Loan Origination: How to Make it Fast, Personalized, Compliant and Connected

Over 75% of customers only engage with banks online and branch footfall is declining 15% year-over-year, according to Lloyds Banking Group. This proves that mobile and online banking experiences are more important than ever, particularly when it comes to loan origination.

When it comes to facilitating loan approvals, time really is money. Customers expect a speedy, intuitive loan application process with real-time decisions for mortgages, personal loans, and credit card origination. A smooth and efficient end-to-end loan process is a genuine competitive advantage.

But while the majority of lenders are now “talking digital”, not all are “acting digital”. And those who are actively digitizing their services struggle to integrate legacy systems to form a cohesive strategy. Whether provisioning consumer or business loans, the multiple touchpoints between the front and back office in the loan origination system make it particularly convoluted. All the more reason to automate the process.

Make it faster

Digitized customer experiences have permeated all our lives and resulted in consumers and businesses alike expecting a sicker digital interface when it comes to managing their finances.

As highlighted by Ceto and Associates, these heightened customer expectations have been driven by processes such as purchasing cars. When buying a vehicle from a dealership, consumers can receive a loan approval directly from the dealership within a very short window. Yet, if that consumer went to an independent financial services provider it would take 24 – 48 hours. This is due to indirect lenders applying automation to their underwriting systems to ensure that they remain competitive and secure a deal with their customers.

The key question every loan business needs to answer is how they can make loan origination faster, whilst preventing fraud and keeping errors to a minimum? There are moving parts to consider too, such as credit checking services, loan review managers, analysts, and fraud detection teams. By automating the loan origination process, not only do customers receive a better service, but loan providers can approve more loans and generate more revenue. A win-win situation.

Old Mutual bank‘s staff had no single view of individual customers, which was slowing down their loan approvals. But by connecting disparate systems and contextualizing customer information with Bizagi, staff could spend less time manually cross-checking information. They were instead provided with an intuitive view of customer profiles containing all the relevant data they required.

Make it personalized

In addition to speed, customers now also expect highly personalized experiences. This means providing contextual multi-touch services on both mobile and desktop.

An automated onboarding process that offers transparency will not only delight and impress customers, but it can also turn them into brand advocates who can recommend their swift, pain-free loan application experience to others.

Once vital customer information has been captured in the onboarding processes, financial service providers need to take responsibility to continually monitor customer feedback. This valuable insight can be used to enhance both the loan origination process and complement other offerings in their portfolio.

Old Mutual saw customer point of contact resolution improved by 30% thanks to the holistic overview they gained of their customers. These contributed to the bank being able to improve its net promoter score by an impressive 15%, demonstrating the power of a borrower-centric approach.

Make it compliant

While being borrower-centric is all well and good, the imperative of adhering to financial regulations cannot be ignored. Since the financial crisis, the loans market has seen tighter governance. So whether you are looking to meet Basel III, the latest Payment Services Directive or even remain GDPR compliant, requirements to self-regulate day-to-day operations have increased significantly.

Transparency is now the name of the game. “[Transparency] has become foundational to how the loan operation relates to regulators, borrows and other departments within the financial institution,” states Fiserv in its Loan Origination Automation report.

“Transparency is not only being able to provide insight into origination processes and practices, but it also means being able to pass along transactional data to those who request it – when and how they request it.”

Automation allows you to achieve this transparency by establishing a single approach to loans regulation whilst permitting flexibility to adhere to local laws. This enables you to derive cost and speed efficiencies from your process.

Flexibility is particularly important as legislation around financial services is always evolving and developing new directives. What’s the point in building your loan origination system so rigidly that you cannot adapt to the changes that will inevitably come in the future?

Make it connected

The loan origination process has multiple touchpoints and approvers, it can be difficult to streamline the approach. Financial institutions will often find that products such as cards, mortgages, and loans are all siloed and run on different operating systems. This leads to a “spaghetti effect” as the applications and databases communicate with the business processes and the front-end user interface because the digital process information is typically defined as ‘data-in’ and ‘data-out’ for each process, form or rule.

This can prevent scaling the platform and leads to poor transparency, both for the loan provider and the customer. By introducing an intelligent automation platform, financial services can gain a more holistic view of their operations and processes.

Old Mutual had 11 disconnected systems with no single view of the customer. This created an unnecessarily long onboarding process as staff relied on individually coded variables to approve the customer data. But by using Bizagi to introduce Digital Process Automation through a simplified data model, they reduced their customer onboarding time ten-fold.

Many businesses struggle today with the complexity of their existing and legacy systems not integrating. Not to mention the organizational boundaries that prevent looking at the loans business end-to-end.

If you would like to see Bizagi improving the loan origination process in action for yourself, watch our Bizagi Mortgage Loan Demo.