Last year, the Financial Brand made reference to a study reporting, “slow loan processing is the single biggest pain point” for the Millennial segment of the consumer group that was surveyed. The PACE report for 2017 found, “Millennials have difficulty finding time to visit a branch and have trouble accessing loans quickly enough to take advantage of an opportunity”, such as purchasing a car or funding education. The common thread being the speed and convenience of lending matters! Which begs the question, if the current lending process is too slow or inconvenient, what are the bottlenecks that are slowing down the process and making the experience so painful?
- Separate Platforms: This doesn’t apply to seamlessly integrated applications through an Application Programming Interface (API). However, it does apply to separate platforms where loan officers have to launch multiple programs, maintain different usernames and/or passwords and alternate between applications for core functions and lending functions.
- Forms: Different loan types require different forms. If your loan officers are spending time making sure they have the right forms for the loan being funded, they are wasting time. Loan Origination Systems (LOS) should allow forms to be grouped and assigned to loan types. This makes the loan officers’ job easier by only prompting for the forms required for that specific loan type.
- Credit Report Integration: If pulling a credit report is not directly integrated into your LOS, this could be your worst bottleneck. Loan officers shouldn’t need to leave their loan workflow, sign into another application or import obligations and trade lines manually. Integration with loan decision tools like Hart Software or CBC should also be considered in this bottleneck.
- Lending Queues: How automated is the loan application assignment process? Can employees create a custom view of loan applications they are assigned to? Are employees notified when a new loan application is submitted, approved or funded? The lifecycle stage of loan applications can be disparate and confusing if not organized efficiently.
- Disparate Mobile Lending: Is your mobile loan application seamlessly integrated to your lending platform? Your staff shouldn’t have to manually import mobile loan applications into your LOS.
- Signatures: DocuSign and many other eSignature companies have researched the bottlenecks of signatures within the financial and credit union industry. In fact, DocuSign found that electronic document flow with e-signatures reduced loan processing time in credit unions by 80%. Most of this reduction is a result of the time it takes for the borrower to sign the documents, with 91% of loan docs being returned in less than 10 minutes, and 66% in less than 5 minutes of sending.
- Duplicate Data Entry: This should be elementary, but if loan officers are manually typing member information that already exists on the member account, they are wasting valuable time.
- Entry, Approval & Funding Lifecycle: Some credit unions allow the same loan officer to enter an application, approve it and then fund the loan. Other credit unions want more control over the process and require a different loan officer to fund the loan than the individual who approved it. For security reasons, this has the potential of catching the eye of some auditors. Your LOS should be able to simply set these types of permissions and provide efficient ways to notify loan officers when a loan has been approved and assigned to them for funding.
- Accuracy: This can be a serious bottleneck and one that is often times overlooked. Your loan processing workflows should be simple and easy to comprehend. When loan officers are in a hurry, they can overlook certain information or forget to input member information that will keep the loan from being funded later on. Explore your system options to make certain fields required and impede loan officers from progressing in the workflow unless the information has been filled out.
- 3rd Party Add-ons: Add-ons to your LOS can bring additional functionality, but they can also bring headaches if not properly integrated through an API.
- Overrides: When a loan officer with lower lending limits reaches their threshold, an override is required. Your staff shouldn’t have to leave the member waiting while they track down their supervisor. With remote overrides, instant notifications can be sent to supervisors who can review the situation and approve the action without leaving their desk.
For more ideas on reducing lending bottlenecks and closing more loans quickly and efficiently, read the related article: How to Trim Loan Processing Time by 80%.