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How Small Business Lenders can Improve Loan Processes Created by: James Mary

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Over the past few years, technology has changed the world of small business lending for good. Today, traditional banks, credit unions, and other non-banking financial institutions use mobile and web technologies to provide different financial products and services to their customers. Besides, these state-of-the-art technologies are also helping customers to do everything from transferring money to monitoring accounts, paying bills, and applying for funding. In an increasingly expedited and highly competitive lending market, technology plays a vital role in a lender’s ability to not only provide exceptional services but also stay ahead of the competition and be profitable. Undoubtedly, those lenders who adopt this innovative disruptive technology, tend to thrive while those who don’t, get left behind. These technologies allow financial technology companies to create ground-breaking lending platforms employing the capabilities of automation, data integration, predictive models, and analytics. How Real-Time Financial Data, Technology, and Analytics are Fundamental to Loan Process Improvement? The data integration, technology, analytics capabilities each play an important role in helping small business lenders Data Integration - Provide immediate access to borrowers’ various data points such as accounting, banking, financial, and cash flow. This allows lenders to see deep critical insights into borrowers’ financial health and make better lending decisions. Technology - Using AI and ML-based systems, FinTechs provide financial data APIs to lenders to collect, analyze and use the most robust and real-time financial data of their borrowers. Analytics - Applying statistical, modeling, predictive analytics approaches help lenders to transform raw financial data into meaningful, easy-to-understand, and actionable insights. How Small Business Lenders Can Improve their Loan Processes Use Digital Methods In contrast to manual and paper-based transactions, a digital loan application is still quick, easy, and secure. Replacing paper with digital documents helps financial institutions provide easy and fast loans and make quick credit decisions. Even after having so many advantages, only a few small business lenders use the digital process. A paper-based or manual process has several inherent problems - gathering endless documentation, delivery delays, lost or inaccurate documents, and missed opportunities compared to digital financial institutions. Lenders can easily and securely store their customers’ most important documents digitally with cloud-based and other digital services though. The benefits of digital documents are numerous, especially for small business lenders with high-volume loan applications. They include: ● Easy capture of applicant’s information and streamlined loan application procedures ● The ability to accurately process a high volume of applications ● Optimize the loan underwriting process by allowing borrowers to submit all information in a digital format ● Remove time-consuming manual verifications and make a quick credit decision ● Allows borrowers with limited or no credit history to raise loan easily ● Retain potential customers by providing easy and fast funds and customized solutions Use Real-Time Financial Data for Loan Origination and Decisioning Many small business lenders still rely on old-school methods to review a loan application and determine a borrower’s creditworthiness. These processes typically involve manual steps and visual verification of borrower data as part of the verification process. So using historical data and outdated methods can delay the underwriting process and loan decision. Today, small business lenders can replace manual processes with automated decisions. Using a financial data API, lenders today can integrate data from multiple sources such as banking, accounting, cash flow, and other financial sources to make more informed and accurate lending decisions. Some innovative FinTechs such as Codata, Validis, and ForwardAI are creating financial data API for lenders that deliver the most robust and real-time financial data of borrowers. They use advanced analytics, predictive modeling, AI, and ML-based systems to collect, analyze and transport data to lenders. When lenders become more data-driven, they will be able to see deep critical insights into a borrower's financial health as well as eliminate manual steps in lending processes. Here are some of the many benefits of real-time financial data: ● Greater efficiency and accuracy in the loan application process ● Easier and quicker loan decisioning ● Reduce credit bias and make loan fairer ● Reduce credit risk and improve customer experience The small business lending system is changing fast, and financial institutions must find innovative ways to compete and stay relevant in the digital world. As customer expectations rise, it will be more imperative for lenders to streamline the loan application process to improve customer experience, boost trust and make smarter lending decisions. Lenders automate their underwriting processes and leverage state-of-the-art financial technology to transform the small business lending loan origination processes and begin working as a digital-enabled bank of the future today.

Transcript of cashvisionusa

  • 1

    How Small Business Lenders can Improve Loan

    Processes

    Created by: James Mary

  • 2

    Introduction…………………………………………………………..……….........................……..………………………………………….. 3

    How Real-Time Financial Data, Technology, and Analytics are Fundamental to Loan Process Improvement…………………………………………………………….……………..................................……………….. 3

    Data Integration…...…...…………………………………......……………….……….......................……………...…..……… 3

    Technology…...…...………………..………………………….....……………….…………….......................……….……..……… 4

    Analytics…...…...…………………………………......……………….…………………………...........................…….……..……… 4

    How Small Business Lenders can Improve their Loan Process…………….………..…....................….. 4

    Use Digital Methods…………………………....……………….…………………………...…….……........................….…… 4

    Use Real-Time Financial Data For Loan Origination and Decisioning …….......................……….. 5

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    Introduction

    Over the past few years, technology has changed the world of small business lending for good. Today, traditional banks, credit unions, and other non-banking financial institutions use mobile and web technologies to provide different financial products and services to their customers. Besides, these state-of-the-art technologies are also helping customers to do everything from transferring money to monitoring accounts, paying bills, and applying for funding.

    In an increasingly expedited and highly competitive lending market, technology plays a vital role in a lender’s ability to not only provide exceptional services but also stay ahead of the competition and be profitable. Undoubtedly, those lenders who adopt this innovative disruptive technology, tend to thrive while those who don’t, get left behind. These technologies allow financial technology companies to create ground-breaking lending platforms employing the capabilities of automation, data integration, predictive models, and analytics.

    How Real-Time Financial Data, Technology, and Analytics are Fundamental to Loan Process Improvement?

    The data integration, technology, analytics capabilities each play an important role in helping small business lenders.

    Data Integration:

    Provide immediate access to borrowers’ various data points such as accounting, banking, financial, and cash flow. This allows lenders to see deep critical insights into borrowers’ financial health and make better lending decisions.

  • 4

    Technology:

    Using AI and ML-based systems, FinTechs provide financial data APIs to lenders to collect, analyze and use the most robust and real-time financial data of their borrowers.

    Analytics:

    Applying statistical, modeling, predictive analytics approaches help lenders to transform raw financial data into meaningful, easy-to-understand, and actionable insights.

    How Small Business Lenders Can Improve their Loan Processes:

    Use Digital Methods

    In contrast to manual and paper-based transactions, a digital loan application is still quick, easy, and secure. Replacing paper with digital documents helps financial institutions provide easy and fast loans and make quick credit decisions. Even after having so many advantages, only a few small business lenders use the digital process.

    A paper-based or manual process has several inherent problems - gathering endless documentation, delivery delays, lost or inaccurate documents, and missed opportunities compared to digital financial institutions. Lenders can easily and securely store their customers’ most important documents digitally with cloud-based and other digital services though.

    3 Ways Open APIs Are impacting the Financial Planning Process

  • 5

    The benefits of digital documents are numerous, especially for small business lenders with high-volume loan applications. They include:

    ● Easy capture of applicant’s information and streamlined loan application procedures

    ● The ability to accurately process a high volume of applications ● Optimize the loan underwriting process by allowing borrowers to submit all

    information in a digital format ● Remove time-consuming manual verifications and make a quick credit decision ● Allows borrowers with limited or no credit history to raise loan easily ● Retain potential customers by providing easy and fast funds and customized

    solutions

    Use Real-Time Financial Data for Loan Origination and Decisioning:

    Many small business lenders still rely on old-school methods to review a loan application and determine a borrower’s creditworthiness. These processes typically involve manual steps and visual verification of borrower data as part of the verification process. So using historical data and outdated methods can delay the underwriting process and loan decision.

    Today, small business lenders can replace manual processes with automated decisions. Using a financial data API, lenders today can integrate data from multiple sources such as banking, accounting, cash flow, and other financial sources to make more informed and accurate lending decisions.

  • 6

    Some innovative FinTechs such as Codat, Validis, and ForwardAI are creating financial data API for lenders that deliver the most robust and real-time financial data of borrowers. They use advanced analytics, predictive modeling, AI, and ML-based systems to collect, analyze and transport

    data to lenders. When lenders become more data-driven, they will be able to see deep critical insights into a borrower's financial health as well as eliminate manual steps in lending processes. Here are some of the many benefits of real-time financial data:

    ● Greater efficiency and accuracy in the loan application process ● Easier and quicker loan decisioning ● Reduce credit bias and make loan fairer ● Reduce credit risk and improve customer experience

    The small business lending system is changing fast, and financial institutions must find innovative ways to compete and stay relevant in the digital world. As customer expectations rise, it will be more imperative for lenders to streamline the loan application process to improve customer experience, boost trust and make smarter lending decisions. Lenders automate their underwriting processes and leverage state-of-the-art financial technology to transform the small business lending loan origination processes and begin working as a digital-enabled bank of the future today.

    Source:

    • 5 Steps to Transform the Mortgage Loan Origination Process | Kofax • How Automation Can Improve Your Loan Origination Process | Moody’s Analytics • Four Ways To Improve Mortgage Lending Operations - a Borrower's Perspective

    Lending | Pad

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    References:

    • https://www.forbes.com/advisor/credit-score/what-is-creditworthiness/ • https://in.finance.yahoo.com/news/forwardai-debuts-forwardai-precise-lender-

    130600931.html • https://www.bis.org/statistics/glossary.htm?&selection=281&scope=Statistics&c

    =a&base=term • https://www.mycreditunion.gov/about-credit-unions/credit-union-different-

    than-a-bank • https://www.edibasics.co.uk/what-is-edi/paper-based-vs-electronic-

    transactions/ • https://cashvisionusa.blogspot.com/2021/04/everything-you-need-to-know-

    about.html

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