Banks & Credit Unions
3 Ways Intelligent Document Processing Improves Loan Processing
By: Jason Burian | January 12, 2023
If Willie Sutton were a banker looking to improve margins, he'd say "Focus on loan processing because that's where the money is." But if you're still relying on manual, paper-based processes, Willie would say your inefficient processes are robbing you blind.
A recent survey of financial institutions from Cornerstone Advisors found that more than half lost out on more than 75% of potential loan business, losing two accounts for every loan or new account opened. These would-be borrowers are abandoning slow, cumbersome loan application processes for easier online processes.
Today’s borrowers expect quick decisions and minimal hassle. And they want to do it all online. Digital-native FinTechs are giving borrowers a superior experience with easy-to-use web and mobile interfaces, eliminating the hassle of the traditional loan process.
The good news is that intelligent document processing (IDP) can help traditional banks level the playing field. With IDP, banks can rethink outdated lending processes to provide a better borrowing experience to customers, gain valuable customer insights, and improve compliance.
These are three important ways IDP can help your bank improve loan processing:
1. Approve and Close More Loans Faster
Approving a loan is a complex process for banks that can traditionally take weeks. This is a dealbreaker for more and more prospective borrowers.
With intelligent document processing, banks can approve loans in days by automatically processing all borrower documentation quickly and accurately. At the inception of the application process, AI instantly recognizes every digital or paper document, extracts all relevant data, and keys it into the appropriate application or system.
There’s no manual data entry or scanning required. This high-level automation allows banks to approve loans quickly without sacrificing accuracy or needing to go back to the customer for more information.
Getting closer to straight-through loan processing, or eliminating the need for paper-pushing and intervention by humans, is key for banks to compete with non-traditional lenders.
Approving loans faster increases the likelihood of winning a prospective borrower’s business and enables higher loan volume. This all leads to underwriting better deals.
2. Make Compliance Easier
The rules that govern how banks handle and process customer data are extensive and growing. Intelligent document processing makes compliance easier by ensuring that your customers’ personal and financial information is accurately captured, secured, and searchable from the moment you receive it.
IDP establishes a system where banks can capture, classify, separate, and organize any and all documents needed for KYC and AML verification. This gives banks the ability to easily retrieve and organize digital documents come audit time.
Banks gain a competitive advantage when it comes to satisfying regulations while still protecting sensitive customer information.
3. Extract More Data to Better Understand Your Customer
The lending process offers an excellent opportunity to get to know your customers better.
An IDP platform can help you collect valuable data from customer documents and gain insight into their behavior, including what kinds of products and services they may want now or in the future.
For example, an IDP platform can identify certain keywords from a loan application form or related set of documents. This data can then be used to inform future decisions and marketing strategies related to loan products or services offered by your bank.
The competition for loan business is cutthroat, and today’s prospective borrowers won’t settle for a lengthy, cumbersome application process. IDP is fast becoming an invaluable tool for traditional banks to compete with FinTechs—not just in the lending arena but across all financial services.
To learn more about the role that intelligent document processing plays in customer experience, check out our recent blog post below:
"Customer Experience in Digital Banking Requires Modern Back Office Operations."
Tag(s): Banks & Credit Unions
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