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Intelligent automation for friction-free loan origination

For lending businesses that aspire to lead the market, a streamlined loan origination process is essential. Ensuring a frictionless experience delights the borrowers. It helps the company establish itself as a trustworthy and friendly ally, not a cold, indifferent usurer. The objective is well understood, but in practice, there are challenges. Across the industry, corporate loan origination systems struggle with inefficient, slow, cumbersome processes that lead to errors and cost escalation, with a negative impact on customer satisfaction. Business leaders need innovative strategies to cope with market demands and competitive pressures.

The good news is lenders today can leverage automation techniques to streamline their workflows and minimize friction for all stakeholders. Business intelligence systems empower financial services companies to unlock their potential, making them agile, scalable, and profitable. Before we understand how automation helps, it would be beneficial to discuss the factors that disrupt the underwriting process. Loan origination systems for banks and financial institutions entail several tasks: acquiring customer information, KYC checks, creditworthiness evaluation, and approval. Friction can hamper the workflow at any stage.

  1. Validation of documents: The process starts with the collection of identity and income documents from the customer. Validating their authenticity is critical. Manual KYC checks are time-consuming, arduous, and error-prone.
  2. Entry of customer data: Data extraction from documents is a laborious exercise, with people poring over hundreds of sheets to identify the values and entering them into a system. Wide variations among document layouts and terminologies add to the delay and the chances of errors creeping in.
  3. Creditworthiness computation: An objective assessment requires a deeper understanding than what Excel sheets can offer. It often entails correlating and interpreting data from different sources, which can overstretch the team’s capabilities.
  4. Inadequate management control: It is impossible to drive the operation in an organized, controlled manner when teams work in silos with paper-filled files shuttling between them.

All these lead to annoyed customers, frustrated management, and dented profits. As the organization grows, the situation worsens, as the system is not scalable. Increasing the team
strength does not guarantee better results. Operations managers must look for innovative solutions that automate tasks, minimize errors, and help the organization keep up with changing needs.

How can automation transform the process?

A well-designed business intelligence system can address all the concerns by making the process smoother, faster, and more robust. Here is a breakdown of areas where automation can readily contribute.

Data Collection

Modern AI tools facilitate effortless data extraction from documents that
serve as identity and address proof. They employ purpose-built software to analyze bank
statements and pay slips of varying layouts containing non-standard terminologies. With
Computer Vision-aided capabilities, even low-quality images acquired through mobile
phones can be accepted, allowing data collection at any time, from anywhere.

Document Authentication

Fraud prevention and regulatory compliance are vital requirements. Document Intelligence applications can verify data integrity across records and against government or public databases. Applications supporting loan origination systems in India must follow the mandates issued by the authorities from time to time. Automated KYC checks simplify the process while adding multiple layers of assurance.

Credit Score Calculation

Once the relevant data is compiled, the system can automatically generate creditworthiness parameters such as the income-to-expense ratio. Customizable rules meet the needs of specific classes of borrowers or loan types.

Workflow Streamlining

 When all underwriting tasks are integrated with clearly defined courses of action, routing, and control, the workflow becomes much easier to manage. With better visibility and transparency, bottlenecks disappear. The pace and quality of decision-making get a boost.

What are the benefits of automation?

As a general rule, automation is helpful where the work is repetitive. With the help of advanced data analytics algorithms, automation has gained a significant advantage. When combined with AI/ML, processes can run precisely with minimal human involvement. Modern tools eliminate friction for both businesses and customers, offering unmatched advantages.

  1. Efficiency Enhancements
    Faster approvals mean shorter underwriting cycles. Organizations can handle more applications within a shorter time but without the need for a larger workforce. For example, applying AI-powered software to analyze bank statements shrinks the processing time from days to seconds. This results in better resource utilization and lower costs, directly contributing to higher operational efficiency.
  2.  Fewer Credit Risks
    Sound lending decisions are possible when the data is accurate. AI-based analysis minimizes the possibility of errors. At the data entry stage, the information is captured without mistakes, even from poor-quality scanned images. Human limitations or biases don’t impact the creditworthiness evaluation as the data is processed. A broader, muti-faceted assessment leaves no aspect out of consideration. KYC compliance is more exhaustive with real-time verification of credentials, ensuring fraud-proof onboarding.
  3.  Insightful Decisions
    AI-driven business intelligence systems empower businesses to acquire a holistic view of the borrower’s financial well-being. With precise insights into the customer’s long-term savings potential and liabilities, lenders can identify profitable cross- selling and upselling opportunities. While these open up additional revenue streams for organizations, customers appreciate the value. As suitable products are offered at the right time, customers cherish the personalized service, paving the way for an enduring engagement. 
  4. Customer Experience
    One of the common causes of friction is the amount of time it takes to process applications. This dampens borrowers’ interest and drives them away to search for other options. AI-powered automation facilitates quicker approvals, making it a pleasant experience for customers. It also makes the process simple, intuitive, and transparent, allowing the customer to track the application status all the time.

About Finuit

Finuit specializes in building innovative solutions for the global financial services industry. We empower businesses to benefit from cutting-edge AI technologies, helping them tackle real-world operational challenges. All our solutions accelerate and streamline workflows, offering outstanding accuracy, industry-leading performance, and superior reliability. Led by accomplished professionals with decades of expertise, Finuit blends technological acumen, professional practices, and a customer-first approach to create and deliver bespoke products and services for tomorrow’s business leaders.

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