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Benefits of Loan Processing Automation with Docsumo and How it Works

The traditional commercial lending process is labor intensive work that involves manual data entry and carrying out tasks related to underwriting, application approvals, and post-loan processing standards. Commercial lenders depend on the creditworthiness of borrowers when lending money and hope to make a profit from investments, which means that they deal with a degree of unpredictability when it comes to losses. Financial institutions and NBFCs are always looking to diversify their investment portfolio, enhance customer experiences, and scale up by generating enough profits. They can meet these milestones by using Robotic Process Automation (RPA) for loan processing.

Steps Involved in Loan Processing

Handling thousands of loan mortgage documents can be time-consuming and prone to errors without intelligent automation. Document processing automation tools help banks improve efficiency and ensure smooth data flows across different parts of the organization.

The commercial loan process includes the following steps:

1. Customer Management

  • Data Collection: Gathering customer data, analyzing their creditworthiness, and reviewing their repayment history.
  • Document Submission: Customers submit required documents such as bank statements, ID and address proofs, salary slips, credit scores, and current employment details as part of the pre-qualification process.

2. Credit Report Analysis

  • Credit Report Retrieval: If not already submitted, the loan officer requests the credit report from online databases.
  • Evaluation: The borrower’s lending worthiness is evaluated, and the loan amount that can be approved is determined.

3. Credit Presentation and Decisioning

  • Information Analysis: Bankers collect information about customers, perform ratio analysis, data mining, and determine risk ratings.
  • Automation Support: Automation tools collect documents, extract data, integrate information, and create financial statements, tax forms, cash flows, balance sheets, and income documents.

4. Income Verification

  • Verification Methods: Lenders verify income through W2 forms, letters of employment, and paystubs. They may also contact the employer directly.

5. Appraisals and Inspection

  • Property Inspection: For mortgage loans, the property is inspected.
  • Verification: Lenders obtain appraisals, proof of insurance, and inspect the items for which the loan is being taken.

6. Review, Certification, and Approval

  • Final Review: Once all details are reviewed and verified, the loan is sanctioned.
  • Processing Time: The time for loan processing varies based on the loan type and purpose. High credit score individuals often get faster processing at better interest rates.

Automating Loan Processing

Lenders process thousands of applications daily and aim to improve speed, accuracy, and reliability. Tools like Docsumo, which utilize machine learning and automated data extraction, make loan application processing more efficient.

How to Automate Loan Processing with Docsumo

1. Sales and Marketing

  • Automated Data Extraction: Docsumo’s AI and intelligent OCR solutions automatically read data from customer applications. The information extracted is validated by APIs and processed for further review. This automation streamlines credit report analysis and helps identify low-risk customers.

2. Loan Verifications and Approvals

  • Document Verification: Docsumo flags errors with APIs and sends alerts automatically. This ensures data accuracy and reduces false positives. AI models assist with cash flow analysis, statistics comparison, and information updates.

3. Improved Customer Experience

  • Enhanced User Experience: Customers can view their applications online, assured of complete data privacy. Docsumo is GDPR compliant and SOC-2 Certified, ensuring secure data processing. Unstructured documents are organized efficiently, reducing the waiting time for loan application approval.

Benefits of Loan Processing Automation

Commercial loans often involve paper-based processes, leading to slower decision-making, more paperwork, and time-consuming manual data entry. Traditional methods can result in errors, redundancy, and mistakes. Automation software addresses these issues.

Advantages of Automated Loan Processing

  • Electronic Storage and Sharing: An automated system allows electronic storage and sharing of information between borrowers and lenders.
  • Enhanced Interaction: Lenders can interact with customers online, process applications, and review details on-screen.
  • Accurate Risk Assessment: Automation improves risk assessment and analysis due to better data accuracy and integrity.

Using RPA and AI for commercial loan processing can:

  • Verify Third-Party Details: Ensure the accuracy of information about third-party vendors.
  • Streamline Workflows: Improve operational, managerial, and administrative workflows.
  • Speed Up Transactions: Process financial transactions faster using rule-based data structuring.
  • Ensure Compliance: Perform audit trails and ensure data meets legal and regulatory standards.
  • Handle Multiple Document Formats: Process and save documents in various electronic formats like PDF, JSON, XML, and share them via email for reviews and faster approvals.

Ready to automate your loan processing? Schedule a free demo with Docsumo to experience the benefits firsthand.