Quantcast

Loan Origination: The Benefits of Automation

What is loan origination automation?

Loan origination automation is when automation technology is used to optimize the process of approving, or declining, a financial loan once a borrower has requested it from a lender. This includes the request of funds right through to the disbursement, including borrowing screening and checks, document completion, underwriting, and ultimately the loan approval. 

 

Why should I automate loan origination?

When it comes to facilitating loan approvals, time really is money. Customers expect a speedy, intuitive loan application process with real-time decisions for mortgages, personal loans, and credit cards, otherwise, they will go elsewhere. In fact, the abandonment rate for online loan applications is at an all-time high of 97.5%. A smooth and efficient end-to-end loan process is a genuine competitive advantage.

But while the majority of lenders are now “talking digital”, not all are “acting digital”. And those who are actively digitizing their services struggle to integrate legacy systems to form a cohesive strategy. Whether provisioning consumer or business loans, the multiple touchpoints between the front and back office in the loan origination system make it particularly convoluted. All the more reason to automate the process.

 

Processes in the loan origination processes that can be automated

There are multiple processes within loan origination that can be automated, including: 

Application processing: Rather than manually reading and entering data on customers’ application forms, you can automate customer data capture using tools such as Optical Character Recognition (OCR) and validate it in real time, and perform eligibility checks in tandem to speed up the process. 

Credit scoring and assessment: You can automate the analysis of customer data to determine creditworthiness by integrating with credit bureaus and financial data sources. Automated algorithms can then be used to evaluate factors relating to both the applicant and the market to determine if they are a suitable loan candidate. 

Document verification: A great anti-risk advantage is integrating your systems with intelligent technologies that automatically validate the authenticity of documents, such as proof of identification, bank statements, and tax documents, so you don’t fall foul of fraud. 

AML & KYC: Enhance your compliance and risk management by automating anti-money laundering (AML) and Know Your Customer (KYC) checks to identify potential fraud risks and ensure you are always adhering to legal requirements. 

Loan underwriting: You can automate workflows in the loan underwriting process and set rules to determine loan amounts, interest rates, and repayment terms. 

Fund disbursement: Once the loan has been approved, you can automate the transfer of funds to the borrower’s account to ensure a swift and efficient release of funds. 
 
 

What are the benefits of automating the loan origination process? 

1 - Increased efficiency

Digitized customer experiences with instant feedback and results have heightened customer expectations in all aspects of life, and loan application is no exception. 

There are multiple elements and processes that make up the loan origination journey. You can automate multiple processes to bring efficiency, from eliminating manual data entry with application processing, right through to automation of the disbursement of customer funds. 

By automating the processes, not only do customers receive a better service, but loan providers can approve more loans and generate more revenue. A win-win situation.

 

2 - Enhanced customer experience

In addition to speed, customers now also expect highly personalized experiences. This means providing contextual multi-touch services on both mobile and desktop. 

Automation technologies that leverage customer data that you can use to generate customized loan options and repayment terms, to provide a better, personalized service for your customers. 

Plus, an automated onboarding process that offers transparency by always providing updates to the customer on the status of the application is sure to impress. An impressive customer experience will not only help to retain customers when they need additional financial services but can also turn them into brand advocates who can recommend their swift, pain-free loan application experience to others.

 

3 - Ensure compliance & risk management 

While being borrower-centric is all well and good, the imperative of adhering to financial regulations cannot be ignored. The loans market has some of the strictest compliance rules of any industry, and failure to comply is not an option. So whether you are looking to meet Basel III, the latest Payment Services Directive or even remain GDPR compliant, requirements to self-regulate day-to-day operations have increased significantly.

Transparency is now the name of the game. “[Transparency] has become foundational to how the loan operation relates to regulators, borrows and other departments within the financial institution,” states Fiserv in its Loan Origination Automation report.

“Transparency is not only being able to provide insight into origination processes and practices, but it also means being able to pass along transactional data to those who request it – when and how they request it.”

Automation allows you to achieve this transparency by establishing a single approach to loan regulation whilst permitting flexibility to adhere to local laws. If your processes are mapped out in process flows, you can also produce reports quickly and easily to prove that all checkpoints in your process have been completed to meet compliance standards.  

 

4 - End-to-end visibility

Loan origination has multiple touchpoints and approval stages it needs to go through, so it can be difficult to streamline the approach and maintain visibility over the steps in the process. 

Automation platforms provide real-time status updates and status tracking so different stakeholders in the process, from account managers to underwriters, can track the progress of applications and view pending tasks, ensuring no delays and helping users to prioritize their workload.  

Visibility can also help with continuous improvement. Creating a workflow with designated steps ready for automation ensures an overview of the end-to-end process. You can amend the workflow as and when you need to ensure efficiency and compliance. An automation platform can also provide dashboards and analytics to display KPIs and process metrics, so you can identify any bottlenecks or delays. 

 

5 - System Integration 

Many businesses struggle today with the complexity of new, intelligent technologies that improve processes not properly integrating with their legacy systems. This can lead to manual handoffs between steps in the process, which slow down operations and prevents real-time information exchange. Not to mention the organizational boundaries it creates that prevent you from being able to follow the process through end-to-end.

Additionally, banks will often find that products such as cards, mortgages, and loans are hosted on separate systems, creating a disconnect and a lack of transparency over customer profiles. For example, a customer may have a current account and mortgage with you, but you can only view information for one product at a time. This disparity creates issues for both the loan provider and the customer. 

By introducing an automation platform that acts as an orchestration layer, banks can gain a more holistic view of their operations and processes and customers can manage their products from a centralized view. This can be coupled with APIs and app connectors to ensure data is passed effectively between systems and processes. 

 

SPOTLIGHT ON A BIZAGI CUSTOMER:
Old Mutual‘s staff had no single view of individual customers, which was slowing down their loan approvals. Their infrastructure was made up of 11 disconnected systems, which created an unnecessarily long loan origination process. 

By connecting disparate systems and automating the exchange of customer information with Bizagi, staff spent less time manually cross-checking data. They were instead provided with an intuitive view of customer profiles containing all the relevant data they required. This reduced their customer onboarding time ten-fold.
 

Transform your operations with low-code automation

If would like to learn more about how automation can accelerate your bank’s transformation efforts, download our free ebook, The Essential Guide to Modernizing Banking Operations. 

In addition to insight on how to offer innovative employee experiences, you will also learn how to:

- Create frictionless customer experiences
- Respond to regulatory pressures
- Bridge gaps in your system with automation
 

Modernizing-Banking-Operations-mockup.png

 

Banking

How Automation Helps Banks to Upsell and Cross-Sell

Governance & Compliance

How Personalized App Experiences Enhance Enterprise Governance

Banking

Anti-Money Laundering Automation: Why Every Bank Needs to Automate AML Processes

Agile & Low Code

How to Create End-to-End Visibility with Enterprise Orchestration

Agile & Low Code

What is Contract Automation and How Can it Benefit Me?

Banking

Automating Banking Approval Processes: Speed Up Loans, Exceptions and More

Agile & Low Code

The Bizagi Experience Matrix: How Total Experiences Can Transform Enterprise App Development

Banking

KYC Automation: 5 Big Benefits Every Bank Needs to Know About

Banking

Transforming Customer Onboarding in Banking with Automation

Banking

Banking Innovation: Why Banks Need to Modernize

Banking

Investment Management Automation: How to Drive Efficiency in Your Operations

Digital Process Automation

What is Data Orchestration and How Can it Benefit Your Business?

Agile & Low Code

[Infographic] How Low-Code Benefits Grow Over Time

Agile & Low Code

Enterprise Application Development Best Practices

Digital Process Automation

[Infographic] Top 5 Pain Points That Could be Solved by Automation

Digital Process Automation

Top 6 IT Department Challenges and How to Overcome Them 

Banking

Banking Fraud Prevention: System Silos Create Gaps for Criminals

Agile & Low Code

Jump to Lightspeed: How to Use PaaS to Drive Transformation Velocity 

Banking

[Infographic] 3 Processes Ready for Automation in Banking

Use Cases

How CBC Orchestrated Their Distribution of PepsiCo Products

Banking

5 Ways to Empower Banking Employees with Automation 

Infographics

[Infographic] Bridging the Gaps in Banking

Use Cases

4 Ways Tatweer Petroleum are Using Automation to Optimize Operations

Banking

Perfecting the Customer Experience in Banking

Digital Process Automation

Ease the Strain of Supply Chain Disruptions in the Energy Sector with Low-Code Automation 

Manufacturing

3 Ways Unilever International Achieved Agility at Scale 

Banking

Banking Automation: 4 Essential Tips to Transform Your Bank

Agile & Low Code

Why You Need a Cloud-First Strategy 

Banking

3 Ways IT Leaders in Banking can Drive Transformation

Banking

How AgFirst Bank Ensures Compliance with Automation

Banking

3 Processes Ripe for Automation in Banking

Use Cases

Automating the Vendor Management Process: Benefits at 5 Key Steps

Banking

Transforming Approval Processes in Banking: Real-Life Examples

Manufacturing

What is Supply Chain Sustainability?

Process Modeling and Mapping

How to Find and Fix Bottlenecks in Your Supply Chain 

Process Modeling and Mapping

What is Process Improvement? Methodologies to Help Your Business

Manufacturing

Want a Resilient Supply Chain? It’s Time to Automate Manual Processes 

Manufacturing

[Infographic] Supply Chain Orchestration: Fixing the Gaps in Your Operations

Manufacturing

Supply Chain Automation: Use Cases for Every Point in Your Logistics Network 

Manufacturing

How to Build a Connected Supply Chain

Agile & Low Code

3 Low-Code Use Cases: How Low-Code Platforms Can Accelerate Digital Process Automation 

Woman looking stock market Data on smart phone Banking

6 Lessons Learned from 6 Years of Using Bizagi at Stone Coast Fund Services

Intelligent Process Automation

5 Intelligent Process Automation Use Cases to Inspire Your Automation Project

Robotic Process Automation

IPA vs RPA – What’s the Difference?

Use Cases

16 Real-World Business Process Automation Examples That Sparked Success

Digital Process Automation

Why Your Shared Services Center Needs Automation 

Agile & Low Code

Low-code and No-code Platforms: Which Approach Should I Use?

Process Modeling and Mapping

Process Documentation Examples: Tools, Use Cases & more

Agile & Low Code

10 Key Factors to Consider When Choosing a Low-Code Automation Platform: The Definitive Checklist

Agile & Low Code

[Infographic] Low-code vs No-code: What’s the Difference

Agile & Low Code

The Citizen Developer Revolution: How to Enable and Support Developers

Digital Transformation: Technology

3 Key Benefits of Running Low-Code Process Automation in the Cloud

Digital Transformation: Technology

What is Hyperautomation and How Could It Help Your Business?

Man wearing headphones working on laptop at desk in empty office Finance Solutions

The Benefits of Audit Automation: Real-Life Examples

Use Cases

AP Automation: Getting Started with Accounts Payable Automation 

Process Modeling and Mapping

Process Mapping vs Process Modeling: What’s the Difference?

Cardboard boxes on a conveyor line in distribution warehouse Use Cases

Automation Success Story from Deutsche Post DHL Group’s Shared Services Hub

Agile & Low Code

Low-Code Automation: The Benefits

Manufacturing

Supply Chain Automation: 4 Benefits it Brings to Your Organization

Infographics

[Infographic] Automate to Innovate in Manufacturing - 3 Essential Strategies

Finance Solutions

What CFOs Really Think About Automation in Finance

Process Modeling and Mapping

What is Process Mapping? Benefits and Examples of Process Maps

Business Analysis and Strategy Digital Process Automation

What is Business Process Automation (BPA)?

Confident smiling businessman using smartphone in office Intelligent Process Automation

Process Automation ROI: How to Calculate Yours

Agile & Low Code

What is Low-Code Automation and How Could it Benefit You?

Digital Process Automation

Automation Predictions for 2021 and Beyond

CREATOR: gd-jpeg v1.0 (using IJG JPEG v80), quality = 82
Process Modeling and Mapping

What is Process Modeling? 6 Essential Questions Answered

CREATOR: gd-jpeg v1.0 (using IJG JPEG v80), quality = 82
Insurance

Transforming the Insurance Claims Process: Real-Life Examples

CREATOR: gd-jpeg v1.0 (using IJG JPEG v80), quality = 82
Finance Solutions

5 Reasons for Automating the Procurement Process

CREATOR: gd-jpeg v1.0 (using IJG JPEG v80), quality = 82
Banking

Loan Origination Automation at AEON Credit Service Asia (ACSA)

Digital Process Automation

3 Ways Process Automation Can Aid Your Business Recovery

HR & Employee Experience

[Infographic] 3 Processes Your HR Department Need to Automate Now

HR & Employee Experience

4 Ways to Deliver Change Management for Process Automation

Depressed frustrated trader tired of overwork or stressed by bankruptcy, sad shocked investor desperate about financial crisis or money loss, upset businessman having headache massaging nose bridge Business Continuity

4 Technology Priorities for Enterprises Preparing for Economic Downturn

Digital Transformation: Technology

The Building Blocks You Need for Digital Transformation

CREATOR: gd-jpeg v1.0 (using IJG JPEG v80), quality = 82
Robotic Process Automation

How to Use Bizagi and RPA to Achieve True Digital Process Automation

Insurance

5 Insurance Processes Transformed by Digital Process Automation

Insurance

Insurance Peer Review Just Got Easier, Thanks to Process Automation

Governance & Compliance

5 Governance, Risk and Compliance Automation Templates You Can Use Right Now

Manufacturing

Smart Manufacturing: How Geesinknorba Increased Production Efficiency by 45%

Insurance

4 Important Wins from Digital Transformation in Insurance

Banking

Intelligent Process Automation: Bizagi and RPA in Action at Bancolombia

Product News

Bizagi Deepens Intelligent Process Automation Capability with 11.2.2

Banking

3 Ways Bizagi Transforms Wealth Management Organizations

Insurance

Tackling the Frankenstack: Legacy IT Evolution for Insurers

CREATOR: gd-jpeg v1.0 (using IJG JPEG v80), quality = 82
Robotic Process Automation

How to Build World-Class Digital Operations

Digital Transformation: Strategy

Digital Transformation Strategy: Get it Right & Become a Digital Master

CREATOR: gd-jpeg v1.0 (using IJG JPEG v80), quality = 82
Healthcare

3 Ways to Ensure Data Security in Healthcare

Customer Experience & Engagement

The Customer Journey: How to Capitalize on Critical Moments

CREATOR: gd-jpeg v1.0 (using IJG JPEG v80), quality = 82
Healthcare

Telemedicine: Meet Customer Expectations in Healthcare with AI

Digital Transformation: Strategy

[Infographic] 3 Ways to Tackle the Tensions Around Digital Transformation

CREATOR: gd-jpeg v1.0 (using IJG JPEG v80), quality = 82
Insurance

Rescue Insurance Policy Administration with AI & Process Automation

Governance & Compliance

[Infographic] 4 Ways to Reduce Risk & Keep Your Business Compliant

Insurance

Insurance Claims Process: Don’t Leave Your Customers Waiting

Digital Transformation: Strategy

Digital Operations: Transform your Business in 6 Simple Steps

Customer Experience & Engagement

[Infographic] 3 Ways to Transform Your Customer Engagement Strategy

Insurance

Customer Experience in Insurance: How to Accelerate the Digital Transformation

Customer Experience & Engagement

Contextualization: The New Rules of Customer Engagement

Governance & Compliance

Governance and Compliance: Mitigate Risk in 6 Simple Steps

Insurance

[Infographic] 5 Steps to Digitally Transform Your Insurance Company

Insurance

Insurance Onboarding: The Key to Lasting Customer Relationships

Governance & Compliance

Why Agility is The Key to Regulatory Compliance

Use Cases

Lotus Notes Migration: Modernizing Your Applications with Bizagi

Banking

Blockchain: The Fuel to Energize Your Financial Services Transformation