Credit Union Compliance Automated Loan Decisioning: Is It Right For Your Credit Union?


Automated Loan Decisioning: Is It Right For Your Credit Union?

automated loan decisioningNavigating a credit union's loan application process can often feel like an arduous obstacle course. The mountains of paperwork and tedious data entry involved can lead to errors and delays. However, there is a tech-driven solution on the rise: automated loan decisioning. By leveraging specially designed algorithms, this trend aims to digitize and simplify the loan application process, reducing paperwork for credit union employees and members, saving time, and minimizing the chances of human error.

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Of course, not all credit unions are created equally. Each credit union must carefully consider the benefits of automated loan decisioning and assess its suitability for their specific needs. Here are four key areas that can greatly benefit from this technological advancement.

1) Compliance Risk

Automated loan decisioning addresses compliance risk by removing potential issues related to perceived preferential treatment. Lending decisions are based on objective facts, eliminating any subjective bias.

2) Reducing Operational Risk

By relying on a scoring model, automated loan decisioning ensures that no crucial elements are overlooked during the lending process. Credit unions and their members receive consistent, reliable results. Furthermore, reducing the level of human interaction required in the process helps minimize overall costs associated with each loan.

3) Mitigating Strategic Risk

Underwriting decisions must align with a credit union's risk policy, which may change due to various external factors. Manual processes that depend on human employees can make it challenging to adjust underwriting decisions accordingly. Automated loan decisioning simplifies this task by allowing basic software adjustments on the platform, eliminating the need to change the behavior of an entire

4) Rethinking Credit Risk

The absence of human involvement at the initial stages of the loan decisioning process significantly reduces the likelihood of errors. Leveraging automated loan decisioning ensures a consistent and error-free process, thereby mitigating credit risk and, in some cases, eliminating it altogether.

Remember, lending is the lifeblood of credit unions, making it crucial to harness modern technology to optimize this process. To delve deeper into this concept and related topics, FLEX has authored an eGuide on "360 Lending," exploring the impact of leveraging these advancements effectively. Click the button below to download the eGuide and gain further insights.

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Preston Packer

Written By: Preston Packer

Executive Vice President | CMO at FLEX Credit Union Technology
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