Digital transformation of lending activity

This pandemic surprised us all. It has affected and disrupted all aspects of financial services, causing stuttering or halting of processes considered both essential and common. The world of loans is no different, and in a post-COVID-19 world, the industry is undergoing significant changes. The industry has been pressured into being prepared to handle both high value and low volume loans.

The mortgage industry is no exception. More and more people are now working from home and they are realizing that the desire to have a decent sized house is now a basic need. Mid-size home loans are experiencing an increase in demand as they become more and more affordable. The social distancing measures that have become a hallmark of the pandemic response have challenged every mortgage lender to revisit their processes. While consumers and regulators were already pressuring lenders to reduce contact time with potential clients, now that many people cannot get to their lenders’ offices, the ability to offer a Simple loan process in the mortgage industry has become critical.

Everything from the origination process to credit checks and approvals needs to be resolved at high speed. Not only that, the pressure to digitize on a large scale is very real. The time required to onboard a client must decrease further. The need for speed in origination, combined with the expected increase in volume, means that it will be virtually impossible for a lender to operate efficiently using manual processes. This is where the need to use automation, machine learning, customer analytics has become a “must have” rather than a “good to have” capability.

The ability to set a range of criteria by which loans can be automatically approved by a system can dramatically reduce the overhead in a lender’s internal processes at a time when offices are closing and staff are unable to function at maximum capacity. There’s no better time for a financial institution to go digital. This is a business decision that is made by most lenders if they are to survive the new normal. Before COVID-19, digital strategies had just been tested in some areas of lending operations, and a slow digital transformation was underway. The transformation should now occur at a faster rate. The legacy lender of yesteryear must quickly transform into a digital lender.

Taking a cloud-centric approach, investing in the best loan applications, and implementing automated and machine-learning processes to deliver customer eligibility information and enable creation and processing fast are some of the ways the industry achieves this.

The technology available today allows clients to securely initiate and submit loan applications online 24/7 and allows lenders to work remotely and securely from any location. Thanks to technology, lenders can quickly assess a much larger number of loans and assess their creditworthiness, in minutes compared to days using traditional processes. Digital technology can exponentially increase the speed of underwriting and back office operations, enabling lenders to cope with dramatic increases in loan volumes and provide rapid responses to borrower credit requests, while maintaining strict adherence to their established policies and regulatory compliance.

Imagine a world where the window for accepting credit applications never closes! Additionally, imagine technology that immediately determines which apps meet, exceed, or fail to meet established credit criteria for each type of loan offered. Loan documents are provided electronically, electronically signed and returned for processing, financing and reservation to core systems, and if required, multiple users can work on individual offers simultaneously. All work is recorded and stored in a secure environment for audit and compliance purposes and can be exported to any file format at any frequency. All of this is becoming a reality.

As you would expect, the adoption of online technology is growing at an ever faster rate! “It’s a curve that won’t ‘flatten’ anytime soon,” and I totally agree with that.

About Geraldine Higgins

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