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Measuring the Impact of Automation

  • by Brit Barker
  • October 26, 2021

When it comes to originating loans, whether for the lender’s portfolio or for selling into the secondary market, automation is a basic requirement. Today, there are too many legacy manual processes throughout the applicant’s journey from origination to closing. It’s not enough to have a system of record to process the information required to generate a compliant and saleable loan.

As a lender, you need effective automation to gather that data and confirm its accuracy if you hope to generate high quality loans quickly. Failure to originate swiftly will take you out of the game.

Today, we’re having conversations with many lenders who know they need good loan automation and are eager to understand how to evaluate their tech stacks to determine whether they need to invest in something new or just make adjustments to the technology they are currently using.

Evaluating automation

While it can be very beneficial to have an outside, third-party consultant working with the lender’s team to help determine the effectiveness of their current tech stack, it is not a requirement. With the right process, lenders can perform this analysis internally.

A good first step for lenders involves the development of a checklist of all the functions that are required for the production of the loan. This includes a number of steps that do not need to be performed by human staff, such as sending automatic status updates to borrowers, requesting missing documents and other information, or ordering third-party services. Knowing which tasks can be performed by automation is key to maximizing the impact of the automation.

During this process, the lender may discover some tasks that typically are done automatically, actually need human interaction, due to the limitations of legacy technology platforms. This is a clear sign that new technology may be required.

Similarly, there will also be functions on the lender’s list that management is not yet comfortable handing over to automation. These are the things that still require the human touch and contribute directly to the development of the borrower relationship.

Finally, lenders should audit their technology to determine how easy it is to move items from one list to the other. This flexibility is built into modern lending technology but is absent from most legacy platforms.

Balancing efficiency with customer satisfaction

Some older origination technologies make it more difficult for the lender to change from a manual to an automated process or to automate functions that were previously manual without outside assistance. But with new technologies, orchestrating the lender’s workflow has been simplified, allowing the lender to easily automate those functions that result in higher lending efficiency, while keeping humans involved where it increases customer satisfaction.

Automation can only be effective if it offers the lender the right mix of efficiency and high levels of customer satisfaction, something that requires a mix of great technology and expert staff. Getting the right mix is the key to success.

It’s important that automation be employed to keep a loan moving efficiently, both to keep costs low and to close on schedule. But automation must not displace human customer service personnel who are critical to high levels of customer satisfaction for these borrowers.

On the other hand, experienced borrowers require less human intervention and, in fact, can view ongoing personal communication as a hinderance to the lending experience. Automation can handle most of the process for these borrowers. We’ve seen this in the data coming out of large digital lenders who promise a fully automated process, but as soon as the application is filed begin calling the borrower. This has not been conducive to higher levels of borrower satisfaction.

The best lenders never fully eliminate the human touch. They automate as many manual steps as possible to make time for value-added steps performed by human staff to achieve higher levels of customer satisfaction.

Making the measurements

A lender’s efficiency can best be measured by the time and cost involved in taking a loan from application to close. The higher the lender’s efficiency, the more likely automation is being employed correctly.

Be sure to measure the costs of all loans in this analysis, not just the ones that close. If automation drives borrowers away before they can close, this will drastically decrease overall efficiency.

Customer satisfaction can be a moving target and is, by nature, a subjective measure. Still, there are now tools available in the market that will allow a lender to understand the impact it is having on its borrowers. The best metric may still be repeat and referral business, though this is a lagging indicator.

The Origence workflow orchestrator was specifically designed to allow lenders to easily maximize the impact of their automation. This allows them to create workflows that offer all the advantages of a lower cost, high-efficiency lender, while at the same time it allows them to free up staff to hold the borrower’s hand through the process.

The best measure of the effectiveness of your loan automation may be how quickly it can be reconfigured to meet the needs of any individual borrower. Origence makes reconfiguration fast and easy.

If your current automation locks you into operating in a manner that does not result in both efficiency and higher levels of customer satisfaction, then you will be operating at a disadvantage. Better to seek out new tools that ensure automation has the intended effect on your business.

To find out how Origence can generate the maximum value out of your lending automation, reach out to us today.

Brit Barker, Origence’s senior vice president, enterprise solutions, is an experienced sales and product executive with 20 years of helping financial institutions improve their lending performance and exceed consumer needs. He’s recognized as an industry leader with innate talent in balancing strategic focus with operational execution. Brit is an authority on consumer, mortgage and indirect lending, with expertise in facilitating the transition of new clients into the financial lending market, and enhancing lending programs.
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