Lenders are always looking to improve their bottom line, increase applications and build their portfolio. Secure technology innovations that have been widely adopted in lending do lead to growth and improvements. However, recent technology trends like AI and automation have been met with trepidation and, in some cases, mild fear. This fear of automation often stems from a few key concerns:
- Job displacement: Some lenders worry that automation will replace loan officers altogether. While it's true that repetitive tasks can and often will be automated, the human touch will remain crucial for offering personalized service in lending. In fact, automation can free up loan officers to focus on building relationships with borrowers and closing complex deals.
- Black box decision-making: Lenders often worry that AI-powered decisions lack transparency. However, most modern lending automation tools provide detailed insights into the factors influencing loan approvals or denials and offers ways for each lender to easily determine their thresholds. This allows for human oversight and ensures fair lending practices.
- Increased fraud risk: Automation is not rubber stamping. Counterintuitive as it may seem, automation can actually strengthen your defenses against fraud. AI-driven algorithms can analyze vast amounts of data to identify suspicious patterns and red flags and keep up with lending fraud trends that might escape the human eye.
And to overcome this apprehension, let's turn how automation can empower lenders and grow their business.
- Fighting lending fraud: AI can analyze active loan applications against historical fraud data, flagging suspicious activity based on inconsistencies or anomalies. This proactive approach significantly reduces the risk of falling victim to fraudulent applications.
- Accelerating lending: Loan processing times can be drastically reduced with automation. Manual tasks like data verification and document collection are streamlined, leading to faster approvals (or declines) and higher customer satisfaction levels.
- Data-driven lending decisions: Automation provides lenders with a wealth of data that can be used to personalize loan offerings and make more informed lending decisions. The speed to (accurate) quote is key in a competitive lending market, so lenders are able to use first and third party data to make the best decisions.
- Consistent borrower evaluations: Automation ensures consistent application of lending criteria across the board. This eliminates subjectivity and bias, promoting fairness and building trust with borrowers.
Lending automation is not a future threat but instead is a powerful tool that empowers lenders to thrive in a competitive marketplace. By embracing automation lenders can free themselves from tedious tasks, build stronger defenses against fraud and make faster, more informed decisions – all while delivering exceptional service to their borrowers. Today automation isn't just an option; it's the key to unlocking a future of efficient, secure and profitable lending.