From pre-approval to post-closing, hundreds of data points must be compiled, confirmed and, above all else, correct. When it has to be absolutely right, lenders shouldn’t rely only on people and training alone.
New technology and access to cloud-based computing have made it possible to put more tasks on autopilot. From robotic manufacturing to sending marketing emails, thousands of responsibilities can now be outsourced to software.
As a general rule, slow, labor-intensive tasks are the best candidates for automation. Processes that can be standardized or require rigid consistency also rank high on the list. Using technology to achieve these types of tasks speeds up the process while simultaneously reducing manpower and cost.
Loan origination, rife with repetitive, time-consuming and manual tasks, is an ideal place for lenders to introduce automation. By some estimates, the loan origination process includes nearly 1,400 manual steps. That’s nearly 1,400 opportunities to make a mistake.
The paper shuffle
Loan officers intake hundreds of documents from a number sources: in-person and by email, fax, text, and upload. Every document needs to be collected, carefully tracked and thoroughly reviewed against information provided on the loan application and third-party sources.
Just keeping track of what’s “in” can take a substantial chunk of time. But it doesn’t have to. Automation software can manage the checklist for lenders – and do it better. Unlike humans, the software can process every document identically, resulting in higher quality and more reliable results.
In a click, software programs can also prepare a comprehensive view of documents that have been received, verified or flagged for follow up. In contrast, documents collected and tracked through manual efforts may be out of reach on various systems, paper checklists or a loan officer’s email account.
Automating tasks isn’t about eliminating manpower. Instead, it’s about reducing menial, manual tasks so you can re-focus human capital on more challenging responsibilities. Ask a loan officer: they aren’t in their jobs to shift paper; they want to put people closer to their dreams.
Ditching the checklists
In the earliest stages of origination, lenders have to take borrowers’ word on items like employment status, annual salary, and existing debt. Later, it takes time and diligence to validate the information. It is easy to miss a discrepancy between a customer’s loan application and his or her W2 or tax return.
Understandable doesn’t mean acceptable, though. Using intelligent content recognition (ICR), a form of automation, the process of recognizing and verifying information can be outsourced to digital labor.
With ICR, document review and verification can occur 24/7, speeding up processing time and shortening origination timeframes. The possibilities for human error – from overlooking a figure to accidentally checking a document off the list too soon – are eliminated. Reducing the hands-on time also reduces the overall cost per loan.
Computer-assisted document review can also ferret out fraud. Software programs are better than humans at finding irregularities that might point to an issue, like addresses, names or social security numbers that don’t match perfectly across dozens of documents.
Sure, people will be called upon to manage exceptions. But, loan officers can dedicate the bulk of their time to reviewing anomalies and performing less-rote tasks. If document collection and comparison could be taken off loan officers’ hands, what else could they be doing? Closing more loans.
Getting it right, right now
Loan origination is cyclical. There are peak times for home buying, and every so often there’s a swifter-than-usual uptick in purchasing or refinancing. Or, projected trends take off, like millennials launching into home buying. Spikes in origination and refinancing result in a windfall of work for lenders.
Meanwhile, lenders are tasked with driving down origination time. So during these spikes, teams are either cross-trained quickly to meet the demand or lenders hire to address the boom, which takes time. Either way, training is often crunched, and problems arise when new employees are put behind the desk too fast.
Plus, it’s impossible to maintain quality through training alone. Accuracy and compliance can’t be dependent upon manual training and homegrown checklists.
Using digital labor and automated processes, important tasks can be managed with consistent quality. With automation, training demands and risks are greatly reduced, which helps lenders quickly and more affordably scale to meet peak seasons. There’s a lower risk of quality degradation, and lenders save on the overhead costs associated with ongoing training.
Garbage in, garbage out
While loan origination is only a short-term part of the loan life cycle, it’s a crucial first step. If you begin servicing a loan based on bad information, the package may not be sellable or profitable in the future. And, some of the worst customer service scenarios result from mistakes made during loan origination.
Up to 70 percent of loans are sold for servicing. The details have to be spot-on to transfer a loan – and all of its related taxes, payments, and insurance – without interrupting its administration. Similar to origination, key steps in the loan transfer process can be automated to ensure quick, quality transitions.
Making the move
Transitioning from a completely manual loan origination process to one augmented with automation capabilities can happen in a number of ways. Like most things, there’s a continuum, ranging from “all in” to simply getting your feet wet.
Cloud-based applications can be accessed on demand and paid for on a transactional basis. Or, lenders may choose to enter into a full automation suite to complement their LOS and to automate processes beyond just origination.
The goal of automation is not to replace your existing LOS or quality systems. The best tools work with your existing technology, simply improving the quality and speed of what gets entered. Automaton should drive efficiency and quality without creating more workarounds or headaches for your team. Exactly the opposite.
To test the waters, lenders may choose to automate only a portion of their processes. Where is the best place to begin? Find your bottlenecks. Look at your risks. And ask yourself: which tasks could I accomplish better, faster, or with higher quality – and that doesn’t challenge or excite my people? Start there.
 Fiserv independent research