Loan Files – Automation Through Digitization at Banks

With recent technological advancements in the financial industry, banks throughout the United States (and the rest of the world) continue to search for tools to optimize traditionally manual processes. With administrative costs comprising such a large portion of a bank’s annual expenses, banking software systems that provide effective automation will continue to experience solid growth for decades to come. A major trend among banks is the automation of loan files. As any banker knows, a single file can represent mountains of paperwork and possibly years of work. This article takes a look at the ways banks are using bank imaging technology to streamline the management of loan and credit files.

Questions For Consideration

Before considering your options for loan file automation, it is wise to first review some basic questions about your bank’s current situation. By thinking critically about your bank workflow as it stands today, your financial institution can maximize return on investment. The following questions may be helpful when starting the process of optimization.

How efficient / effective is your current paper loan file system?
How much money does your financial institution spend each year creating and organizing physical files?
How frequently do physical files have to be transferred from one branch to another?
Things to consider: courier costs – routing for credit analysis, approval officer review, etc
Has your bank every misplaced, damaged, or completely lost a loan file, creating mountains of duplicate administrative work to restore the original files?
Have customers or lending officers ever complained about the length of time it takes to approve or update loan files at your bank?

Loan Approval Process: A Very Good Place to Start

Once you have identified the need to automate your loan process, a wise place to begin is at the very start of the application process. By implementing a banking software system that can manage your loan files from start to finish, your organization will yield the greatest ROI from such a platform. When evaluating the offerings from different banking software companies, it is a good idea to find a system that will integrate with your existing applications, underwriting software, credit analysis platform, and documentation. It is also important to find a system that will provide up to the minute loan status information, electronic routing, and multi-party document viewing rights. Through automated updates to the assigned user, loan status, and approval status, your bank will experience formerly unrealized economies of scale.

Optimizing Your Bank’s Loan Pipeline

With the volume of loans being processed each day in a single bank branch, keeping up with the status of each paper loan file has historically been a challenge for institutions of all sizes. When implementing bank loan software to centralize such activity, it is crucial that your bank select a banking software company that offers a loan pipeline management and reporting tool. Such tools typically offer a customizable dashboard for instant analysis of a bank’s existing loan pipeline. In addition, such platforms should provide a wide variety of reporting options, allowing users to subscribe to email alerts for specified pipeline activity. Also, reports should have the ability to be easily exported to the standard formats, such as.pdf and.csv, allowing deeper analysis by management.

Customize Loan Files for Your Bank Workflow Needs

Perhaps the greatest benefit of automating loan files via bank management software, is the ability to quickly glance at the entire documentation workflow and instantly understand which documents are still missing. As documents are routed from user to user through your bank workflow, users can be automatically notified via email that their action is required. When choosing a banking document management system to streamline your loan filing, it is vital that you go with a vendor that allows you set up unlimited workflow actions in your system. By customizing every workflow action to your bank’s needs, you can ensure that your system will reflect the operational goals of your institution. Such elements to consider in your workflow automation include: managing exceptions, defining user groups, email notification recipients, setting lending limits, etc.

Closing Thoughts – Loan File Digitization

By automating the approval and life cycle of a loan file, your bank can reap significant benefits. Studies have shown that many financial institutions are able to recoup their investment in loan portfolio management software within a twelve to eighteen period. By digitally capturing every action associated with a loan file, banks have been known to save money in the areas of administrative costs, courier / overnight shipping expenses, storage space, and overall productivity.