Exception tracking is a crucial part of the loan origination process, and can greatly benefit from the implementation of a digital lending solution. Many financial institutions currently rely on paper-based checklists, such as Excel spreadsheets or Word documents, to manage their loan requirements. These methods can be cumbersome to maintain and difficult to standardize across departments, leading to missing requirements, communication issues, and frustration for both financial institution staff and customers. In this article, we will explore how digital lending solutions can streamline exception tracking and provide a more efficient and effective way for financial institutions to manage their loan requirements.
First, it’s important to understand how you are currently using paper-based checklists for exception tracking. These usually outline the entire loan process, starting with pre-approval requirements like financials and CIP/entity documents, followed by due diligence requirements for closing, such as appraisals, insurance, and ‘title’. The final steps in the process are typically post-closing/booking, exceptions, and ongoing requirements.
When evaluating digital lending solutions for exception tracking, there are several questions you should consider. What are your current checklists based on? Do different roles, such as lenders, loan assistants, processors, and credit staff, have their own requirements? Are there different requirements for different collateral or products, such as real estate, vehicles, or revolving loans? Are you using multiple checklists for different scenarios, such as construction, SBA, or real estate loans? Understanding these factors will help you determine the best digital solution for your needs.
There are two main types of items that can be tracked with digital lending solutions for exception tracking:
Digital lending solutions offer a range of features and capabilities for exception tracking that can greatly improve upon paper-based checklists. These solutions can be tailored to the specific needs of each financial institution, and can be customized to track different types of documentation items and process items. Documentation items may include physical requirements like appraisals, inspections, entity documents, financials, and insurance. Process items can be divided into two categories: reminders to do something, such as completing a loan narrative or pulling credit, and steps to complete a document, such as ordering an appraisal or reviewing insurance. Digital lending solutions can track both types of items and provide reminders and alerts to ensure that nothing falls through the cracks.
There are several potential benefits of using digital lending solutions for exception tracking. These solutions can help financial institutions save time and reduce the need for paper documents, leading to cost savings and improved efficiency. Digital solutions can also provide greater visibility and transparency into the exception tracking process, allowing different departments and staff to easily access and collaborate on the same information. Digital solutions can also help financial institutions maintain more consistent and uniform exception tracking processes, reducing the risk of errors or omissions.
However, there are also some potential challenges and considerations for financial institutions to keep in mind when considering digital lending solutions for exception tracking. One concern may be the upfront cost of implementing a digital solution, as well as any ongoing fees or maintenance costs. It’s important to carefully evaluate the potential return on investment and compare different solutions to determine the best fit for your financial institution. Another consideration is the training and onboarding process, as staff may need to learn new systems and processes. It may also be necessary to update or modify existing policies and procedures to fully integrate a digital lending solution into your exception tracking process.
To ensure a successful implementation of a digital lending solution for exception tracking, it’s important to follow best practices. This may include thoroughly evaluating and comparing different solutions, engaging with vendors and experts for guidance, and conducting a pilot program or testing period before fully implementing the solution. It may also be helpful to involve key stakeholders, such as IT staff and senior management, in the decision-making process and ensure that all staff receive proper training and support.
In conclusion, digital lending solutions can provide a more efficient and effective way for financial institutions to manage exception tracking in the loan origination process. These solutions can help reduce the reliance on paper documents, improve visibility and collaboration, and maintain more consistent processes. While there are potential challenges and considerations to keep in mind, the potential benefits and cost savings make it worth considering for financial institutions looking to streamline their exception tracking processes.”’
