Digital Transformation Of The Lending Business

All work is saved and warehoused in a secure environment for audit and compliance purposes and can be exported to any file format at any frequency. All this is now becoming a reality.

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This pandemic has caught all of us unware. It has affected and disrupted every aspect of financial services, causing a stutter or a stop to processes considered both essential and common-place. The world of lending is no different, and in a world after COVID-19, the industry is experiencing some significant changes. The industry has been pushed to be ready to manage both high value and low volume lending.

The mortgage lending industry is not an exception. More and more people are now working from home and they are realizing that the desire to have a decent size home is now an essential need. Mid-size home loans are witnessing an increase in demand as they are becoming more affordable. The social distancing measures which have become a hallmark of the pandemic response has posed a challenge to each and every mortgage lender to relook at their processes. While the consumers and regulators were already putting pressure on lenders to reduce the amount of contact time with potential customers, now with many people unable to visit their lenders’ offices, the ability to offer a low-touch lending process in the mortgage lending industry has become critical.

Everything from the origination process to credit checks and approvals have to be turned around at great speed. Not only that, the pressure to digitise in a big way is very real. The time it takes to onboard a customer needs to drop even further. The need for speed in origination, combined with the expected rise in volume, means that it will be next to impossible for a lender  to operate efficiently using manual processes. This is where the need for using automation, machine learning, customer analytics have become a “must have” rather than a “good to have” capability.

The ability to set a range of criteria within which loans can be automatically approved by a system can dramatically reduce overload on a lender’s internal processes at a time when offices  are closing and staff are unable to operate to maximum capacity. There is no better time for a financial institution to go digital. This is a corporate decision which is being taken by most lenders if they want to survive the new normal. Before COVID-19, digital strategies were just being tested in some areas of lending operations, and a slow digital transformation was taking place. The  transformation now needs to happen at a faster speed. The erstwhile legacy lender needs to quickly transform into a digital lender.

Adopting a cloud-first approach, investments in best-in-class lending applications and implementation of automated processes and machine learning to provide insights into customer eligibility and enable rapid origination and processing are some of the ways the industry is making this happen.

Technology available today allows customers to securely initiate and submit loan applications online 24×7 and allows lenders to work remotely and securely from any location. Using technology, lenders can quickly evaluate a far greater number of loans and evaluate their creditworthiness, within a few minutes versus days under the traditional processes. Digital technology can exponentially increase the speed of underwriting and back office operations, allowing lenders to meet dramatic surges in loan volume and providing rapid responses to credit inquiries from borrowers—while maintaining strict adherence to their established policies and regulatory compliance.

Imagine a world where the window to accept applications for credit never closes! Further, imagine technology that immediately determines which applications meet, exceed or fall short of established credit criteria for each loan type offered. Loan documents are provided electronically, e-signed and returned for processing, funding and booking to core systems, and when necessary, multiple users can work on individual deals simultaneously. All work is saved and warehoused in a secure environment for audit and compliance purposes and can be exported to any file format at any frequency. All this is now becoming a reality.

As one may expect, the adoption of online technology is growing at an ever-increasing rate! “This is a curve that will not be “flattening” anytime soon” and I completely agree with this.

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