The world around us is constantly moving forward, advancing as technology advances. Those who don’t keep up with what’s new and what can transform business will be left behind while competitors taking advantage of new advancements will quickly take a step forward. This paints a very vague picture of what is happening with lending processes. As the rest of the world moves forward, their digital journey is anchored in the past.
Banking, lending, and financial services is one of the foundational aspects of our economy – real estate purchases, business investments, saving for children’s education, buying a car, paying bills, investing, retirement savings, and so much more involve this industry. It doesn’t make much sense that something so important – something so integral to the processes of our country – would be so behind in technology. Unfortunately, it is true.
What’s the Delay?
The banking and lending industry is huge and one would imagine that it would see opportunity and advantage in embracing new digital ways of handling daily operations. So, what is the hold up? What has caused the delay in taking advantage of an easier, more efficient lending process?
Well, first of all, having too many hands in the process is bound to complicate things. Consider, for a moment, what a flow chart from loan application to closing and funding looks like. Have you seen one? If so, you would see that the documents go through many different people, different departments, and different agencies.
Here is an example of some of steps necessary for the lending process:
- Customer engagement and application
- Credit analysis
- Credit presentation
- Decisioning and approval
- Covenants monitoring
- Portfolio risk management
And each of these steps has a long list of duties, tasks, and responsibilities that need to be addressed. Everyone has something to do at some point in the process and so these long, tedious forms are passed back and forth between dots on a flow chart for the next step of the process to be completed.
Due to the nature of these processes, there are many forms and documents that need to be drawn up from information that has been passed around. Someone has to manually put all this together by pulling details from various complex documents in order for the loan agreement to go through evaluation, data entry, and, ultimately, the decision process. Not only does it make the process slow down, but it can also lead to human error. However, when it comes to the significance of these documents, there is little room for error. Seems like a recipe for disaster, doesn’t it?
Getting everyone at every level on the same page in a digital journey seems like a daunting task. Perhaps that’s why it is rarely attempted.
Mistakes Have Been Made
The idea of going digital has been passed around many conference tables where lenders have gathered. And, why not? The world is going digital so it only makes sense. While the idea sounded great in theory – and may have even been backed by a sincere desire to make it happen – it always gets tossed to the wayside. Each company that has tried may have gotten a little further along in making the digital transformation, but at some point, it just doesn’t work.
One of the biggest mistakes is solely focusing on the end product – the cool, interactive websites, mobile applications, and automated services. What happens is all the work that it takes to put these things into use is overlooked. Often, the push to go digital is so strong that it is being hyped up and plans are being made long before the digital products are ready to deliver. It will take years to just plan and develop before the implementation can ever be put in place.
See, to fully work, you’ve got to have all people on board. You would need to look at those who are currently handling processes and make sure they will be able to deliver when it comes to a digital situation. Systems need to be reviewed to see if they would allow everything to flow smoothly. Is CRM software currently being used? This can offer some insight as to how a digital workflow would go. There has to be a core infrastructure that will be able to handle this new journey. Finally, you can’t do any of this without a strategy. When building a plan, your strategy and operations need to work hand-in-hand.
Again, the idea is great – but for many, it never seems to make it to fruition. It’s just too big of a job. Or, is it?
How Digital Efficiency Can Impact Lending Companies
We talk about the word efficiency a lot and how it is a vital part of a successful business. It is the same for lending companies, too. Becoming efficient can have a significant impact on your business and your customers. After all, a process that flows smoothly will:
- Increase borrower satisfaction thanks to less hassle and quick turnaround time
- Lead to greater profits due to less lag time in moving customers through the system
- Present you with organized, effective document storage
- Make you a leader in the industry
As many other industries are making their processes more efficient by implementing digital practices, it is only a matter of time before consumer satisfaction drops due to the current inefficient methods of lending companies.
Some companies get it, others not so much. Either way, it is likely safe to say that those lenders who understand the need and urgency for more efficient, productive, and responsive processes understand the power of using advanced technology to make it happen.
Streamline Lending Processes with Document-Centric AI
For those looking to step out and leap ahead, it is possible to streamline lending processes with document-centric AI. You cannot take the lending process as it has always been and make its paper journey now a digital journey. Rather, you have to recreate the entire process.
Imagine being able to have everyone linked up with a software system in which lending docs just simply move through. There would be no need for emails or for 30 or 60-day reminders in the calendar. There also wouldn’t be a need for files saved in all locations that seem to disappear just when you need them. Rather, from the moment the loan application is received until it is approved, etc., it will move through the structured system. As notifications pop up, the appropriate person will be prompted to handle the next step.
But, why stop there? This digital journey makes things even easier with document-centric AI. Instead of someone manually going through complex documents to locate the needed information – and potentially making an error – the software can automate the identification of documents that have been created and organized. Then, as these docs are needed throughout the process, they can be easily retrieved – with specific data found and added – and presented within a user-centric workflow.
The review of loan docs will be systematic, efficient, and a fresh outlook for the industry.
At Parascript, we understand that time-consuming processes in the workflow are not the way to find high efficiency and greater success. If you are interested in learning more about how document-centric AI can enhance the digital journey of the lending process, visit www.parascript.com.
