In recent times there has been a growing demand for expedited and improved loan originations in the commercial lending market. This has led to lenders embracing automation to boost the productivity of lending officers and make customers happier. The massive improvements in digital mortgage loan origination systems over the years have immensely helped lenders to meet the varied demands of borrowers, including loan origination transparency, quick response to customer queries, accurate evaluation of customer data, and seamless disbursements of the loan amounts.
| A recent survey revealed that 34% of lenders have adopted a combined paper and digital application and processing approach, while 51% of lenders are already following a mostly digital approach. |
Shortcomings of Traditional Landing Practices; How Automation Overcomes Them
Tiringly slow decision-making
A glaring problem with the conventional mortgage loan origination process is the excessive use of paper-based approval procedures, complex spreadsheets, and outdated manual systems. Such systems are usually siloed and are marked by data management problems, creating more work for loan processing teams and opacity for the management and external examiners. This invariably elongates the decision-making cycles of lenders and is often the cause of borrower frustration.
These snags in the paper-based practices have paved the way for digitization of the ecosystem for gains such as a consistent lending cycle, auditability, and accuracy, among others. Today’s advanced mortgage automation solutions like MSuite allow streamlining of the entire loan data management system. MSuite offers a highly capable document indexing engine that recognizes every type of mortgage-relevant document in varied formats. It leverages OCR and Machine Learning capabilities to accurately classify documents, thus addressing the concern of disparate systems and facilitating reliable and consistent dataflows across all stages of the loan origination process.
| Statistics reveal that 90% of younger mortgage borrowers prefer hybrid banking services or digital lending only. The demand among younger buyers for digital lending and the growing use of automated lending software has forced lenders to adapt to digitalization to avoid business loss. |
Sloppy Customer Management
The gathering and arranging of financial and other key borrower data is labor-intensive and dominated by manual form fillings and re-keying of data into the lender’s systems. One of its downsides is the recording of inaccurate applicant data which is used by the customer service teams to handle customer queries. The huge inflow of queries that business front office teams usually face requires executives to maintain their own versions of records for every customer. However, there are instances when the risk department restricts access to certain information owing to compliance reasons, making it difficult for agents to address customer issues accurately.
| In a poll conducted by Moody’s Analytics, 56% of the industry professionals surveyed revealed manual data collection and subsequent back and forth with their clients as the biggest hindrance in initiating a loan process. |
Such data-induced blockers are aptly mitigated by mortgage automation solutions offering customer-facing web portals to facilitate auto data gathering and seamless borrower onboarding to the lender’s loan origination platform. These solutions are integrated with rule engines that can be used to define business rules to automate the next steps in the process post data entry. They can also differentiate between loan applications that are ready for decision and the ones requiring more documentation. Digital mortgage systems can receive data feeds that pre-populate customer information fields in the origination platform to save the time and efforts of the lender’s teams.
Inaccurate Credit Analysis
Credit analysis is part of the risk assessment regime in commercial lending and involves the spreading of the loan applicant’s financial data. Based on the findings of the analysis, the lender determines the creditworthiness of the applicant. Without digital assistance, credit analysts must constantly liaise with the prospect and other parties to get the required information. The subsequent steps of sifting through multiple datasheets and adhering to the approval rules often prove overwhelming for the analysts and impact the quality of their work in assessing the lending opportunity.
| Digital lending is estimated to rise from $10.7 billion (2021) to $20.5 billion (2026) at a CAGR of 13.8%, which makes digitization a top priority for lending institutions. |
It’s because of such quality and efficiency issues that mortgage lenders are banking heavily on digital loan origination methods that make the job easy with interactive web portals. These portals can automate the extraction of relevant financial data for accurate credit risk assessments. MSuite and other advanced mortgage solutions simplify the credit reporting task by providing real insights on customer data. These solutions can generate standard reports for critical parameters and custom reports for specific business needs.
The demand for greater operational efficiency, improved borrower experience, and a quality loan portfolio has catapulted the popularity of mortgage automation to the next level. Today, most leading players in the industry are leveraging digital lending systems to create higher shareholder value, manage risks effortlessly, and serve customers better. Besides other gains, automating critical parts of the loan origination process also ensures compliance and improved security and helps manage information flow to comply with regulatory guidelines.
Who We Are and Why Our Expertise Matter
Expert Mortgage Assistance (EMA) specializes in end-the-end mortgage back-office support services for industry-leading clients across the US. Over the years, we have tailored custom solutions like MSuite to manage the loan origination process with improved pre-screening, application processing, eligibility verification, and pre-approvals. We assist our clients to keep pace with the dynamic lending landscape that demands higher levels of efficiency and responsiveness to customers. With features like auto data gathering and evaluation, rule-based application approvals, accurate credit score checks, and digital customer service, our solutions reduce the burden of loan origination for lenders while visibly improving customer experiences.
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