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How to Add More Automation to Your Loan Origination Process

How to Add More Automation to Your Loan Origination Process

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Looking to learn how to add more automation to your loan origination process? We outline opportunities for automation throughout the process.

The loan origination process is transforming with technology innovation.

What once was a time-consuming process full of paper applications and stacks of physical copies of documents has gone mostly or all digital for many lenders. A process that used to take weeks now happens within days in some cases.

Finance automation is the biggest key to speeding up loan origination process steps. You may already be using automation in some areas, but are there ways you can add more?

We've identified seven of the ways that finance automation tools like ours can automate portions of your loan origination process. Below, we highlight how you can apply automation to each phase of the loan origination process steps.

Prequalification Phase

The prequalification phase is the first step in the process. It's also generally very menial, which makes it ripe for automation. Your financial institution has already established what information it collects during prequalification. Typically, this information involves establishing a prospective borrower's identity, income, and financial stability.

With the right finance automation solution, you can pull the relevant data from any supporting documentation, analyze it, and route the application according to your preset criteria. Automated criteria can reject some applications and approve others. It can route the rest to the appropriate human agent for review.

Loan Application Phase

The prospective borrowers who prequalify will move on to the loan application phase, where they provide further documentation in a formal application. More and more, this phase is moving online, with prospective borrowers completing loan applications from the comfort of home.

The opportunity for automation here is similar to the previous phase. Data can be collected and sent to the appropriate employee for review automatically. The types of data coming in are reasonably standardized. There is no longer a need for a human being to manually collate this data. Machines can do it far faster and with more accuracy.

Application Processing Phase

Application processing also benefits from digital transformation. In the days of paper forms, an employee would review all entries, making sure forms were accurate and complete. If a prospective borrower skipped a field, the form would get sent back, causing a significant delay.

With an online application, you can prohibit prospective borrowers from submitting without filling all needed fields. And whether you're using paper applications, online applications, or a mix of the two, the process of notifying applicants about missing information can easily be automated.

If your automated application processing check reveals no issues, it can also route the application to the appropriate reviewer.

Underwriting Phase

Underwriting, the process of evaluating an application based on a lender's particular criteria for scoring, is painfully slow when done manually. There are still cases where you need to do manual underwriting, but you can automate it for most typical loan applications.

A quality finance automation tool will allow you to customize underwriting formulas and procedures using whatever guidelines your institution has in place. An excellent finance automation tool will even stitch the steps together, automatically pulling in applications that are ready for the scoring and analysis program and proactively pushing applications to the next step.

Credit Decision Phase

When underwriting is complete, there are three possible outcomes: approval, denial, or request for more information. Some credit decisions are unremarkable and can be automated. Others require human evaluation.

Whatever the case, automation can help in the routing of applications, retrieving them from the underwriting phase and passing them on to QA.

QA Phase

No matter the level of automation you're currently using, an element of quality control is essential. If you've already successfully automated your loan origination process steps, you'll still want a quality control process present if your automated systems make an error in judgment.

You might be tempted to think that automation can't help this phase. It is, after all, the most human and subjective of all the steps for most financial institutions. But automation does have a role to play here, too. Once (human) QA is complete, users can generate automated approval or disapproval notifications with a single click.

For users who are approved, automation workflows can also initiate the loan funding phase.

Loan Funding Phase

Once the system makes an approval decision, there are still additional legal or compliance obstacles for some loans. You can add further automation to this process, ensuring all proper documents are in the system before disbursing funds.


OpCon: Your Financial Automation Solution

SMA Technologies is proud to offer OpCon, our financial automation platform, to financial institutions looking to increase their capabilities. Over 600 banks, credit unions, and insurance companies rely on our solution. Get in touch today to request a demo.

Want to learn more about automation? Schedule a demo of OpCon!

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