How automation will continue to drive a competitive edge in lending

Written by Michael Haedrich Senior Product Manager, Finastra
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As the digital lending space continues to evolve, it can be hard to know where to focus your resources.

Should you invest time and money to develop tools that make the customer or member experience more convenient?

Is making sure that your organization remains compliant and keeps valuable account data secure also top of mind?

Are you hesitant to make a decision about the cloud because you’re worried about the total cost of ownership?

All of the above?

It’s a lot to consider. Modern technology has fundamentally altered many ways that loans are processed end-to-end. This is thanks in no small part to the proliferation of cloud technology, which enables lenders to improve loan process efficiency, reduce error and risk, bring down the total cost of ownership and provide new, agile ways to grow.

So rather than feeling compelled to choose a single lane and stay with it, you want technology that allows you to offer a wide range of services while also allowing for growth wherever and whenever you need it. Today, that means investing in cloud technology that goes beyond a single benefit.

A new frontier: Automation, AI and Machine Learning at scale

The rise of automation and use of advanced Artificial Intelligence (AI) and Machine Learning (ML) capabilities in the lending space are providing instant benefits at scale and are largely possible because of cloud platforms.

Financial institutions can use AI and ML to analyze massive data sets and detect patterns that drive innovation, lead to better decision-making, and create more standardized workflows. ML can also be used to deliver more oversight control. Think of it as a personal assistant that can help with the tedious process of error detection.

And the overarching feature in all of this is automation.

This may seem like kind of a no-brainer in today’s lending environment. However, it’s surprising to see some financial institutions still have so many manual processes in place. Over the last decade, finance departments that prioritized automation were able to slash operating costs by around 30%.

The advantages of automation and new AI capabilities in lending

Streamlining the lending process and making it more convenient for account holders while bolstering security and compliance has been a game changer for lending services.

Automation and AI can significantly reduce the time it takes loan officers to make compliant documents. Research has shown that leveraging AI in the lending space can save as much as $70 billion annually. That’s why it’s a necessity for financial institutions to welcome it.

Automation efforts need to be embraced and instilled from upper management down. If they aren’t driving automation, it’s not happening. And if it’s not happening, organizations are at risk of falling behind. Adding automation across multiple departments saves hundreds of manual hours and increases an organization’s ability to handle the full spectrum of loan types.

Add in cloud delivery, and solutions can be accessed easily and reliably, wherever there is internet access. And that’s crucial with today’s working environment. Team members are remote one day and then back in the office the next, so adapting to these changes with ease is key.

Further, with cloud technology, financial institutions reduce financial risk and loss. They no longer have to make huge capital investments to digitize their lending process. The built-in automation capabilities allow financial institutions to eliminate the kinds of manual activity that have a high potential for error. In fact, Finastra has seen a 50% reduction in front-line transaction errors with its Fusion Originate solution, when deployed in the cloud.

Let’s not forget about the speed factor

Digital platforms have created the expectation of constant access, and it’s important for financial institutions to not only meet that expectation, but exceed it. A cloud platform with automation enhances overall client communication, leading to faster turnaround times and onboarding while allowing for rapid provisioning of documents.

Ultimately, efficiency benefits will only continue to show as automation, and cloud technology in general, continue to evolve.

Automation allows for more interaction. That might seem counterintuitive, but the time that loan officers are saving on tedious document prep or other redundant manual tasks allows them to focus more on building relationships within their community.

It will also enable them to refocus on offering strategic, high-value activities that lead to even more growth. Right now, Finastra clients have experienced an 11% growth in their commercial lending portfolio, nearly double the industry average. They’re also experiencing a 9% growth in their consumer lending base within 4 years.

The loan officer of the future will only continue to benefit and ensure customer and member growth continues by adopting new, innovative tools and practices.

Is your financial institution looking for ways to use the cloud to provide a more robust digital lending experience? Download this ebook to walk through a story of a VP of lending and her journey to the choosing cloud-based solutions.

Contact Finastra today to see how our lending solutions can spark innovation and ensure security and compliance at your financial institution.

Written by
Photo of Michael Haedrich

Michael Haedrich

Senior Product Manager, Finastra

Mike has been in the technology field for over 30 years, supporting some of the world’s largest technology companies. He joined Finastra in 2018 and has been instrumental in developing the electronic signature strategy for lending products. Mike has a Bachelor of Science in Finance from the...

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