Consumers occasionally have struggled to get loans, not because they aren’t qualified, but because of bottlenecks in the lending process. As consumers prefer speedy customer service, many lose patience while waiting for loan processing, especially when bottlenecks appear.
To avoid bottlenecks in lending processes, financial institutions should investigate potential causes and implement resolutions accordingly.
Too many forms
A towering stack of forms is often to blame for bottlenecks in the lending process. As customers attempt to make dents in the paperwork provided, they may unknowingly skip a step or fail to submit the necessary information to the appointed loan officer. Eventually, the customer may become frustrated and back out of the process altogether.
To reduce bottlenecks with forms, loan officers should use loan servicing software. With this software in hand, lenders can reap the benefits of automated tasks, timely notifications, and maximized revenue.
Lack of credit-report integration
To speed up loan origination, lenders need to automate pulling credit reports. The lender should not have to add extra steps to the origination process to pull and analyze the customer’s credit report. After all, the software can analyze credit reports faster than any human can.
Overlooking accuracy
Bottlenecks occur when loan applications aren’t accurately completed. Overworked loan officers make mistakes, and if no one proofreads the application, the loan might sit in limbo or be unnecessarily declined.
To avoid bottlenecks with accuracy, inform automated systems of the required elements that employees must complete, then double-check and approve before moving to the next step.
Issues with signatures
Mobile loan applications need to have e-signatures. Lenders who are stuck in the past still require customers to sign in person, while modern lenders use technology to capture electronic signatures.
Remember, millennials and younger borrowers trust technology. When lenders use e-signatures, borrowers return their signed forms faster than if they have to visit the office to sign in person.
Application life cycles
Bottlenecks are bound to ensue when loan applications have to move through several offices before final approval. While audits help catch mistakes, having too many people entering applications, approving them, auditing them, and funding them slows the process.
Customers want efficiency, and lenders should streamline the process within their ranks. Rather than having an application pass through three or four people before funding, automated systems can check for mistakes and audit applications.
Too many platforms
Some financial institutions have too many platforms in place, and moving between them creates bottlenecks. Loan officers who have to launch several programs will slow the process and drive customers elsewhere.
Overrides for rookie loan officers
In some financial institutions, loan officers have lending limits. If a customer applies for a loan at the end of the month, the loan officer might have depleted their lending limit.
To get approval, loan officers need to get overrides from someone above them, slowing the process and repelling customers who value time efficiency.
Financial institutions need to automate overrides so loan officers can get immediate approval.
Lack of automation
Lenders that aren’t automated are behind the times. With so many online financial institutions, automated loan applications, approvals, and fundings happen in the blink of an eye. Institutions that require a human touch at each stage might think they are meeting their customer’s needs, but they are inadvertently slowing the process and succumbing to their speedier competition.
Wrap up
Lenders with bottlenecks that slow the lending process are hurting their bottom lines. Finding the problems and speeding up the process satisfies today’s customers who crave (and demand) instant gratification.
