Consumer Loan Processing Automation
Overview
Document processing is one of the most costly expenditures of most organizations, resulting in hours of manual labor and organization that is not without error. In order to remain competitive in a market filled with endless options for consumers, the digitization and automation of documents remains essential for any financial services company striving for success.
Banks and financial institutions can accelerate loan processing while also increasing the consumer experience with DocProStar. Access to accurate, digitized documents and cross-referenced data can ensure a time-efficient loan process. Companies can bypass the hours spent on manual labor in favor of automation–leaving those hours of labor to be better spent on other projects, and allowing them to remain competitive. But it takes the right solution.
THE SCENARIO
One of the biggest factors determining if a bank or lender will be chosen by the customer: time. When loan requests are initiated, the bank or lender with the quickest response and best offer wins. The process of receiving and approving applications for consumer loans is complex and time sensitive. The document process remains the same: collect various documents from diverse channels, understand each document in context, ensure all required documents exist within a customer account, and cross-verify critical personal data across the many document types and/or databases. It can be difficult to train employees to perform these activities while also enforcing compliance throughout the regulatory process. Not to mention the risk to the bank if errors are made.
Numerous input channels complicate processing
The loan application process requires the applicant to submit documents to the lender, including an application and supporting materials such as employment pay slip, both proof of ID and residence, and taxpayer ID. Other parties, such as an assessor, real estate firm, or dealership also submit additional documentation about the asset and the loan. These documents vary in their origins, with some submitted via mobile, websites, email, or even paper. Banks or lenders sometimes rely on a business process outsourcer (BPO) or an internal shared services center (SSC) to formalize the bundle of documents–reviewing the application for completion and ensuring it adheres to business rules and risk assessment, allowing the bank or lender to respond to the request for loan approval. Because the BPO and SSC are removed from customer interaction, processing many different document types from different input channels creates challenges that pose a threat to competitive response times.
Constant process and document changes are costly
There are countless, specific regulatory requirements and corresponding business rules of each lending process. In order to navigate these areas, organizations employ dozens of operators trained in each sector of business. But there are often changes to these processes, both internal or external, which can lead to many hours of additional training and can result in errors, complications and lengthier turnaround times. These setbacks can be the difference of a bank being the selected offer or being bypassed for another lender. Not only are the rules constantly changing, but there’s also the issue of document quality. Because documents can come from a wide array of sources, the full scope of documents may have to wait to be reviewed until all are received. Also, many incoming documents scans of original paper documents, and the quality of those scans can be a challenge. Poor quality reduces the effectiveness of manual data extraction from these documents, thus costing even more time.
Anti-fraud procedures leads to heavy red tape
Anti-fraud checks must also be performed on the documents to prevent significant errors in the finalization of the loan process. These checks will often require integrations with banking and government systems, among others; for example, to validate the authenticity of an ID card. This adds additional time to an already arduous process. Any time a document is missing, or the application is otherwise found to be incomplete, an exception process must be initiated before the application can be considered for final approval. This results in an excessive amount of paper being pushed around and waiting on people’s desks to review and respond to the bank, lender or processor. This directly impacts efficiency, time, and increases the opportunity for errors and fraud. Preventing fraud as well as remaining time-efficient are two essential proponents of the procedure that often impede on one another but are both crucial to the loan approval process.
The document formalization process can take several days
The entire document formalization process can take anywhere from 2-8 days per transaction on average. The various document sources, constant process changes, anti-fraud checks, and the need for manual input to complete these tasks leads to long wait times. If necessary information is missing or incomplete from the supplied documents, further time is needed to retrieve the information from the applicant or other source. In order to meet competitive service level agreements (SLAs) for loan approval, banks and lending organizations are often approving and disbursing loans before the formalization process is complete. This creates substantial increases in financial risk for the bank, financial institution or lender. However if process times are not reduced sufficiently to compete with a borrowers’ myriad offers, another offer may be chosen and the effort to run the loan approval process will yield no result. This results in a no-win situation for most banks and lenders.
Meeting your customer’s expectations requires knowing your customer. Today’s borrower wants to experience the same level of customer service, speed, and convenience that they enjoy with their smartphone and at the coffee shop when going through lending processes, whether for an automobile, a phone, a TV, or a credit card.
THE SOLUTION
Arduous, manual input does not deliver promising results, especially when competitors are shifting rapidly to digitalization. DocProStar ensures complete, accurate, and rapid digital information to the processor. Countless hours of manual labor are eliminated, replaced by DocProStar’s enterprise process automation solution. Once installed, the need for a lender or banker to assemble and organize information is terminated, and the process is completed void of error and while reducing risk along the way.