Top 10 Reasons for Banks to Invest in Automated Lending Technology

Brian Allen
May 30, 2024
8 mins read
Top 10 Reasons for Banks to Invest in Automated Lending Technology

Traditional bank lending processes are slow, paper-heavy, and frustrating for both borrowers and lenders. The manual workflow is also prone to errors, delays and limits banking institutions’ ability to accommodate higher-loan volumes. 

However, with the advent of automation, the efficiency in bank lending operations has soared. The sheer ability to manage more borrowers, effectively engage in loan servicing, and ensure compliance with regulatory guidelines has made this technology a must-have. In fact, an industry report found that banks have been major dominant end-users in the US loan servicing market. [Source]

So, what are the reasons for this increased use of automation in the bank lending operations? Let me chart that out for you. I have put together the top reasons that banks should invest in automation technology to streamline their lending operations.

10 Reasons Why Banks Should Invest in Automation Technology

  1. Enables Faster Loan Processing and Servicing

So, one of the very first hassles I identified in loan processing was the extended timeline. Days turned into weeks for a loan to be processed and even when it was processed, some of the details were incorrect. These errors, caused by manual data entry, have always been a major setback for banking institutions. 

This is where automation comes to the rescue. Automation technology optimizes and standardizes loan processing workflows, reducing manual intervention and minimizing delays. Repetitive tasks like consolidating borrower information, creating personalized documents and generating detailed reports can be handled swiftly by automated systems. This can reduce your loan processing time by up to 80%.

  1. Efficient Loan Management

Automated systems don’t just process loans faster; they manage them efficiently throughout their lifecycle. Automated workflows ensure timely loan payments are collected, track delinquencies, and even trigger automated communication with borrowers. This frees up valuable staff time for more complex loan servicing and customer interactions.

  1. Advanced Scaling Potential

Automation empowers banks to handle loan applications with greater ease, especially during periods of high demand. Cloud-based bank lending automation software can easily adapt to banks’ growing loan portfolios. 

This means seamless accommodation of an influx of applications without compromising on speed or accuracy. This allows banks to cater to a wider customer base and confidently grow their lending portfolio.

Features like custom-defined user fields, banking information, and loan applications facilitate the onboarding of higher loan volumes.

  1. Significant Cost Savings

Did you know that, according to a recent survey, about 52% of the respondents (consisting of banks and credit unions) reported saving a minimum of $100,000 annually with automation? [Source] Why do you think that is? I’ll tell you why.

By automating repetitive tasks and reducing reliance on manual labor, banks can achieve substantial cost savings in operational expenses. This includes staffing, paper-based processes, and error correction. More importantly, automation provides the following benefits: 

  • Reduced Labor Costs: Automation streamlines repetitive tasks, reducing the need for manual intervention. This leads to fewer staff requirements for processing loan applications, managing portfolios, and handling administrative tasks. This, in turn, results in lower labor costs for banks.
  • Minimized Errors and Rework: Manual processes are prone to human errors, leading to costly re-work and corrections. Automation minimizes these errors by standardizing processes and performing tasks with precision, ultimately saving banks both time and money.
  • Lower Overheads: Automation reduces the dependency on physical infrastructure and paper-based processes. Banks can decrease overhead costs associated with printing, storage, and maintenance with fewer paper documents to manage and store.
  • Optimized Resource Utilization: By automating routine tasks, banks can optimize resource allocation and improve operational efficiency. This means resources, such as staff time and computing power, are utilized more effectively, leading to cost savings across the organization.
  1. Enhances Borrower Experience

As a borrower, I know how frustrating it gets to wait around for communication letters from the bank, not to mention the customer service is subpar at best. However, that’s not the case anymore. 

Automation enhances the borrower journey by offering faster processing, personalized interactions, and seamless communication channels, ultimately leading to higher satisfaction rates and improved retention.

Additionally, the borrower portal provides borrowers with 24/7 access to their loan information, track loan status, upload documents and receive updates in real-time.

  1. Automated Bulk Reporting

Traditional bank lending workflow relies heavily on spreadsheets to generate reports. Toggling between multiple tabs and numerous spreadsheets to look for specific data consumes a lot of time. This, again, is prone to errors and rectifications. 

But with automation, banks can automate the bulk-report generation process tailored to each borrower’s loan profile. These reports aren’t just generated quickly and easily but are error-free as well. This also enhances borrower satisfaction.

  1. Allows for Data-driven Decision Making

Automation facilitates the collection and analysis of vast amounts of loan data for efficient portfolio management. By harnessing the power of data analytics and machine learning, automation equips banks with the tools to make informed lending decisions. These decisions are based on real-time data accessibility. 

For example, Bryt’s custom reporting allows banks to track collateral on their loans and provides insights to prepare loan programs for risky borrowers. This also facilitates efficient risk and delinquency management.

  1. Ensures Regulatory Compliance

The financial sector is subject to strict regulations. Automation helps banks stay compliant by automating compliance checks, documentation, communication, and reporting. 

It also helps to simplify audits by maintaining a unified record of all the customer data, compliance settings, loan documents and master register. This not only facilitates streamlined audits but also helps in tax calculations.

Leveraging automation can minimize the risk of costly penalties associated with errors caused by manual compliance management.

  1. Boosts Productivity Across the Banking Organization

By automating manual tasks and complex processes, automation frees up valuable time for bank staff. This empowers employees to focus on higher-value activities, such as building relationships with clients, providing personalized financial advice, and strategizing new lending opportunities.

Automated bank lending software also improves collaboration in a banking organization. It facilitates the smooth sharing of loan and borrower information across teams to provide a unified service to the borrower.

  1. Advanced Security for Sensitive Borrower and Lender Data

Bank lending automation software is built on secured platforms to ensure that sensitive data is safe and private. For example, cloud-based bank lending software is typically built on a cloud computing platform that incorporates robust security measures to safeguard sensitive borrower and lender information. This includes advanced encryption like end to end encryption and column level encryption. It also includes two-factor authentication, access controls, and real-time data monitoring, ensuring data integrity and confidentiality. 

Additionally, the software has rigorous data recovery capabilities such as point-in-time restoration and tracking and managing any changes made to the application code.

These advanced security features mean that banks no longer need to rely on on-premise security solutions to ensure security compliance.

Features to Look For in a Bank Lending Automation Software

  • Workflow Automation: A must-have in bank lending automation software, this feature streamlines the entire workflow. This includes everything from loan processing to its maturity. Simply having one or two automation features isn’t going to cut it. Ensure the software offers a suite of loan servicing automation tools.
  • Contact Relationship Management (CRM): CRM enables banks to effectively manage and nurture relationships with borrowers, prospects, and other stakeholders throughout the lending lifecycle. CRM features typically include contact database management, communication tracking, lead management, and customer interaction history. 
  • Custom Reporting: Custom reporting capabilities allow banks to generate tailored reports and analytics based on their specific lending requirements and business objectives. With custom reporting, banks can access real-time insights into lending performance, portfolio metrics, risk exposure, and compliance status. It also enables banks to create ad-hoc reports, customize report layouts, apply filters and parameters, and export data in various formats.
  • Document Management: Document management features enable banks to efficiently capture, store, organize, and manage loan-related documents throughout the lending process. It typically includes document upload, indexing, version control, electronic signature integration, and document retrieval capabilities. 
  • Loan Payment Tools: Loan payment tools allow banks to facilitate loan payments and repayment processing efficiently. These tools typically include features such as payment scheduling, automated payment processing, payment tracking, and integration with payment gateways and financial systems. 
  • 24/7 Access to Loan Documents: Providing borrowers with 24/7 access to loan documents through the lending software enables them to securely view, download, and manage their loan-related documents at any time and from any device with internet access. This feature enhances borrower convenience, transparency, and self-service capabilities, reducing the need for manual document distribution and inquiries to customer support.

  • Real-time Monitoring: Real-time monitoring allows banks to track and monitor lending activities, transactions, and performance metrics in real time. It typically includes dashboards, alerts, and notifications that provide instant insights into key performance indicators (KPIs). These KPIs can be loan volume, approval rates, delinquency rates, and portfolio composition. This feature helps banks identify issues or opportunities early, make timely decisions, and optimize lending strategies for better outcomes.

  • Batch-create Tax Reports: The feature of the batch-create tax report enables banks to generate bulk tax reports for multiple borrowers or loans simultaneously. This saves time and effort. This feature is particularly useful for banks in complying with tax reporting requirements, such as generating annual tax statements, IRS Form 1098s and 1099s. This feature automates the process of gathering relevant loan data, calculating tax amounts, and generating tax reports in the required format.

How Bryt Software is Helping the Banking Industry Automate Day-to-day Operations

Having witnessed the ineffectiveness of traditional bank lending operations first hand, I was determined to provide a SaaS solution to the banking sector and other lending institutions. So, Bryt Software was built with the vision of transforming the banking industry through automation solutions, specifically targeting loan processing and servicing. 

Bryt Software is a cloud-native platform built on Microsoft Azure to offer advanced automation solutions that include: 

➡️ Loan Creation Wizard

➡️ Centralized Loan Processing

➡️ Automated Workflow Management

➡️ Real-time Tracking and Reporting

➡️ Document Management and Paperless Documentation

➡️ White-label Solution for Greater Customizability

Ready to automate your bank lending institution? Schedule a demo today.

Brian Allen

About Brian Allen
Brian Allen is the Chief Information Officer (CIO) at Bryt Software, where he leads developing next-gen loan management and servicing software solutions. With over 18+ years experience in the industry, Brian is an expert known for his technical excellence. Before joining Bryt Software, Brian co-owned RTEffects, a renowned provider of...

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