Customer experience is one of the major talking points for customers dealing with businesses operating in the retail and hospitality sectors. However, that was hardly the case in the finance industry, especially in lending.
However, the times they are a-changing.
Modern customers are ready to ditch the traditional, inconvenient, and time-consuming process in favour of advanced, convenient, and, most importantly, banking services that provide seamless experiences. Therefore, many financial institutions are increasingly focusing on improving customer experiences across multiple touchpoints.
Additionally, financial technology (Fintech) companies have played a pivotal role in transforming the dynamics of the current Indian financial landscape. For example, applying for a loan is one of the most common interactions customers make with financial institutions.
In this context, loan origination systems with intuitive automation can speed up the process and minimise lending risks.
In this blog post, let us explore the importance of a streamlined loan origination solution and why automation is the key to ensuring flawless customer experiences.
Loan Origination System: Why Is It Lenders’ Much-need Ally
It is no secret that the traditional loan origination process was complex and far from being straightforward. It was not only time-consuming for borrowers but also for lenders who faced numerous obstacles to being efficient and customer-centric.
Digitisation and increasing calls for convenience from customers have now paved the way for automated loan origination systems that play a pivotal role in improving a bank or a lending institution’s bottom line.
Let’s look at the key areas where automated loan origination tools are helping financial institutions and lenders alike:
1. Eligibility Evaluation
Onboarding is the first step in securing a loan. At this stage, the borrowers provide useful details, including the type of loan they are interested in, income details, and other personal information.
Advanced loan origination systems powered by artificial intelligence (AI) expedite this process via online portals and web forms. Additionally, real-time evaluation and background checks ensure borrowers provide accurate information, leaving no room for discrepancies.
The loan origination software takes these details into account before providing instant results based on pre-set criteria, including loan amount, interest rate, and whether the borrower is eligible or not.
2. Application Processing
To optimise service delivery, many financial institutions are concentrating on minimising human intervention and improving decision-making. Application processing is one of the most critical stages of securing a loan, as all the details and other information the borrower provides are verified.
Additionally, borrowers also instantly verify whether all the information is provided accurately and rectify if something is missing.
While this used to be predominantly a manual process, the arrival of loan origination system has automated verification, eliminating the need for human intervention. Automatic data-checking, identifying errors, and instant alerts in case something is missing ensure faster and error-free loan application processing.
3. Credit Scoring
Credit scoring has witnessed a remarkable evolution in recent years due to several factors. The significant rise in transactions made via smartphones, widespread adoption of financial products, and advancements in data analytics are some of the top reasons why credit scoring has witnessed a transformation in recent times.
Modern loan origination tools rely on algorithms and machine learning models that go through vast data sets to determine a borrower’s creditworthiness. These systems analyse a borrower’s credit history, digital transactions, income statements, and other financial indicators to assign a credit score.
While traditional credit scoring processes took weeks and even months to complete, lenders can determine a borrower’s credit score within seconds today.
4. Seamless KYC and Anti-Money Laundering Checks
As the financial sector opens its arms to welcome innovative and technologically advanced financial tools and systems, it also opens doors to financial fraud and cybercrime. Additionally, it is not uncommon for many bad actors to misuse the advancements to launder money and engage in similar illicit crimes.
‘Know Your Customer’, or KYC, has emerged as one of the most effective strategies to combat this financial crime and build a more transparent and secure financial landscape. Traditionally, customers had to visit a bank or meet the authorising agents in person to initiate and complete the KYC process. While this approach was not only inconvenient, it was very time-consuming.
Modern loan origination systems eliminate the need to visit a branch physically as they combine different databases, including government and transaction records of a customer, to verify their identity.
Additionally, these tools can also flag potential risks and notify the concerned authorities if they detect something unusual.
5. Prompt Customer Communication
Timely and transparent communication is one of the key parameters that can turn a lacklustre customer experience into a positive one. Loan origination system send out consistent automated notifications at every step of the loan origination journey to ensure customers know the current status and all the critical information they should be aware of.
AI-powered chatbots can also serve bank customers and answer their queries 24/7. These systems document and log every instance of communication made with borrowers, ensuring transparency and accountability at all times.
Final Note
It is impossible to ignore or sideline the impact of automation in the lending sector, and its rising adoption is a testament to its effectiveness and efficiency. Customer experiences have become one of the key differentiators that shape a lending or a financial institution’s bottom line, making them practically indispensable in the current scheme of things.
Lenders that are already harnessing these automated tools carry a competitive advantage over lenders who are hesitant to embrace this innovation.
As India’s leading Lending Lifecycle Management platform and Credit Evaluation Services provider, Finezza has the perfect solution for you.
Our modern and robust loan-origination system offers accurate and actionable insights into a borrower’s credit history and, most importantly, improves the lending process significantly. It can also facilitate smooth and efficient lending from a loan eligibility planner to a 360° customer profile assessment.
Book a Demo today to know more.
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