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Digital lending: 4 tips for modernizing your loan origination journeys

When it comes to loan origination, many banks have taken the same approach: if it isn’t broken, don’t fix it.

Bakhtier Pulatov

Bakhtier Pulatov,
Product Director Lending at Backbase

But rest assured, lending is broken, and it’s having a very real impact on your bottom line. Even worse, it’s causing your customers to jump ship and making your employees tear their hair out due to frustration. And that’s on top of all the missed opportunities for revenue, failed conversions, and wasted time.

Quite a gloomy situation, right? Now that I’ve gotten the bad news out of the way, let’s look at the silver lining here — what’s broken can be fixed. And I’ll even show you how to get started.

The benefits of a streamlined, automated digital lending process

First, you may be wondering, what’s in it for you? After all, digital transformation can be complex, costly, and time consuming — and you’ve probably got a ton on your plate already.

Well, to put it simply, you stand to gain a lot.

If you can create a smarter, faster digital lending experience, you’ll be poised to capitalize on one of the fastest-growing banking products out there. That means:

  • Cutting servicing and maintenance costs

  • Increasing revenue and conversion rates

  • Creating new opportunities for up-sell and cross-sell

  • Differentiating from your peers

  • Empowering employees and increasing efficiency

  • Boosting customer loyalty, retention, and acquisition

As you can see, modernizing your lending journeys has a far-reaching impact that you’ll feel throughout your financial institution. And with digital challengers breathing down your neck, it’s the best way to future-proof yourself for the years to come. Now let’s take a look at how you get there.

Creating a smarter, faster digital lending experience

Rome wasn’t built in a single day, and neither is the perfect digital lending system. It takes organization-wide commitment, as well as time and money. But that doesn’t mean it’s impossible. Far from it. In fact, a streamlined, automated digital lending process is more than just achievable — it’s the way of the future.

Here’s our recommended approach for success:

  1. Upgrade your front-end loan application process

  2. Overhaul your employee workflows

  3. Progressively digitize your end-to-end journeys

  4. Automate with trusted fintech partners

We explore each of these in depth in our new hands-on guide, How to digitize lending: 4 tips for modernizing your loan origination journeys. Let’s take a brief look so you can get an idea of what you’ll need to do — and what you'll gain as a result.

Digital lending how to guide infographic 1

Download your copy of the checklist here.

Upgrade your front-end loan application process

It’s not rocket science: giving your customers a poor loan origination experience leads to higher rates of abandonment. They’re no fans of long applications, redundant data entries, and manual document submission, nor should they be, in the customer-first era. So start your modernization journey there — by updating the user experience.

Your main goal? Reducing the time it takes your customers to submit an application. Give them a smoother journey by breaking things down into small, clear steps, and be sure to include a progress bar for transparency. On the employee side, automate your data collection to create a simple, user-friendly, scalable process. And keep both groups happy by avoiding redundant data entry, asking only for information you don’t already have. That will go a long way towards optimizing your front-end system.

Overhaul your employee workflows

Speaking of employees, they’ll need your support if you want them to offer gold-star customer service. After all, having a smooth, fast application means nothing if it takes weeks — or months — to process. And in the end, that may even have a worse impact on customer satisfaction than a tedious lending process.

Focus on increasing your number of loans originated per employee, as well as time to disbursement. That means giving your employees a 360° view of the customer’s history, as well as a single platform for approvals, tasks, and more. That will help enable interdepartmental collaboration and speed up the disbursement process. And finally, connect your internal processes to the application system. That will allow you to keep your customers in the loop, boosting their confidence and engagement.

Progressively digitize your end-to-end journeys

So many banks focus on big-bang system replacements, since they look impressive to the board and investors. But unless you have unlimited resources — wouldn’t that be nice — you’ll need to conduct a progressive digitization, one that keeps the customer journey in mind.

The essential KPI here is the number of loans you’re able to close via straight-through processing, but don’t try to get there straight away. Instead, start from the customer journey, not the system. Think small, but don’t forget to develop a long-term vision for success. And above all, make technology choices that allow reusability and scalability. That will help you stand the test of time as you grow and the market changes around you.

Automate with trusted fintech partners

To get to this point, you’ll need to work with fintech partners. They’ll help you create a fully automated process that can assess risk, approve or deny a loan, and disperse funds, all without manual intervention. That will save you an enormous amount of time and money when it comes to simple, easily approved loans — AKA the ones that take up the bulk of your team’s time.

And in order to enable fast, incremental improvements, you’ll need to work closely with a platform provider. They’ll be able to integrate directly with your systems and get you up and running fast. But make sure they offer — and maintain — pre-integrations to the latest fintechs. That way, you’ll prevent unnecessary integration headaches that could stand in the way of your digital transformation.

Jumpstarting your transformation journey

That’s all well and good, you may be saying, but what about my unique use case? How do I fit into this picture? Well, if you want to maximize your impact — while minimizing cost and time — you’ll need to work with the experts.

And Backbase is here to help. By using our Digital Lending flows and journeys, you’ll be able to deliver the fast, frictionless experiences your users demand — all while lowering costs and even driving conversions and revenue. You’ll even unburden your employees, speeding up turnaround while reducing risk and errors.

Unfortunately, lending doesn’t sleep — and it never stops evolving. That’s why it’s critical to modernize your origination processes sooner, rather than later. If you want some advice about how to get started, you can schedule a chat with our team of experts. Together, we’ll create a better lending experience for your customers while helping you drive revenue. And that’s what it’s all about.

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