Consumer lending is a highly competitive industry that requires consistently efficient operations to maintain a healthy bottom line. This post describes how lenders can leverage digital technologies to improve their efficiencies and achieve economies of scale.
The Digital Borrower Experience
In a nutshell, digital technologies improve efficiency by providing faster means of information processing and faster channels of communication. For example, using a smartphone app and online portal to keep in touch with borrowers and transmit loan documents helps process loans much faster rather than using paper documents and traditional courier services, creating a superior borrower experience.
According to recent surveys, the demand for consumer-facing mobile apps for mortgage activities has doubled over the past year. Very soon, it will become commonplace to perform essential activities like borrower communication and document submission via smartphones. Lenders that fail to adopt mobile technologies will have trouble attracting new customers, especially millennials who form the major portion of first time home buyers.
Efficient Loan Review
Mortgage firms can also use digital solutions to improve loan processing efficiency. Instead of employing large compliance teams, lenders can use loan review software to perform QC and due diligence in a fraction of the time and at a significantly lower cost. Loan review software is much faster than manual alternatives in virtually every domain, from loan package preparation and review to the creation of federally mandated uniform closing datasets. Instead of spending hours on document preparation, these applications perform the same tasks in just a few minutes.
One of the most efficiency-sapping activities in the mortgage closing cycle is having manual entries. Having to enter and re-enter information into various computer applications and online forms is a clear sign that your organization’s digital workflow isn’t as efficient as it could easily become.
With digital imaging technologies, paper documents are first scanned to produce digital images and are then processed using optical character recognition (OCR) software. OCR software converts what are basically just pictures of printed sheets of paper into digital data or text that can be copied, searched, or inserted into your organization’s loan origination system (LOS) and other systems. Digital document imaging is less expensive, much faster, and much more accurate than manual entry.
Origination Process Management
An important method for improving operational efficiency and reducing costs is using digital transformation with global delivery model. Digital transformation coupled with a global delivery model can leverage a workforce in multiple countries on a large scale and can perform these tasks around the clock with greater speed and accuracy. Examples of digital transformation include document indexing, loan boarding and processing, pre-underwriting support, pre-funding and post-close QC, fraud review, compliance review, trailing document management, HMDA reporting, secondary market pre-purchase reviews, and more.
Return on Investment
The initial investment required to implement these kinds of improvements is constantly decreasing, and the expected returns make such investments in digital infrastructure extremely worthwhile. Depending on the type of digital solutions and technology-led services you decide to implement in your organization, efficiency can increase by as much as 250%.
For more information on how digital services and solutions can help improve your mortgage firm’s operational efficiency, please write to us at email@example.com.
To learn more about how to begin transforming your mortgage operations, use our eBook as a guide.
Alok Bansal is Managing Director of Visionet Systems Inc. and has 21 years of experience in managing strategy and global BPO operations. He excels in optimizing and leading the growth of financial services companies who are looking to take their mortgage operations to the next level.