How To Automate Loan And Mortgage Management

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February 8, 2023 Business

Issuing a loan should be a smooth process. The loan issuer’s task is to check the eligibility of the client and then decide whether to approve or deny their application. Once the bank or financial institution approves, the client receives the loan.

For a long time, there’s been chaos and confusion, especially in large financial institutions, regarding loan and mortgage management. The reason is that they’ve been using a manual system to service loans and mortgages. This process may involve a lot of paperwork, so it’s complicated.

Additionally, different customers have different payment and term dates. So, the entire process of keeping all this data in order and following up using a manual system may take a toll on the employees in the organization.

The good thing is that with advancements in technology, banks and other financial institutions have gotten a solution on how to lend loans and mortgages, do a credit check on different borrowers, and complete the entire loan issue process seamlessly. You might want to adopt some of these strategies for your company.

To gain more understanding on how to automate loan and mortgage management, read on!

1. Use A Platform For Online Loan And Mortgage Applications

When a loan applicant applies for a mortgage or loan, the lender requires that they provide the following information:

The problem with having a manual system is that it takes a long time to collect data to help initiate the loan process. Also, you may experience some push and pulls or back and forth with the client.

However, with technological advancements, loan borrowers can complete their loan applications online and upload all the relevant documents alongside their applications. You can advise them to adopt these techniques.

On the flip side, the financial institution responsible for issuing the loan also can use Optical Character Recognition (OCR) software to go through details and extract the most critical data.

OCR is a technology that enables the recognition of text in digital images and scanned documents. OCR software scans the images and converts the text into machine-readable text, allowing the information to be easily processed, searched, and edited.

Another technology that can be used is Robotic Process Automation (RPA). RPA is a technology that enables organizations to automate repetitive, routine, and rule-based tasks, such as data entry, document processing, and customer service interactions, without the need for human intervention.

RPA will copy and paste the information into the bank’s system. This makes document submission more streamlined, fast, and efficient than individuals physically submitting their documents.

2. Use Artificial Intelligence (AI) To Process Applications

Once the borrower has successfully submitted their documents, the loan or mortgage lender has to verify that they’ve received accurate, complete, and updated information to help ascertain whether to give or deny the loan. An example of a case that can make the lender get a denial is if the name appearing on the ID doesn’t match that in the application document.

So, the bank or financial institution has to verify all those details and ensure they’re authentic. Considering the number of people applying for loans and mortgages, you can tell that this is a lot of work if done manually. This is because it’ll take so many days to do a complete follow-up for every person. Also, the loan and mortgage approval may take a lot of time. Lastly, there’s a high chance that errors will occur.

To save more time, it’s essential to have AI or loan processing software, which has an intelligent automation tool to help automatically do the following:

Check if the loan applicant has filed all the documents correctly
Confirm that the documents meet the required criteria (For example, the signatures in the application and ID must be the same)
Ascertain that the details in the application form are legit (For instance, the company name must be similar to what appears in the tax documentation)
Check the credit score of the borrower

You can use this software with others like RPA to get information about the client’s credit history from certified websites before processing the loan.

3. Integrate An Up-To-Date Loan Management System

The loan and mortgage management system has become a solution and automated the loan lifecycle for many in the field. This software can help in various ways, which include:

Processing client information
Creating new loans
Giving lenders accurate reports and statements
Reducing workflow
Managing interest rates
Providing automation collection tools
Reducing manual risks and errors
Collecting debt automatically
Tracking repayments

This software has several features that help it achieve all the above tasks, and you can customize yours to fit your needs. Some of the common features of this software include the following:

Customer relations management software: Typically, loan and mortgage management systems have customer relations management software integrated, which helps evaluate the risks associated with giving the lender a loan. It helps check the credit history of the organization or individual borrowing a loan before giving it to them. Moreover, it helps suggest the types of loans best for the client. This software completes this process within minutes, unlike a manual system which takes many days.
Machine learning (ML) models to help with underwriting: Underwriting in loan and mortgage management is assessing the borrower’s risk and ascertaining which type of loan would be best for them. Apart from the credit score, banks and financial institutions insist on checking other variables like the value of your assets, hence the need for automation.

The reason why it’s critical to use ML in loan and mortgage management is that it can help you predict the possibility of the applicant’s default after confirming different metrics. For instance, it might check the individual’s or organization’s past performances regarding a loan in the same income, tax, or profit bracket to ascertain that information.

You’d also want to automate this process because it’s more accurate and can quickly scan related documents like cash flow statements, balance sheets, and income statements. These documents give insightful information to help the financial institution make informed decisions when giving out loans.

Ultimately, the underwriting process through ML is fast. Therefore, you’d want to be included. In this regard, you can hire a professional in both loan and mortgage matters and ML to help integrate this software into your system.

Natural language processing (NLP) and OCR technologies: Before issuing the loan, it’s critical that the staff performs a final run to ascertain that everything has been done correctly.

NLP focuses on the interaction between computers and humans using natural language. It can automate customer service, extract information from loan applications, detect fraud, and improve loan underwriting. Additionally, it can analyze text-based data to identify patterns and generate reports, recommendations, and answers to customer inquiries.

Apart from the NLP and OCR technology, you can also use RPA in this process. If it flags anything for a quality check, it’s essential to verify the information again.

It’s critical to have all three technologies in your system to help you do a final review, keeping in mind that the number of loan applicants is increasing daily. Apart from eliminating errors, these technologies are fast and efficient. They’ll help you easily detect unsuited and unqualified ones. Moreover, they ensure that the applications align with the regulatory agencies’ expectations and pre-programmed standards.

You’d want to use the automated loan management system with the above features to make your loan origination and verification seamless and less time-consuming.

4. Automate The Lending Process

It’s essential to know that AI and ML can work hand in hand to not only complete the already-stated functions above but also help in loan issuing. You can use AI scheduling to send an automatic email to loan lenders confirming disapproval or approval once the system has established all the essential details.

Using these technologies in the loan lending process ensures that the applicant gets information about whether they’re qualified to get the loan on time. These technologies have the power to analyze, standardize, and update all the necessary information and database within seconds.

The chances of these technologies giving loan lenders inaccurate information are meager to none. It isn’t easy to find such systems informing an applicant that they qualify for a loan when they don’t or that they don’t qualify, yet they’re eligible. Most likely, you’ll get the loan you’ve requested if you’ve been identified as eligible and approved.

5. Set Up Automatic Reminders

After issuing the loan or mortgage to the borrower, monitoring their repayment is critical and ensuring they’re doing it on time. To achieve this, you can install automatic AI-powered reminders to help borrowers remember and keep track of repayments. In case of delayed payment, the system can automatically send a message to the borrowers reminding them again of the repayment.

Reminders benefit loan borrowers and help financial institutions, banks, and third parties like credit agencies to be aware of the issues going on with their customers. For instance, if an institution has defaulted to paying a loan for an extended period, you’d want an automatic system to update you on such an issue through an email or text. Thus, you can take the next course of action without delay and incorporate strategies to secure your position.

By sending these reminders, the financial institution is able to track its bad loans and maintain an up-to-date understanding of its cash flows.

6. Use A 24/7 Customer Support Chatbot

It’s critical to ensure that your loan and mortgage management software offers 24/7 support service to all its customers. In this regard, you need to ensure that you have a website with a chatbot, where your clients and customers can ask questions regarding their loans and get instant feedback.

Apart from that, the software should allow borrowers to access their account information, payment history, and account balance. This will help them keep up-to-date with their account balance. It’ll also be wise to ensure that the borrowers can track the due repayments through the loan and mortgage software to help them pay their debts at the right time.

7. Integrate Financial Analyzer Software

You’d want to use financial analyzer software, an AI-driven tool to help you analyze your organization’s financial information and performance. In this regard, verifying every bit of your income statement, cash flow statement, and balance sheet will be easier.

If details are written in other languages, this software has features for choosing the language you prefer. The customers can also analyze the information in the language that they’re most comfortable with.

You can also use AI-driven tools to ensure that your loan and mortgage software gives the borrowers a summary of all the transactions they’ve made individually. This will help them track their progress and how far they are from clearing their entire loan.

8. Incorporate Loan Servicing Software

Having loan servicing software is critical because it helps manage and automate the loan lifecycle. This software minimizes errors and takes away the burden of manually reconciling and tracking loans.

Additionally, the software ensures that the borrowers pay the loans on time and calculate fees and interest. It makes collecting funds through credit cards and wire transfers easy.

There’s greater customer satisfaction if you use loan servicing software because of minimal physical interaction and increased efficiency.

Conclusion

With modern technological advancements, the world is slowly transitioning to automated systems, shifting from the manual way of doing things. Not only do these up-to-date systems have efficiency, but they’re also time-saving. There’s also a lower chance of making mistakes since these systems are accurate.

An example of a sector that’s going digital is loan and mortgage management. In this regard, you’d want to learn how to automate this type of management in your organization. Some ways to do it are as follows—ensuring most of your operations are AI-driven, providing a platform online where borrowers can apply for a loan, using software like financial analyzers and loan servicing, ensuring your chatbot is active 24/7, and setting reminders.

By incorporating all the strategies mentioned above with the help of a professional software or IT expert, you’ll have one of the best loan and mortgage management systems with optimum efficiency and little to no errors.