How Loan Automation Makes In-House, Software-Enabled Consumer and B2B Lending an Absolute No-Brainer 

Faced with a pandemic that’s changing how retail businesses engage with their customers, and under pressure to disburse tide-over “stimulus” funds to businesses roiled by the public-health crisis, banks and other lenders have flocked to labor-saving, social-distancing technologies in the last 18 months. 

Of course, lenders are past masters at rising to challenges. Just since 2008, they’ve had to contend with a global financial crisis, regulatory reforms, a bewildering array of new technology — and now a contagious disease that has claimed the lives of more than 4 million people by official counts. 

Spurred by the pandemic, it’s a banner year for fintech investing 

Perhaps in keeping with the current crisis, the first quarter of 2021 saw 39% quarter-over-quarter growth in financial-technology funding, according to CB Insights.  

Research by new-company tracker Dealroom indicates that London-based fintechs chalked up more funding than in any full year on record — in just the first six months of 2021. “Investors poured $5.3 billion into London fintech startups in the first half of the year, compared to $2.1 billion in the same period in 2020,” writes  Reuters, reporting on the finding. 

But closer analysis suggests digital adoption around loan automation in the era of Covid-19 has been skewed toward big lenders. According to one new survey, “77% of institutions topping $10 billion in assets accelerated digital transformation plans as a result of the pandemic.” But only half of lenders with less than $10 billion in assets could say the same. 

“Lenders who aren’t actively striving to increase automation are losing ground to rivals operating at a rapidly quickening competitive advantage,” says Elena Ionenko, COO and co-founder of TurnKey Lender. “It isn’t just that they’re forced to work at a slower pace — and as a result process fewer loans with less precision and security — they’re actually missing out on game-changing innovations included in the technology stacks that enable basic lending functionality.” 

Artificial intelligence is one example of a technology add-on that lenders lacking automation must do without. This matters because AI is changing the face of lending. It helps lenders delve more deeply than ever to uncover more about individual customer behavior than loan applications and credit-bureau scores ever could by themselves. Inputs on specific, individualized, real-world financial behaviors — spending and bill-pay habits, for example —  allow lenders to make better lending decisions and lay the foundation for more robust loan portfolios. 

With loan automation on tap, you won’t miss out on ancillary technologies 

Lenders hemmed in by manual processes couldn’t be further from game-changing innovations like AI, and the advanced machine-learning that underlies it for cutting-edge lending-tech vendors. Far from advancing capabilities around due diligence and risk mitigation, lenders condemned to push pencils are hard-pressed to assemble the documents and corral the third-party vendors needed to secure, process, and manage loans.  

Some lenders who can rely on seamless integration with third parties such as — 

• Credit bureaus 
• Payment providers 
• Account verifiers 

— say they have trouble imagining what the laborious, error-prone manual workarounds required for old-school lending even look like. That’s a stance TurnKey Lender’s Ionenko has grown accustomed to. “For those who have grown accustomed to loan automation, it’s simply inconceivable,” she says. “They can’t comprehend the inefficiency.” 

Where integration isn’t present, staff must repeatedly rekey the same information for disparate systems, wasting time and risking costly data-entry errors. Eliminating data re-entry should be a top priority for institutions that want to save as much time as possible and eliminate unnecessary risk. 

In this sense, an online application that’s integrated with the lending-system configuration the lender has selected is the starting point for “straight-through” processing that includes automatic “field inputs” for third-party forms, ongoing loan management, and internal analytics. 

To benefit from greater operational analytics and transparency into borrower pipelines, lenders are using relationship manager technologies that aggregate all customer information into a complete view of each customer and loan. This technology helps financial institutions centralize all customer engagements, accurately report on the institution’s lending pipeline, and track all open opportunities. 

 The net effect of integrated automation? Unparalleled insight 

Community financial institutions have no control over the economy. However, by examining key inefficiencies and processes that add costs, delay turnaround times, and increase risk, financial institutions can be more prepared for economic changes and remove obstacles to success.

In particular, integration with relationship-management software — Salesforce is the biggest example — provides a broad view of every loan applicant and every borrower and every transaction from the point of origination on. With all customer engagements recorded, and access to these records centralized, lenders can get a vastly improved view of its lending pipeline.

The net effect of not having to chase paper and type in the same data at multiple junctures? Third-party responses tend to come in faster, with traffic directed by automatic notifications that in turn ensure next steps are handled in proper order and that bottlenecks are few and far between.

Not least, constantly improving technology means lenders can merge loan pricing, loan analysis, and risk assessment to save time, improve efficiency, and inform pricing decisions. As a result, loan automation helps firms price loans strategically, so that loan operations are simultaneously competitive and profitable. 

“The greatest benefit of loan automation, even past efficiency, is visibility,” says Ionenko, named Innovator of the Year by Finovate in 2020. “That’s what enables our clients in 50 countries to determine creditworthiness, develop informed and dynamic pricing policies, and inform customer outreach and marketing strategies.” 

 To learn how TurnKey lender can help your business, get in touch with our team to discuss your needs or request a live demo.