The lending process is often a complicated exercise that requires perfect coordination between the various interfaces from the front-office and back-office. Then, the process slightly varies for the various kinds of lending. For instance, the consumer lending process will be different from that of commercial lending, and so on. However, the basics in all lending remain the same, and it includes the following steps:

●Loan Application
●Loan Processing
●Loan Underwriting
●Loan Approval and Closing

Though automation is fast becoming a buzzword, and there are several digital lending software options available, in many financial institutions, the process of lending involves many manual steps. It can start with consumers requiring to visit the bank to complete their loan application to the data acquisition and verification of the applicant. When these steps are processed manually, it requires a lot of manual labor and time. There are also chances of making mistakes as financial protection rules require increased documentation and verification. The same, when done using suitable lending software, results in much better efficiency and gets completed in no time. The automation of processes is a great boon in this scenario. Thus, we must automate whatever steps we can go forward within 2020.

Biggest Challenge In Initiating The Loan Process

According to a survey, 56% of bankers said that manual collection of data and following up with a client for that is the biggest challenge. Automating this process will help in eliminating the delays of manually collecting the data and the inconsistencies associated with it. Using APIs (Application Program Interfaces) and customer-facing web-based portals facilitate digital onboarding of both the existing customer data as well as the new prospect directly to the lender’s loan origination platform.

Application Processing

Once the data is received, the next step can be automated to segregate the applications that are complete and hence ready for decision and those requiring more documentation.

Risk Evaluation

It plays an essential role in deciding whether the loan can be sanctioned to the particular applicant or organization or not based on credit history, worthiness, etc. Automating this process will help the lenders make more accurate and right decisions as the automation solutions will make use of AI and Big Data along with traditional and alternative evaluation approach.

Communicating with the Customer

The communication with the client is essential, and this step can be automated easily. The process should be designed such that at specific triggers, a customized email is sent to potential customers automatically. For instance, if there is an upcoming or overdue payment, then the system should send alerts and reminders to the users.

Account Management

Managing the accounts of the users manually inserting all details often leads to typing errors and a lot of time. If the account management process is automated, all details will get updated automatically each time the payment is overdue or paid, or status is changed.

Regulatory Compliance

It is often a hassle for the lenders to manage this as the laws keep changing. Having advanced bank lending software, integrated with the compliance solutions, will make life easy for lenders. It will save a tab right from the start while accessing the borrower’s quality to collecting all the required documents following the regulatory compliance.

The standard practices lack consistency, auditing, and accuracy besides consuming a lot of time and resources. The lending process can get automated to a large extent. It will help in streamlining the process of integrating disparate systems and providing reliable and consistent dataflow from one stage of the lending process to the next. If we succeed in automating the various stages of the lending process in 2020, it will help in quick processing of loans with a robust audit and control benefits. It will be a win-win for both the lender and the consumer.