Why Automate Your Loan Origination Process

Why Automate Your Loan Origination Process

Victoria Egba's photo
Victoria Egba
·Nov 23, 2022·

4 min read

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Lenders are currently in a challenging situation with the high level of bad loans and risk they experience. In mitigating bad loans, To top it up, they experience delays in the manual loan origination process with the aim of mitigating high risk.

Even with the loan processes in loan origination, default rates have increased with flat profits as a direct result of decreased consumer spending. Thankfully, automation, alternative data, and other new technologies have paved the way to speed up the loan origination, disbursement, and collection process while mitigating risk.

In this article, we’ll discuss why lenders need to automate their loan origination process and include alternative financial data in their credit underwriting process.

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What is Loan Origination Automation?

Loan origination automation refers to using technologies to improve the process of granting or denying a financial loan after a borrower has requested it from a lender.

Loan Origination Systems such as Oystr Float can be utilized to ensure ease and accuracy in the step o a loan lifecycle. This includes screening, document completion, underwriting, and loan approval.

Benefits of Automating Your Loan Origination Process

There are too many benefits to automating your loan origination process as a lender. Let’s discuss a few of them.

Increased Productivity

Due to the pervasiveness of digital customer contacts, both consumers and businesses anticipate a more intuitive digital interface for managing their finances. Clients can receive loan approval relatively quickly with loan origination software and automation.

Those who incorporate loan automation can provide loans within minutes or 24 hours. As a result, to remain competitive and secure consumer business, indirect lenders have automated their underwriting systems.

Personalized Service

In addition to speed, customers seek highly individualized experiences nowadays. This involves offering multi-touch contextual services on mobile and desktop platforms.

A transparent, automated process will not only please and impress clients but may also convert them into brand ambassadors who will suggest their fast and painless loan application procedure to others.

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Increased Compliance

While it is commendable to prioritize the borrower, financial compliance must not be neglected. Since the financial crisis, governance of the credit market has been more stringent.

This openness is facilitated through automation and provides a standardized approach to loan regulation while allowing flexibility to comply with local regulations. This reduces the cost and duration of your loan processes.

Your loan origination system should be flexible enough to accommodate future changes.

Total Visibility

Due to several touchpoints and approvers, it may be challenging to streamline the loan origination process. In addition, cards, mortgages, and loans are typically hosted on distinct systems, leading to a gap and lack of customer profile transparency.

A consumer may have multiple accounts, but you can only examine data for one product at a time with traditional methods. This gap can hinder scalability and reduce transparency for both the lender and the borrower.

Lenders can obtain a deeper understanding of customers’ financial behavior and pattern by deploying an automation platform that works as an orchestration layer.

Decreased Risk

Any manual procedure, including underwriting, is prone to error. Automating repetitive processes can reduce the likelihood of making a judgment error. Furthermore, new-generation loan origination systems like Oystr Float can be complemented with diverse data sources to check customer data quickly.

You can acquire an instant, comprehensive view of the borrower and make precise judgments by utilizing a powerful rules engine for contextualizing customer-provided data.

Cost efficiency

The main aim of an automated loan origination system is to speed up some aspects of the loan origination process. In addition, these technologies, which act as a digital filter, allow you to process a higher volume of loans without incurring additional costs.

Conclusion

The digital world is changing the way we do things. Everywhere you look, innovations in financing and lending are redefining the customer experience. By implementing technology solutions that give you access to the information your customers need, you can positively impact your customer base and position yourself to win over new business.

Oystr Finance offers automation and ease in loan origination, collection, and disbursement for lenders. Additionally, we provide alternative data in the underwriting process to mitigate lenders' risk. Want to learn more? Visit our website today!

 
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