RPA Redefining Loan Processing

In the circle of life, key items in anyone's life checklist would be to own, run and manage their own business, experience a sense of freedom within the business realm and under their belt own a piece of property or land commonly referred to as mortgage. All these require capital - with regards to the business, or principal - with regards to the mortgage, as the primary seed. This concept is replicated globally and has been a key concept throughout history, spinning differently with each stance the economy takes. But what has not span, so to say, is the duration taken to approve loans. A loan application process, in the 90s, could take 6 months or more which was not a guarantee that one would be awarded the loan. Fast forward to today, and the process has been shortened to a maximum of 5 working days, depending on the bank's internal processes.

But what if I don't have a few days to spare and needed the money now, could the process be faster?

Let's review what is done in a loan application. An applicant fills a long form - be it physically or online - and then attaches supporting document for each section of the application. The form could be twelve long pages with the last 4 being terms and conditions. When the applicant feels that their application speaks for itself, he/she uses the provided email for submission. Then the application is assigned to the back-office process of the financier. To say that back office processes are the back bone of any financing company would not be entirely a lie and if the back bone is overwhelmed by slow performance then the overall process will be perceived to perform in a rather slow manner, churn this to the front office and customers begin to think that their financier is not up to par with processing power as other institutions. Result, many will move their interests (and funds) to other more deserving institutions because customers expect and anticipate faster and seamless loan services at the time, place and channel of their choice. 

So back to our earlier question: what if I needed the loan immediately? Could the process be faster? Yes. Through Robotic Process Automation. This emerged technology is redefining lending. While there are many software applications that serve aspects of the process already, digital automation will see to the automation of manual, repetitive processes that have been handled by operations staff for eons. Disparate systems can be aligned to allow reliable and consistent dataflow for the entire chain, allowing for a hastened overall process. Does it require an overhaul of the infrastructure? No. Digital automation is laid atop the existing IT infrastructure. The goal of automation is to not replace the system but rather to improve the quality and speed of the system. The benefits that accompany the implementation of the technology are many, each building on top of each other. The core benefits will include reduced cycle time and higher data accuracy. Using automation, errors arising from data capture when keying in the six pages of customer information will be omitted. Errors of omission or transmission will cease; all the better if the information was keyed in on an online document and submitted through a portal that the bot can access. And what of cycle time? The time taken to verify data from a customer will be reduced as the bot will handle the process, be it through integration with other systems - such as verification of tax PIN number from Tax portal or credit bureaus to verify credibility of the borrower - or within the bank itself to verify if the applicant is already an account holder. This will also reduce the amount of data gathered on the applicant, for instead of multiple bounds of files seated in different siloed departments containing duplicate data on the same applicant, the systems will be synergized to share information on a need to know basis. At the end of the verification process, the bot can automatically trigger an email or send a message to the applicant informing them of their loan status and the next step to follow afterwards.

Once the cycle time is reduced, then easy customer management alongside enhanced customer experience is achieved leading to a cost reduction that would have been brought about by extra labour, storage, paperwork, mailing and physical transportation for verification purposes. And to earn trust from an audit perspective, automation creates its own digital footprint that can easily be traced and logging - an adage in monitoring - is also applied.

Using a digitally automated loan processing system means data from paper documents can be electronically read, converted and indexed or for companies that have adopted an online portal, data can be captured from the portal and stored in databases. Routing can then be performed to direct information to the appropriate system. Workflows can be used in place to allow repeatable processing for multiple applicants. With effective process-mining and business re-engineering, the process can be smoothened out to achieve even more optimal results.

And what next after RPA, one might ask? Well, next would be to optimize the entire automation chain. And among the optimization would be Artificial Intelligence that will specifically target Risk Evaluation when deciding on whether to award the loan or not.

But that is positivity for another day.