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5 Ways Digital Loan Origination Can Help Boost Efficiency

Allen Miles
Aug 15, 2023

In a recent survey of more than 200 bank and credit union CEOs, 95% of respondents said they plan to enhance their lending capabilities over the next two years. Priorities diverge sharply and predictably between banks and credit unions given their differences in commercial versus consumer focus. For banks, digitizing loan applications and implementing a single, end-to-end loan platform for commercial and retail lending take precedence. For credit unions, having an automated lending process for decisioning and funding, along with exploring cross-selling opportunities, are key.

These priorities basically boil down to one thing: financial institutions want greater efficiency in the lending process. In other words, they want to be able to do more with less, especially since loan demand is down.

But what does it take to get there?

 An all-digital loan origination system is a good place to start. By engaging with more than 200 financial institution clients that utilize an all-digital loan origination system, I’ve observed five important ways these systems boost efficiency. An all-digital loan origination system:

  1. Eliminates the need for multiple, disparate systems. Integrations between core and enterprise content management can provide a seamless platform that allows lenders to live in a single ecosystem, making their duties much more efficient because they don’t have to leave or jump between systems. This is accomplished through a complete end-to-end lending management solution ‒ from the initial loan inquiry to robust underwriting, workflow, due diligence, approval management, doc prep, booking, and the ongoing process of portfolio management. This results in higher productivity and directly impacts the bottom line in loan generation.
  2. Minimizes data entry and eliminates rekeying of customer information. By leveraging core CIF data, you can propagate everything from loan record, third-party interfaces, credit memos, closing documents, booking to core, etc., saving time and effort throughout the loan life cycle by eliminating redundancies in the process. OCR technology can be used to populate spreading tools so that manual entry of spread data is drastically reduced. This is a tremendous time-saver to the underwriters, moving the loan along quickly through what is typically a very complex process. 
  3. Streamlines manual and inconsistent processes in portfolio management and document tracking. Separate tickler solutions or spreadsheets can involve countless hours in a week. By automating tracking and notifications, the document collection process becomes not only easier on the financial institution, but it’s also more convenient for the borrower. This is also key with required documentation during origination when it’s crucial to let the lender know instantly what documents are needed and to be able to collect them quickly so that the process is not slowed down. This saves time and is much more efficient than managing manual processes and labor-intensive document collection procedures.
  4. Reduces the burden of meeting ongoing regulatory requirement changes. Smart loan origination systems have both the resources and framework that allow requirements to be quickly and easily deployed through a release when a regulatory change occurs. This provides the lending team more time to focus and grow business.
  5. Isn’t restricted to traditional application channels. Digital tools can produce many efficiencies. Business is no longer restricted to brick-and-mortar locations ‒ the financial institution can do business in any market with tools that reach more niche segments by meeting borrowers where they are, directly affecting loan growth strategies. Digital channels are not only helpful for borrowers but also provide the same freedom and flexibility for lenders. Lenders are no longer restricted to conducting business at their desks and can be far more productive while engaging clients outside the financial institution. And that affords them tremendous efficiency gains and opportunity to grow their portfolio.

By addressing and minimizing the time spent on administrative requirements and manual processes of the job, lenders can spend more time in front of clients, building relationships. Leveraging a digital credit file through the entire journey of both origination and life cycle management, coupled with key integrations, provides the ability to truly streamline and standardize processes and has a direct impact on increasing efficiency. 

When I speak to our clients and ask them how they would define efficiency in lending, their response is inevitably some iteration of the transformation Jack Henry™ has helped them make in their lending department, resulting in better quantity and quality of loans.

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