Overcoming the Loan Origination Challenge
The banking industry began experiencing a “digital transformation” long before it was cool. Starting with the automated teller machine (ATM), it continued with online banking, and is now accelerating with the advent of mobile computing. Indeed, for most of us, the very idea of visiting a physical bank branch has become an antiquated notion.
Driven by smart phones and 24/7 connection to the Internet, the banking industry is one of the most digitally disrupted industries today. Bank performance is less about a physical branch experience (e.g., Ally Bank has no branches at all) and more about the real-time experience customers have when interacting with the firm.
The banking industry began experiencing a digital transformation before it was cool.
While significant changes have occurred with user experience, financial institutions are only now discovering a tremendous value in a new generation of intelligent data capture and document automation solutions that help banks remove the burden of paper in legacy back-office processes, like loan origination and new account openings, while powering improved case management to achieve new levels of customer service and digital transformation.
Simply put, there’s no time for old paper-bound methods when today’s banking customers expect real-time service, and the very profitability of the firm hinges on efficiency, cost containment and customer responsiveness.
The Loan Origination Challenge
Despite digital transformation, the loan origination process at most banks continues to be burdened with paper-based inefficiencies and expense. Banks pay the price in unnecessary administration overhead while profitability and performance often suffer from the inherent delays and complexities of a paper-bound process. Moving loans faster through the approval cycle means higher throughput, translating into tens of millions of dollars in more loans processed each year.
Documentation for a typical mortgage loan, for example, can grow to include hundreds of pages; all subject to time-consuming sorting and data verification, and the inevitable errors of any manual process. The fact is that many key people involved are still working with paper. Loan officers, underwriters and fulfillment personnel all ship stacks of paper back and forth and often make their own “shadow” copies to get the job done. Even documents that originate in a digital form, like email or spreadsheets, are typically printed simply to be sent to a centralized facility to be scanned.
Transforming the Process
A new breed of intelligent document automation and data capture tools are changing things by giving banks a way to remove paper inefficiencies from the loan origination process, speed the pace of business, and satisfy customers’ expectations for a digitally transformed and hassle-free experience.
Scanning devices and automated systems drive the digital “capture” of the necessary documents in each branch. Mobile capture technologies using smart phones and tablets extend the approach even further by bringing document automation and data capture directly into the field, to customer’s homes or their workplaces. All the while, advanced document classification capabilities streamline the centralized management of each loan.
Propping Up Branch Profitability
Intelligent data capture systems save money and improve branch performance by digitizing documents at the point of origin and directly connecting branch activity to centralized bank operations. Instead of making photocopies and shipping the paper, loan officers scan and capture documents at the point of service—often working directly with a customer and using a desktop scanner or standard multi-function printer/copier. Most solutions are easily integrated to all leading brands and devices.
Despite Digital Transformation, the loan origination process continues to be burdened with paper-based inefficiencies and expense.
Capture systems further streamline and connect the process by ensuring all of the correct data is present, as well as locating and extracting the right data. The automation is tied directly to centralized management systems depending on the loan type and each individual customer account.
What to Look For
Moving from a paper-driven process to an automated document processing approach is a solution that many banks have successfully deployed and the growing trend in the industry is toward further automation. But with all the technologies and solutions available, how do you know which one is right for you?
Look for the combination and synergy of several evolved technologies starting with scanning and multi-channel input, and progressing with content analytics and other linguistic enhancements that acquire, understand and enable all of the transactional content flowing through the banks’ systems:
- Multi-channel capture and input
- Multi-language data extraction
- Image and text analytics-based document classification
- Integration with case management and business process management
- Document and data storage, archive and retrieval
Could digital transformation in your loan origination process be your secret weapon to greater branch profitability and performance? Document automation and data capture systems have evolved from tools for simple scanning into a more strategic and intelligent approach to digital transformation that leverages machine learning with zero system configuration. Any time new documents are added into the system, new business rules are automatically generated to ensure the correct data continues to be extracted and ensure rapid straight through processing with little to no manual document handling and high accuracy results.
Loan origination is one key area of opportunity for banks looking to eliminate the inefficiencies of paper and improve service and performance, especially as the need to control costs and improve performance becomes more pressing. Look for providers and partners with the right mix of expertise, vision and capability that will allow you to capture the increasing value of advanced systems and strategies.
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Guest contributor Kevin Craine is the author of the book Designing a Document Strategy and host of AIIM On Air, the podcast for AIIM International. He was named the #1 ECM Influencer to follow on Twitter. Find him at CraineGroup.com.
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