Unlocking growth using income documents

The process of income verification during loan approvals can be tedious for lenders. Methods range from transaction scraping to manual employment verification calls to manual reviews of traditional income documents - all very time-consuming, costly to implement, with limited “large scale” automation outputs.

While each approach carries its own advantages and disadvantages, it’s important for lenders to pick the options that (a) customers feel comfortable with, and (b) can be integrated into the loan approval workflow to enable a fast decision.?

In this article, I’ll discuss how traditional income documents (such as payslips) can be used to acquire customers through fast decisions and a seamless verification process.

Making it easy for borrowers and brokers

The lending industry has seen a rise in refinance activity, with borrowers seeking to find competitive propositions as interest rates continue to climb. Lenders I talk to have either completed a digital transformation, or are mid-way into such a program, with the focus on being able to make a fast decision for a prospective customer a key priority.

Added to this, broker originated loans have continued to grow, with the MFAA reporting that ~70% of mortgage applications were written through brokers in the last 3 months as of end of May 2023.

Therefore - lenders must provide both direct borrowers and brokers with fast, transparent and seamless experiences, if they are to capitalise on the current market.

Income document verification slows down borrowers, brokers and lenders.

Income verificatin is one of the ‘last standing’ manual activities in lending, which in turn leads to time and process issues for both borrowers and brokers.?

Different solutions for income verification have emerged over recent years, which include:

• Utilising existing customer transaction data (if you’re a bank)
• Scraping transactions using online services (good for applicants who share this data)
• Open banking (where available)
• Manual employer checks/calls (either in-house or outsourced)

The above solutions all have PROs and CONs however one thing is consistent, which is that no single option covers the majority of applicants. Documents such as payslips, bank statements and tax assessments remain one of the most simple and convenient methods for borrowers and brokers to provide this information.?

Unfortunately for lenders, documents are usually manually processed by teams of people who are wearing two hats: (1) manually reviewing, extracting and re-keying financial information and then (2) keeping an eye out for fraud.

This means that despite adopting different methods for income verification, lenders still need to manually process payslips, bank statements and NOAs coming in from direct and broker channels.

How can income documents be harnessed to automate verification?

Income documents provide a great opportunity to automate income verification for a number of reasons, which include:

• Borrowers and brokers are familiar with providing these documents, as they have done for decades
• Documents provide a discrete, point in time reference for which there is no need for an ongoing feed or stored bank account credentials
• The number of documents and type of documents can be varied commensurate with risk, so borrowers only provide and lenders only receive what is needed.?

As lenders are well progressed with Loan Origination System (LOS) transformations, the opportunity to use the data from documents to perform fast verification is now very real and can be implemented quickly.

This is where Fortiro fits - using documents to provide fast decisions

Fortiro specialises in the real-time processing of income documents such as payslips, bank statements, NOAs, BAS, etc.; it provides the ability to (1) automatically extract income information from documents and (2) perform very deep fraud checks on documents. Similar to a human, this works on photographs, scans and original documents.

Fortiro enables lenders to automatically and unconditionally approve loans, without needing borrowers to share access to transaction data, provide their banking credentials, complete additional employment calls, or submit a perfect PDF document. Fortiro uses the income document, such as a payslip, as you’ve received it from the borrower.

This innovative approach entails the use of advanced algorithms to scrutinise and accurately extract information from financial documents provided by the borrower.?

Fortiro enables faster unconditional approval

Lenders can quickly and automatically verify the borrower's financial information - without needing to spend hours manually reviewing each document.

For those who’ve experienced OCR, Fortiro is not simply OCR. OCR solutions aren’t able to handle these sorts of income documents reliably and implementing OCR can be expensive and time-consuming. It requires the development or integration of sophisticated algorithms to accurately interpret and extract data from various formats.?

What does Fortiro look like in action?

One of the benefits of Fortiro is that it offers a less intrusive and technically disruptive way of verifying financial information.?

Our clients will normally perform a conditional approval very quickly using application data, and once the borrower provides the relevant documents, these:

1. Are uploaded into Fortiro and automatically recognised
2. Fraud checks are performed
3. Income verification is performed
4. A response is provided back to the LOS or decision system within 30 seconds
5. An unconditional approval can then be reached (subject to other items being completed by the lender)

One of Fortiro's clients has drastically cut loan approval time - and in general our clients share that we are saving them anywhere from a few minutes for a single document right up to 20 minutes or more.?

For one client, their loan approval times went from 360 days per 10,000 loan approvals, to 3.5 days per 10,000 loan approvals.

If you're interested in learning more about how Fortiro can benefit your borrowers and brokers, we encourage you to get in touch.

Don't miss this opportunity to take advantage of this powerful tool and improve your loan origination process.?