Banks, credit unions, and alternative lenders are increasingly inundated with loan applications for a variety of purposes that range from home mortgages to business lines of credit. In 2020 alone, financial institutions reported over 22.7 million home loan applications under the Home Mortgage Disclosure Act.
Digital Lending Platform
The number of mortgage applications is somewhat inflated, as many individuals and businesses submit multiple applications to different lenders to find the best terms for their needs. However, due to the sheer volume of mortgage applications that lenders receive and the time it would take to examine each request by hand, it’s unrealistic to expect that lenders can manually qualify applicants. The issues attached to the modern lending process are not just isolated to the mortgage industry, but any type of loan funding.
As a result, many financial institutions are turning to digital lending platforms and artificial intelligence to optimize the prequalification process.
Why the Prequalification Process Needs Adjustment
In many ways, the prequalification process is the top-of-funnel stage in relation to the loan application process. With an ever-increasing number of loan applications that demand attention, financial institutions can’t continue to expand (and overextend) resources on risky or unqualified loan borrowers. By prequalifying applicants at the beginning, your organization will ultimately save revenue, and time, and avoid frustration. With the ability to decipher instant approvals from “hard no’s” during the loan origination process, banks, credit unions, and other lenders will experience an immediate impact on their daily operations.
Outdated Methodology Dampens the Customer Experience
Furthermore, the prequalification stage is a crucial component of the customer experience. If your prequalification process is complex and tedious, it will negatively color the view your consumer has of your institution. For example, if applicants are unable to upload necessary documents online and have to resort to paper forms, printouts, and snail-mail, it will drag the process out and make your institution appear rigid and outdated — also leading to longer processing times.
The convenience and flexibility of a digital process have long since become an expectation, not a luxury. As technology advances and needs change, your customers expect lenders to process applications and make judgments rapidly. Ordinary paperless services are now standard, and to remain competitive, you must offer consumers digital financing methods that match the times.
Data backs this up, as almost all age groups would prefer to start and finish the entire process online. The modern borrower is seeking a simple and streamlined lending process that allows for decisions and financing to be made quickly.
A Slow Response Can Cost You Business
Since many of today’s consumers submit multiple loan applications to multiple lenders, you have a small window of opportunity to sign an agreement with great candidates. If your prequalification process takes too long to determine that a person or business would make an ideal loan candidate — or even if it simply takes longer than your competition — you’ll likely lose out.
How a Digital Lending Platform Can Help Improve Productivity and Accuracy
To combat these issues, you can turn to technology solutions like digital lending platforms to better meet demand and improve the customer experience.
The right digital lending platform can help you provide potential borrowers with a seamless loan application process. Features like AI-powered decision engines, integrations with third-party apps and programs, and a robust back-end repository of high-performance models can improve your prequalification productivity and accuracy.
Improve Underwriter Efficiency
Underwriting a loan is one of the most challenging and vital choices a lender must make. It’s a daunting endeavor to automate your credit policy and build a method for it to be performed promptly, consistently, and precisely.
To automate the preapproval process and improve underwriter efficiency, you need to do more than simply provide a secure website for applicants to submit information. You’d need to create a process by which you pull credit reports, compile data, determine eligibility, calculate interest rates, and return the offer to the consumer, all while adhering to legal requirements and data security standards.
Digital lending platforms can automate these procedures and create a repository for the many moving parts of the loan application process. You reduce manual reviews, automatically filter out unqualified applicants, and reduce transaction costs. This ultimately helps showcase your value to customers as a speedy lending institution, and for those who do qualify and sign loan agreements, they will appreciate a relationship with a business that prioritizes the customer journey.
Work With a Customizable Decision-Making Engine
In conjunction with this, you can leverage decision engines to determine an applicant’s eligibility based on pre-specified rules. Decision engines are a simple approach to automating underwriting and may be integrated with other services like automated credit report retrieval and customer-facing web apps to produce faster preapproval capabilities.
Identify Cross-Selling Opportunities
With a digital lending platform, you have the ability to evaluate applications as you receive them to see if there are other offerings that a borrower could qualify for. You can use this information to cross-sell to your applicants, all of whom have demonstrated immediate interest in your services. When an individual or an organization has submitted an application to the platform, you can provide customers with instant offers that require no additional forms to complete.
Make Instant Decisions
By upgrading your legacy system to a digital lending platform, you can make instant decisions on incoming loan applications. Your applicants can use a customer portal to fill out forms, upload documents in real-time, communicate with your representatives, and receive status updates about their applications. Your organization can enjoy automated, AI-assisted tools that help you prequalify borrowers and streamline the loan process across all loan and applicant varieties.
Create a Consistent Brand Experience
To improve brand recognition, give potential customers a consistent experience across channels, and to tailor the loan application process to your organization’s credit rules, you’ll either need a powerful team of marketers, designers, engineers, and project managers, or you’ll need to use a digital lending platform.
No matter the vertical, you can build a custom, branded digital loan application process. Borrowers can access forms, information, and support from the platform. The issues that arise with legacy applications — namely a disjointed, outdated process — are resolved and simplified through the modern growth opportunity attached to updating your internal lending platform practices and capabilities.
A Digital Lending Platform Unlike Any Other
GDS Link provides financial institutions with top-tier technology, solutions, and advisory services. For an end-to-end digital lending platform that enables your team to prequalify borrowers and provide a seamless digital experience, choose Modellica Engage.
GDS Link helps financial institutions with underwriting, fraud prevention, customer management, loan origination, decisioning, borrower acquisition, and, of course, prequalification through a digital loan journey.
Request a demo today to see how our digital lending platform can supercharge your business.