressed. Are there built in validations to ensure information is complete and accurate?
  • Automated document creation – Automation saves time and reduces errors. Make sure there is an automated process to merge information into documents.
  • Operational efficiencies – Is this solution eliminating manual processes? Are you able to reduce the number of documents needed? This system should take less effort and time to maintain than previous methods of document prep.
  • Speed to market – Deploying documents on an enterprise-wide basis via a single point update process is critical to speeding up the process and reducing inefficiencies.
  • Customization – is it easy to brand the solution with your logos, bar codes, or other organization specific information?

The right partner can take much of the risk out of loan document preparation, all while helping streamline processes and increasing efficiency – creating more opportunities and less future headaches.

Topics: risk management