Managing Your Loan Workflow Through Automation

Every day in the world of community banking is different.  Loans are in various stages of the process: application, underwriting, waiting on a third party, needing loan approval, preparing loan documents.  For staff that work on these loans, it is a daily question: What should I do first?

Fortunately, workflow automation can help to answer some of those questions.  Different tools are available that can speed up the time in each phase of the loan process.  You can remove the guesswork so staff can instead focus on completing the tasks.

 

How Can Workflow Automation Be Leveraged?

A McKinsey study found that 45% percent of the activities that individuals are paid to perform could be automated by adapting technologies.

Within a loan department, this could include time spent on identifying workload.  Individuals juggling many loans need to make decisions about priority and the amount of time required.

By automating part of the process, your institution could have many benefits, such as:

  • Cost savings in the amount of time spent per loan
  • Faster delivery if staff can quickly identify the loans that should be prioritized
  • Fewer bottlenecks in the loan process

 

The Cost of Communication

Part of the time spent on processing a loan could be internal communication or communication with third parties.

Maybe your underwriting staff are unaware of an approval that needs to be reviewed quickly.

Maybe your loan closing staff are waiting on an appraiser responsible for multiple properties before it can go to loan committee for approval, and the appraiser needs a follow-up.

Any time spent on communication that can be automated will result in less time spent on the loan.

  • Email notifications to staff can alert them of tasks to complete
  • Follow-up alerts can streamline communication with third parties.

 

Defining the Workflow Process

To move loans more quickly from application to closing, your institution will need to identify the steps in your loan origination process.  These steps may include some of the following:

  • Loan Application
  • Underwriting
  • Loan Approval (by the lender, committee, or board)
  • Waiting for a Third Party (such as title work, environmental, appraisal)
  • Loan Document Preparation
  • Loan Closing
  • Loan Booking
  • Post-Closing Review for Compliance
  • Post-Closing Tasks such as imaging or ticklers

In addition to defining the workflow, you will need to identify who is responsible for each task.  Would the loan be assigned to a specific individual, or is it assigned to a pool of people (such as underwriters) who then self-assign?

 

Quickly Notifying Loan Staff of Tasks

As loans are assigned to specific people or pools, workflow automation makes individuals aware of the work that needs to be completed.  Notifications may also come from a loan management system used internally.

Not only do automatic notifications make individuals aware of the task, but they also reduce the amount of time that may elapse.

Workflow automation of this kind also removes human error.  For example, miscommunication could occur regarding what the loan needs for its stage in the process.  Or the communication regarding the loan is overlooked.

 

Following-Up on Future Loan Tasks

While preparing the closing of a new loan may have many steps that occur quickly, loans also require future follow-up.  These future tasks are easy to forget without a system in place.

Post-closing often requires documentation that may arrive weeks or months later.  Your institution’s loan operations staff may request ongoing documentation from the borrower or a third party.

If a loan begins to deteriorate, the loan officer may make outbound phone calls to the borrower and need to keep track of those efforts to collect.

A process that identifies any follow-up needed and preventing these tasks from slipping through the cracks will ensure that the loan receives the necessary attention.

 

Identifying the Right Tools to Improve Workflow

Once you have identified your workflow process and the involved loan staff, you will want to ensure that you have the right tools in place to automate their efforts as much as possible.  This is where you will see the most improvement and efficiency gained.