In the mortgage sector, manual loan processing is usually time-consuming, error-prone, and labor-intensive. To organize, comprehend, and analyze loan applications without missing anything, you’ll need to hire qualified specialists. When loan documents arrive for processing, loan processors can only accomplish so much before their productivity plummets. So, how can we fix these issues? With best-in-class automation, you can expedite your loan process, boost efficiency, and make customers happy.

Private lenders are increasingly conscious of the need to improve their loan processes in various areas to boost efficiency, decisioning speed, and production and enhance the client experience. Below we will go over automating the loan process and the benefits of doing so.


Why Are Lenders Unable to Meet Their Lending Goals?

Many lenders still employ paper loan approval processes, which appear out of sync with today’s digital environment. In addition, the manual process takes more time and is labor-intensive for the lender and loan examiners.  

The complexity of a loan can vary based on the size and its contingencies. One tool that lenders widely use in the manual process is spreadsheets. While spreadsheets are fantastic tools, they were not designed with the loan underwriting process in mind.

Using a spreadsheet to document, track and analyze data for underwriting credit takes time, and there is more room for error because of manual entry. Information is sometimes typed in a spreadsheet and then re-entered into other loan systems, thus duplicating the work. This approach has significant problems in terms of data storage, lineage, retrieval, and portfolio insights.

How Can Automation Improve the Loan Process

There are many steps in the typical loan process. When thinking through the process, it is easy to identify steps where bottlenecks can occur. It is crucial to consider the staff involved in each essential step, which phases are the most difficult, and how long it usually takes for a loan application to progress between stages. With automation, you can eliminate the steps causing pain points, increasing the overall efficiency of the process while increasing the entire team’s productivity.

Manual underwriting processes are inconsistent, lack accuracy, and are time-consuming. Automating your loan process can streamline the work that needs to be completed, offering an accurate and consistent data flow for every step of your loan process. Likewise, speeding up the whole process while providing superior audit capabilities and controls.


automate your loan


Client Management

During the loan process, the first stage is to collect all necessary data, including the customer or prospects’ finance information. Data collection can be time-consuming and challenging to accomplish. As a result, filling out forms, whether electronically or manually, and a physical paper file for the client is standard. In addition, lenders often duplicate the information from the documents in other systems. Depending on how many systems must be updated, the more likely a lender will record incorrect data.

Automation can help to reduce the inconsistencies and delays associated with manually gathering financial data and other required client data. Customer-facing Cloud-based portals and APIs can help with the digital onboarding process of new and existing customer data directly to the lender’s loan platform. Following the receipt of data, business rules, defined by the lender, can automate steps in the process, distinguishing between applications that are ready for a decision and applications that require more information.

More sophisticated automation platforms can receive data feeds to pre-populate borrower information fields in the origination platform. Importing customer ownership hierarchies is one of the more beneficial uses. Importing such information can alleviate a significant administrative load for complicated debtors.

Another pain point is rekeying information from a CRM system into the loan application if a borrower’s information changes. The process would be more straightforward, with less chance for errors, if all of your data were integrated and flowed from one step to another without having to intervene? Liquid Logics Cloud-based Saas is an end-to-end system that seamlessly integrates all your loan process needs based on your business rules. 


loan approval process


Credit Evaluation

Spreading the financial data obtained from your prospect or client is an essential step in assessing risk. However, this is a labor-intensive and repetitive process. Automating these processes can assist the lender or analyst in tabulating the borrower’s financial data accurately and efficiently for use in the rating process. The actual benefit of electronic data gathering and automated financial spreading is that it frees up more time for risk assessment tasks to help assess the borrower’s financial risk and ability to repay their loan. 

Credit Presentation and Determination

Automation for the loan approval process entails mining relevant data and presenting the data to make an informed credit judgment. The ability to automate your loan process from beginning to end benefits accurate decisioning, decreased decision times, greater efficiency, and accuracy.

For many lenders, compiling and combining documentation adds time to the approval process. Two loans are never the same in lending; however, auto decisions based on the lender’s regulations and business rules improve the accuracy and shorten the timeframes for approvals.  


using spreadsheets for loan processing



Following the loan origination process, it is necessary to continue to manage the asset and the risk with yearly, quarterly, or even monthly evaluations. However, most lenders face a challenge in identifying a consistent procedure for gathering financial data to fulfill ticklers, covenants, and policy exceptions. When processes are not well defined and rely on manual tools, tracking may be inefficient, not to mention hazardous. 

Automated covenant solutions can exist independently of a loan origination system, but they perform better in data accuracy, efficiency, and effectiveness when integrated into the entire solution. Recording the relevant covenants as part of the loan application process eliminates the need for rekeying and ties the covenant information to the approval record for audit reasons.


manual loan paperwork loan application


Management of Portfolio Risks

Traditional manual, paper-based loan processing makes it difficult for lenders to identify the risks in the portfolio and how these exposures evolve. As a result, all lenders have declared risk appetite thresholds to advise their loan officers, and most have set acceptable risk-based portfolio limitations. However, unless the lender has access to an accurate portfolio reporting technology, developing these criteria is only an intellectual exercise.

However, we’ve already discussed how data integrity is in jeopardy when multiple systems hold the same data. When such situations occur, lenders must spend significant time and money reconciling their portfolios before analyzing the data. As a result, several weeks may pass before an accurate picture emerges, causing additional time and expenses.

Lenders should not underestimate the cost benefits of accurately measuring a loan portfolio in terms of capital utilization. Overstating risk-weighted assets on your balance sheet comes at a high direct cost. We know that at least one significant European bank realized capital savings in the hundreds of millions of euros after completing a substantial portfolio data cleansing exercise. The true lesson, though, is not to let things get to that point.

Automating crucial steps of the loan origination process aids in the governance and control of risk data. Further automation of the delivery of critical business information with a sophisticated business reporting platform may also offer considerable value.


assessing risk


In Closing

Automation has enhanced the efficiency of several sectors across the world. The business financing landscape is evolving, and many lenders are getting in on the game by implementing automation methods in their loan processes. These decisions are due to the rise of more technologically savvy rivals. However, competition is not the sole motivator. Lenders that realize the need to be more efficient, productive, and responsive to their clients; while also providing greater service levels aim to incorporate technology solutions. Cost reductions and the need to satisfy more stringent regulatory test criteria are also motivating these lenders. In comparison, others want to regain ownership of their data and get sharper, more accurate business insights.

The reasons to automate your loan process are abundantly clear. Borrowers and lenders alike demand good service and quick responses. As new loan demands emerge, lenders need a robust solution to keep them one step ahead of their rivals. Automating the loan process will help lenders process loans more cost-effectively and efficiently than before. At Liquid Logics, we are a true cloud-based SaaS Full Cycle Lending Software Solution for the residential mortgage banking industry.  To learn more about our offerings, schedule a consultation.