Loan origination covers everything that happens between a customer submitting their loan application and the funds being disbursed or the loan being declined. So that’s quite a chunk of work. In the past, it used to take a staff of originators. Now their work is done by intelligent algorithms. And the steps to automate here are:
The first step in any loan decision or new relationship is collecting the financial and other necessary information from the prospect or customer. Today, this task can be labor-intensive and difficult to complete. Often it is dominated by form filling, electronic or printed documents, and a physical customer file. The more often the information contained in these electronic and paper documents is entered and rekeyed into the lender’s systems, the greater the possibility of inaccurate data being recorded.
In a recent poll conducted by Moody’s Analytics, the question was asked “What is your biggest challenge in initiating the loan process?,” to which 56% of bankers surveyed answered the manual collection of data and subsequent back and forth with the client.
Alt Approach
Automation - Automation can mitigate the inconsistency and delays of manually collecting financial data and other mandatory customer information. Customer-facing web-based portals and application program interfaces (APIs) can facilitate digital onboarding of new prospect and existing customer data straight to the lender’s loan origination platform.
In 2015, McKinsey and Company reported that 45% of business activities could be automated (Chui et al 2015). In a more recent Moody’s Analytics webinar hosted by the American Bankers Association (Choi and Robinson 2019), most bankers reported that they do not focus on core lending activities such as spending quality time with prospects and clients, performing in-depth risk assessments, developing mitigation strategies and obtaining approvals(Table 11.1).
Lending Tech as a Service is a specific set of functional modules and integrations that we set up, deploy and manage correctly for our clientele.
Loan application, risk evaluation, credit decisioning, origination, underwriting, servicing, collection, reporting – all of that sounds complex only for as long as you haven’t taken an advanced lending automation service for a test-drive.
Banking customers have come to expect an efficient digital experience so they can focus on their own business demands. The customer onboarding experience not only needs to be smooth, it needs to comply with the most stringent security, governance and regulatory requirements of the banking industry. What’s more, banks and financial service providers are under pressure to innovate to stay ahead of the competition — as well as future-proof operations against another pandemic-type business disruption.
MLS offers a highly intuitive online customer experience for onboarding, servicing and offboarding — all while meeting and/or exceeding the security, governance and compliance standards of the world’s largest banks and financial institutions. As pioneers of secure file-sharing technology, MLS focuses on enabling and securing the flow of information — no matter the volume of files, the number of collaborators or the location worldwide.
The decision to use Loan Automation simplifies many aspects of your lending activities.
Consider the investments you may have already made or may be considering to make to support loan servicing needs:
Procure and install IT infrastructure to support the service;
Hire and train loan servicing agents;
Implement processes to accept payments via mail, email, and mobile/online; and
Establish expertise in the areas of delinquency and default management, and recovery and remarketing of returned vehicles.
That’s a big commitment of capital and ongoing operations expense. An alternative approach to meeting these needs is using Loan Automation by MLS. With all of the required infrastructure, staff, and experience, MLS can deliver services more efficiently and cost-effectively.
We have automated the entire process of conducting a Due Diligence exercise on a Corporate Client seeking a Loan.
Some high value products can only be purchased by certain customers. These customers need to have the infrastructure, human resources and funding necessary to receive, ship and process the products. Sifting through the paper work required to be submitted by customers seeking to purchase such high value products needs to be methodical, but at the same time it is important the customer is not put-off by the process. The process must therefore be easy for the customer to walk through whilst enabling the seller to conduct a comprehensive due diligence on the customers capabilities.
IN ONE SUCH CASE WE SUPPORTED A CLIENT IN AUTOMATING THE ENTIRE PROCESS INVOLVED IN PROCESSING CUSTOMER APPLICATION FOR PRODUCTS.
THIS RESULTED IN THE SELLER EFFICIENTLY AND QUICKLY IDENTIFYING PRODUCT READY CUSTOMERS WHILST HANDHOLDING THOSE CUSTOMERS NOT READY AS YET TO RECEIVE PRODUCTS.
We all know what its like applying for a bank loan. Corporate loan applications are the worst. KYC / Due Diligence appears to be unending. It appears as you pass through one hurdle your banker is on the phone about another hurdle that is yet to be crossed. Its a never ending cycle that seems to have no end.
WE CHALLENGE BANKS TO SIMPLIFY THE ENTIRE PROCESS WHILST MAINTAINING THE HIGHEST LEVEL OF COMPLIANCE.
Our managed tool with built-in intelligence helps loan providers identify and evaluate risk. The result is:
Reduce cost involved in assessing loan applications
Reduce volume of errors in assessing loan applications
Decrease the volume of time required in assessing loan applications
See video below for an overview of the tool.
Loan Assessment Tool with intelligence built-in
The evaluation process is automated and assesses several factors, such as:
The underlying loan documents (see Drafting Note, Loan Document Review).
Information on any subordinate debt (see Drafting Note, Subordinate Loans, Mezzanine Loans, and Intercreditor Documents).
Real estate-related reports, such as any: – inspection reports; and – environmental reports. (See Drafting Note, Third Party Property Reports.)
Property operations information, such as: – Insurance policies and whether coverage is adequate; – rent rolls; – operating statements; – tax notices; – lease agreements, estoppels, and tenant subordination agreements; and – ground lease documentation, if any. (See Drafting Note, Property Contracts and Agreements.)
Title policy, survey, and zoning information (see Drafting Note, Title Policy Review).
Borrower entity information from closing (see Drafting Note, Borrower Party Information).
The legal opinion issued at loan closing (see Drafting Note, Legal Opinion).
Additional new information gathered including: – an updated title report; – updated property information;
