There is nothing left to debate when the topic of technology and whether or not it helps or hinders our society comes up.
We see the benefits of better technological inclusion in our daily life each moment. Plus, tech becomes more innovative and intuitive, and its potential still isn’t fully explored. The costs associated with better integration of machine learning and AI seem to steadily decrease which is due to boost our society’s capabilities furthermore.
In the banking and loan industry, this type of technology is beginning to decrease the loss, since credit card fraud can be easily identified today. Plus, the loss on consumer’s part is becoming minimal as banks today are able to alert them as soon as some suspicious activity is identified.
Overall, by leveraging technology, financial institutions are able to improve all internal processes and aid the way in which they interact with the consumer and make their financial experience a better, more enjoyable one.
Below we have more information on how technology is improving the loan approval process.
Tech is Reshaping the Loan Process
Financial institutions seem to always be the first to adapt to various new technologies. Thus, technology-based banking processes have become widely embraced by most banks. Thus, the way in which we use and apply for loans has seen changed as well. According to this report, the vast majority of banks, insurers and investment managers plan to increase their partnership with fintech companies in the following years. But why is this happening? Apparently, with technology’s aid, fintech companies and lending institutions are able to keep those customer satisfaction rates up, while reducing their operational costs quite significantly. The technologies that are expected to impact the most the loan approval process and the lending process are the following.
- Could technology – could services allow lenders to implement and adaptto the latest loan origination software products out there. This allows companies to adapt to the latest technological advancements without investing in developing an IT infrastructure and operational overhead. The system is hosted in the could vendor’s data centre and it can be easily made accessible via web-based apps and platforms.
- Automation capabilities and technologies – automation in the banking contextfacilitates a faster and more accurate processing of loan application. Which makes the whole process seem less dreadful, faster and more accurate. In the automation context, employees in financial institutions are able to focus more on high-value tasks and processes rather than redundant and lengthy (not to mention boring) ones. Automated decision-making software will also decrease each financial institution’s chances of being subjected to fraud, due to the better lean application analysis capabilities.
Could and automation deliver the best and most accurate desktop loan application capabilities. These products are expected to increase the efficiency level of each process step. To enjoy better competitivity rates, all financial institutions should realistically consider to invest in could services and AI.
Cloud Services and the Latest Lending Technology
Could services are well-known for reducing the costs and expenses associated with developing on-premise infrastructure. This includes the capital expenses with IT equipment and the expense associated with electricity use and system ventilation. The economic benefits of could technology in the banking context cannot be debated and more and more operators in this sector look forward to moving most of their loan applications and capabilities in the cloud. Could-based integration allows immediate access to relevant data that might be useful in the loan application and approval process. From employment, credit history and sources of credit, income verification and more, banking institutions can analyse and assess if the applicant meets the requirements more effectively than ever before.
The need for manual verification is eliminated, and the employees can now focus on those higher-value steps in the process, rather than focusing on those boring and redundant tasks.
Automation and Faster Loan Decisions
No matter how big or small lending institutions may be, a fast loan will certainly offer them a competitive advantage. Whether clients apply for a business loan or a personal loan, today the loan approval process is a lengthy and time-consuming one. This happens because there still are manual steps that each banker must manage. Automation to replace and eliminate those, contributing to better, more accurate automated decisions.
What automation also brings to the table is a faster lending process and consistent decisions, unlike in the case of manual decisions. Human error is very likely to occur in those, putting both the client and the institution itself at risk.
In this context, human expertise is applied only where it shows the biggest advantages. A professional’s judgment is never closer to the perfection showed by automated systems. Thus, the loan origination process is fundamentally reshaped by technology and automation, mainly.
Data-Driven Processes Fuelled by Automated Decisions
While the manual steps are almost completely eliminated in the automation context, data-driven processes slowly take their place. These systems can automatically evaluate different variables with a high relevance for the entire loan application evaluation process, starting with the applicant’s age, income, FICO score, employer, etc.
In those cases when the applicant perfectly fits the loan approval criteria, the loan is immediately approved. If not, the application is labelled as invalid and it doesn’t consume any precious time on the lender’s part.
Business Users Create the Rules in the Context of Automation
While private users certainly enjoy some advantages when it comes to automated loan approval processes, business users seem to enjoy more perks, as they don’t have to waste time waiting for their loan applications to be evaluated and a decision to be made. This boosts their development capabilities quite a lot.
To remain competitive in this highly challenging climate, banks and lending institutions certainly have to keep up and adapt to all these technological developments and innovations. Plus, they will be able to enjoy lower operational costs and higher profits, as they will be able to prove more applications in a shorter timespan.