How Automation Can Enhance the Loan Origination Process?

Updated On : Sept 2022

The post-pandemic era calls for banks and other lending institutions to upscale the lending process. The lending industry has grown rapidly over the past decade and paper-based processes are moving online. The switch to automation is driving changes in loan origination and helping financial institutions improve the quality of loans, reduce costs and fight fraud among others.

In today’s fast-paced world, customer expects quick, seamless, and hassle-free access to loan services, whenever and wherever they want. They look for specific loan products which fit their needs and are made available with swift approvals. Banks and other lending organisations with the manual processing of loans have increased labour costs and the non-closure of loans on time. Digital transformation or automation has brought huge changes to the loan management cycle, helping lenders gain a competitive advantage in the loan origination process.

The loan origination businesses with automation technology have been able to streamline their processes, cut costs, increase the productivity of their team, offer faster application turnarounds and quickly scale with demand.

Here is how automation can enhance the loan origination process.

  • Accuracy in Decision-Making

    Since automation eliminates manual steps, it improves applicant evaluation and loan decisions. For example, lenders can automate applicant information review by integrating credit data sources and services. Thus, applicant data is quickly assessed and loan approval is provided rapidly. The best loan structure and terms are automatically determined.

  • CRM Functionality

    The customer relationship management (CRM) feature allows client data to be easily accessible to lenders. The CRM retains privileged information, correspondence, and loan information in one place and allows the loan automation system to quickly access information, saving time and increasing the overall efficiency of the process.

  • Multichannel for Digital Notification

    The automated loan system allows lenders to create several notification templates filled out with loan-specific information before being distributed to applicants. They can then send notifications through like email, print, and text messages. These cut down printing and mailing costs. The multichannel implementation also enables secure, digital record-keeping of notifications and helps to establish regulatory compliance.

  • Easy Customer Management

    Automation makes customer management easier by mitigating the inconsistencies and delays of collecting financial data and other mandatory customer information manually. It enhances the customer experience by delivering convenient, personalized customer service on time.

  • Fraud Detection

    Computer-assisted document review exposes fraud more efficiently than manual review as software programs can find irregularities like mismatched addresses, names, etc across different documents.

  • Reduced Cost and Time

    Automation cuts down the costs of paper, extra labour, storage, mailing, and any necessary physical transportation. At the time, this leads to less processing time as the approval process is shortened so closing rates are quicker, giving the lender an edge over the competition.

  • Compliance Enabled

    Automation eliminates the risk of non-compliance, data loss, or data compromise that go together with manual manipulation of customer information.

  • Better Quality

    The process of loan origination requires multiple documents in different formats which need to be carefully tracked and reviewed against the information provided on the application and information collected from third-party sources. All this is taken care of smoothly and reliably by automation as technology can identically process every document, yielding higher quality and reliability. Moreover, an automated program can prepare a comprehensive view of documents that have been received, verified, or flagged for follow-up, in a click.

  • Scalability

    Automation brings in higher data accuracy as it removes the errors normally arising from human intervention.

    With automation, lenders no long risk quality degradation as processes is quick and scalable to meet peak season demands. It significantly reduces the need for training, thus saving on overhead costs associated with continuous training.

  • Analytics for Continuous Process Improvement

    Since continuous process improvement is a must in the industry to maintain profitability, one of the biggest benefits of loan automation for lenders is being able to examine and review their lending procedures. The loan origination process generates a large amount of information on the applicant, underwriting, and financing options.

    This data can be analysed to help the lender understand where they are meeting expectations and also identify potential areas of improvement. Analytics tracks progress and deliver insights to help increase process efficiency over time.


Digital Automation, also known as Robotic Process Automation (RPA) comes a boon to the loan origination process in the commercial lending market. It helps lenders automate manual, repetitive processes which were traditionally performed manually. Automation allows the streamlining of disparate systems, provides reliable and consistent dataflow for any stage of the loan origination process and speeds up the overall process, while at the same time, delivering solid audit and control benefits. Implementing automation involves front-end integration without any changes to the existing IT infrastructure.

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