Loan origination takes time, leading to longer wait times for approvals on credit applications. For highly-lucrative consumer financing, this can increase unnecessary friction and reduce conversion. This runs counter to the idea that lenders are looking to increase access to buying power for their clients, as clients need to know they will have the money right when they need it.
Manual loan origination can also lead to inconsistencies, causing more profit variance from account to account. This makes profit projection much harder for lenders, making automation of the loan origination process serve lenders in multiple ways.
This doesn’t mean that automation takes everything out of experienced loan underwriters’ hands. Instead, it simply automates the deals that don’t require as much deliberation, like prime borrowers and small-ticket lending. This frees up underwriters’ hands without diluting the benefit of their expertise, rather than magnifying it by giving them more time to deal with the applicants that require human attention.
To get businesses educated on how to incorporate loan origination automation, we will cover::
- How loan origination automation works
- How lenders can add it to their system
- Next steps to move forward with automation
How Loan Origination Automation Works
When businesses automate their underwriting process, as we mentioned above, it doesn’t mean that underwriters aren't needed to review. Automated origination is usually limited to more cut-and-dry cases where an offer is easily generated based on tangible credit data. When a system is put in place, lenders simply input credit criteria and what offers they are willing to make based upon it, and the software tool is able to auto-generate offers based on each applicant’s tangibles.
For less-tangible circumstances, lenders can set auto-disqualifications or auto-escalations that allow applications to be denied or escalated to a human underwriter for any number of reasons. This reduces the risk of a sub-par auto-offer and ensures that more complicated cases get into the hand of capable, experienced staff whose time is much more valuable in these circumstances.
This gives lenders a best-of-both-worlds lending system that provides the speed and consistency of an automated system, as well as the attention to detail and human touch of a system handled by underwriters. It also leads to a better working experience for existing staff, reducing their busywork and allowing them to exercise their aptitude in more rewarding ways. As a result, the efficiency of staff spending is also maximized.
How Lenders Can Add Automation to Their System
Banks and lenders invest in several ways to improve their product offerings and increase profitability. Although, building out an in-house automation program for the loan origination process may not be the most effective investment, as software development takes time. Not only that but banks and lenders aren’t usually equipped to build out a software tool from scratch on their own.
This is where fintech firms play a vital role in modernizing banking and lending operations. Fintech firms have expertise in software development, and a background in finance operations, allowing them to develop cutting-edge tools that banks and lenders can license. This allows them to plug in a software tool quickly, reducing both the time and money required to add this functionality to their finance offers.
All these financial institutions have to do is identify a quality fintech partner that offers support for all the lending products they offer and does so in a package that ensures efficiency, security, and the support they need to get up and running quickly.
Skeps offers all of this and more.
Automate the Loan Origination Process With Skeps
Skeps offers a comprehensive, end-to-end consumer financing platform that helps businesses modernize their entire payment process. Working with an entire network of established lenders, we go above and beyond one-click payment, also offering a one-click application process for several different types of consumer financing, including:
- Installment financing payment plans
- Store credit cards
- Consumer loans and leases
If you’re looking to partner with a forward-thinking fintech company that will keep consumers' eyes on the purchase while offering best-in-class financing, Skeps is the perfect fit.
Do you have more questions about automating the loan origination process? Request a demo or contact us at firstname.lastname@example.org.