Even though many organizations are more than willing to experiment with digital services for members, many credit unions still use manual, paper-based processes for digital lending, including loan decisioning. Not only does this consume a significant amount of time, but it also makes the process prone to errors and inaccuracies.
Automation offers a great way to improve the loan decisioning process—both in terms of achieving the desired outcome and optimizing each step along the way.
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Step 1: Customer Management
The first step in the loan decisioning process comes down to comprehensive customer management. Here, automation can be a major benefit by not only saving time when it comes to collecting financial data and other essential customer information, but by outright eliminating inconsistencies as well.
Step 2: Credit Analysis
Once that financial data has been collected, a thorough credit analysis must be conducted. With the appropriate permissions in place, automation can be used to allow a member to effortlessly interact with a credit union's systems. Information from tax returns, accounting software, and other important sources can be easily uploaded in far less time than usual so that credit union officials can make better decisions faster.
Step 3: Presentation and Decisioning
Remember that automation in the loan decisioning process is all about getting the right data in front of the right credit union employee at exactly the right time. Modern-day systems can automate this from start to finish, accurately capturing information as outlined above and presenting it to those who need it to do their jobs and make loan decisions in near real-time.
Step 4: Monitoring
After the loan in question has been originated, it's a credit union asset that will still need to be carefully managed. Automation can be used to monitor it and take a closer look at factors like risk on a yearly, quarterly, or even monthly basis. All of this is done through a standardized process built with data accuracy in mind.
Step 5: Ongoing Portfolio Risk Management
Finally, automation allows credit unions to break free of traditional, paper-based (read: manual) loan underwriting methods. Not only does this give organizational leaders a better understanding of the risk that their portfolio might be exposed to, but it also gives them more insight into how that exposure is changing over time. This helps to significantly improve data integrity, data lineage, and a credit union's larger ability to govern both the loan origination process and the experience it is offering to members.
Incorporate Automation Into Your CU's Loan Decisioning Process
Overall, remember that loan decisioning is more than just the sum of its parts. There are many important steps that make up this process and each one of them can benefit from the right approach to automation in different ways. If a chain is only as strong as its weakest link, automation can help make sure that weakness isn't something that you or your credit union members have to worry about.
At FLEX, we've recently authored an eBook that goes into more detail about this and other factors that credit unions should concern themselves with in the digital-driven lending age that we're living in. To find out more, click the button below to get started.
