With increased volumes of non-performing assets, rising default rates, and decreased consumer spending in the post-pandemic era, lending institutions are in a difficult position, resulting in lower earnings. However, to jump-start the economy, financial service providers must increase the speed with which they give credit. However, it is easier said than done.
Banks and other lending institutions are under pressure from manual loan processing, resulting in higher labour expenses and file backlogs that prohibit loans from being closed on time.
Though there is no simple cure for all of these issues, one technical feature, strategic automated loan processing, can alleviate them.
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Meaning of Automated Loan Processing
An automated loan processing system, like document processing technologies, is a software-based solution that digitises and automates all stages of the loan cycle using the latest cloud and web technologies. As a result, it aids in streamlining the loan system by swiftly finding applications that fit the lending criteria, efficiently underwriting, and timely funding. It also improves the precision of overall decision-making.
Furthermore, an automated loan management system provides enhanced security features and a 24-hour online support system, giving loan management a whole new meaning.
Advantages of Automated Loan Processing
Because today’s customers are much more demanding, clients can swiftly move to another institution that is more efficient at disbursing loans if a lending institution fails to complete a loan application within a certain amount of time.
Automated loan processing allows lenders to serve their customers more quickly and effectively while also lowering the high cost of manual data entry.
The following are some of the primary advantages of automating technology for good loan management system:
- Parallel loan application processing and optimal workflow allocation save processing time.
- Document management and tracking have never been easier.
- Customer satisfaction is increased due to faster response times and improved product offers.
- Compliance with regulatory standards that is effective
- Better audit trails and minute detail tracking.
- Quicker turnaround
- More effective handling of loan volume variations
As a result, automation decreases the cost per loan and allows lenders to process more qualifying loans, giving them a competitive advantage in today’s volatile market.
Most lending institutions are under pressure to provide services remotely, reduce risk, and increase profit margins.
A comprehensive analytics-driven and digitally driven loan management system can considerably relieve these concerns. Unfortunately, due to historical software constraints, fully digitising the entire loan origination cycle in one go may not be achievable. However, automation can be implemented in stages.
How can loan processing be automated?
Automating crucial stages of the loan origination system described below makes it possible to ensure that dangerous data is subject to strict governance and control.
Here’s how to achieve automated loan processing:
Marketing and sales:
KlearStack’s AI and clever OCR solutions can assist enterprises in interpreting data from customer applications automatically. Neural nets use data parsing rules to identify which parts of documents to read and extract information from. APIs evaluate the information extracted and process it for further evaluation.
The benefit of using automated data extraction for loan processing is that you can train an API to recognise a single document type and then submit many documents for data extraction and input once it’s been suitably trained. This can save you numerous hours and simplify credit report research, allowing you to understand risk profiles better and identify customers with the lowest default rates.
Loan approvals and verifications:
The best part of using KlearStack for automated loan processing is document verification and validation. APIs highlight errors, and individuals receive alerts automatically. The frequency of false-positive cases is reduced by assuring data completion and correctness. AI models can assist with cash flow analyses, statistical comparisons, and information updates over time.
Increased client satisfaction:
Improved client experience is one of the additional benefits of using KlearStack. Your users will be able to browse their applications online while maintaining total data privacy. By training API models, you may submit unstructured documents and let KlearStack organise information for clients. Because document reviews are completed quickly, your customers will not have to wait long for their loan application approval and processing.
Various lending platforms have become more efficient as a result of automation. The lending market is shifting as more technology-enabled competition emerges and better cloud-integrated platforms become available. Lenders must understand the value of automating their processes in terms of cost savings, time savings, improved data integrity, and a valuable analytical tool. While automation can be difficult at first, doing it in stages can improve the institution’s brand value, as done by KlearStack.