How Can Credit Documentation Automation Optimise Credit-Related Banking Operations?

How Can Credit Documentation Automation Optimise Credit-Related Banking Operations?

(Last Updated On: January 19, 2023)

Given the current rage of digitisation leading the market, credit and loan processing has expanded to become more efficient. Using technologies to automate data extraction, documents for loans or credit applications can be processed faster without any requirement for manual entry.

It is an end-to-end operation that can prevent delays in the time of emergencies and allows officials to decrease their response time. By streamlining the process of credit documentation automation, banks can improve their customer satisfaction and utilise their resources effectively through better data extraction and smart analysis. 

Giving out loans and credit-based banking systems are leading operations that help banks generate revenue and ensure cash flow in the financial market. It allows them to gain profits and increase their value. However, the process of giving credit isn’t as easy as it seems. Before a loan is processed, banks are required to conduct a thorough analysis to ensure credibility as a part of their risk management protocol. 

Many banks still rely on paper-based forms for loan processing making the process much slower and even more complex. To avoid this, credit documentation automation is necessary to optimise operations. It will allow them to manage their data, assess documents and account for potential losses in a shorter span to increase the bank’s loan portfolio and improve customer experience. 

Entering financial data manually into spreadsheets is both extremely tedious and inefficient when it comes to detecting loan fraud. Since the data entered isn’t organised and managed effectively, it can result in documentation errors. Manual data entry fails to meet the legal and regulatory compliance standards prescribed thereby putting customers at high risk.

Further, large volumes of data cannot be processed when such a system is in place resulting in delays that can cause irreparable damage to business operations. 

4 Ways Credit Document Automation Can Improve Decision-Making

To improve the process of credit documentation automation, banks are now looking at innovative solutions involving the integration of bank operations with ML algorithms or AI-driven new-age technologies. By doing so, they are not only increasing their efficiency but also making informed decisions by mitigating risks to protect them and their customers. 

1. Automated Systems For Credit Processing

Using omnichannel platforms for credit filing and load processing allows banks to interact with their customers to boost operations. These systems allow the customer to communicate directly with an interface developed by the banks to input and validate their documents easily. Further, the use of trigger notifications lets them know if any documents are missing and keeps them up-to-date on the processing operation thereby avoiding apprehension. 

2. Decreased Loan Processing Time

Since the documents generated from credit documentation automation are converted into machine-readable digital formats, they can be processed easily using preset algorithms for improved efficiency. It also allows for collaboration with third-party credit agencies to ensure faster evaluation in times of increased traffic. 

3. Catering To Target Audience

Given the recent pandemic, the requirement for loans and credit has gone up tenfold. Banks need to be able to identify critical customers and offer the right services for their requirements. In such cases, automation of banking procedures has allowed banks to filter their credit requests and even identify a potential customer base for streamlined credit offerings. 

4. Adhere To Established Protocols

To keep their licence and facilitate smooth functioning, banks are required to comply with the rules and regulations set by the nation’s Central Bank. Information Technology can be employed to construct requirement data models and algorithms that allow banks to process vast volumes of customer data while processing credit requests. 

How To Bring About Credit Documentation Automation

Here are some of the ways through which banks can bring about credit documentation automation to ensure workflow and faster loan processing.

1. Using AI-based Automated Tools

Robotic process automation (RPA) along with optical character recognition applications (OCR) enable banks to extract and organise customer data. This information is then organised and analysed during credit assessments using algorithms that are programmed to certain criteria making the process more efficient. 

2. Data Parsing

Using smart application programming interfaces (APIs) to capture critical information from physical loan forms and credit documentation automation can allow banks to convert data to a digital format thereby speeding up application processing. 

3. Auto-Classification Of Customer Information

By creating algorithms using intelligent document processing (IDP) systems, bulk volumes of generated data can be classified and organised into relevant categories and then forwarded to specific teams for further processing. 

Automated Loan Document Processing For Improved Operations

Digitising and credit documentation automation is the new way for banks to improve operations efficiency, reduce risk and prevent loan frauds. It ensures decreased human errors, quicker processing and enables greater cost savings. It allows them to mitigate default risks during these procedures ensuring greater customer satisfaction by employing tools for intelligent decision making.

Ashutosh Saitwal
Ashutosh Saitwal

Ashutosh is the founder and director of the award winning KlearStack AI platform. You can catch him speaking at NASSCOM events around the world where he speaks and is an evangelist for RPA, AI, Machine Learning and Intelligent Document Processing.