Lending has always been a thriving business, and with good reason. People do not often have the full amount of cash on-hand to make many of the larger purchases they wish to make. Yet despite the number of Americans who take out a loan of some sort (nearly half took one out in the past year), inefficiencies and waste continue to plague loan origination services. There's hope, however. Below, we outline the top three inefficiencies in this space and give actionable advice on how to start addressing them today.
Too much paper
Anyone who has ever applied for a loan can attest to the amount of documentation the process requires. With traditional lenders, most of that documentation, surprisingly, is still of the paper variety. "Very few organizations have the capability to utilize electronic forms and the ability to receive scanned documents from their borrowers," John Mateker, vice president for management consulting firm Ceto and Associates, writes in a piece on the company's website. "To complicate matters further, every state has slightly different rules for loan documentation requirements, wet signatures, and other technicalities related to documents. Freddy [Mac] and Fannie [Mae] also have their standards as well. All of these complications add to the burden [of] processing waste, resulting in higher costs."
These costs are significant. The average mortgage application, for example, generates at least 500 printed pages, according to an article by Brent Chandler and Ann Fulmer in Mortgage Compliance Magazine. That's an approximate annual cost to that industry of 10 billion sheets of paper and more than $60 million. What's more, "paper is one of the primary conduits for introducing defects into the loan origination process," Chandler and Fulmer write, adding that more than a quarter of "all loan defects" in the first quarter of 2016 were attributed to missing documentation.
Traditional lenders can largely eliminate this annual drag on their finances by moving to digital loan origination services, such as those offered by Ripcord. With Ripcord's solutions, no longer will bank personnel need to worry about getting back physical copies of signed documentation from lenders. No longer will they need to worry about keeping the hundreds of papers for each application in order, on-hand, and safe from prying eyes. Ripcord's loan origination software digitizes, classifies, and makes fully searchable every bit of it -- securely.
Clunky borrower experience
Traditional lending has necessarily meant the time-consuming, in-person obtainment of applications and the equally cumbersome return, either in person or by mail, of these documents. Such a system is wholly out of step with the needs and desires of the modern consumer. In the new, post-COVID-19 environment, borrowers want to be able to fill out applications via mobile apps, not on paper during bank business hours that may well be inconvenient for them and their recently altered schedules and responsibilities.
In addition to being digital, Ripcord's loan origination solutions incorporate artificial intelligence that allows lenders to offer individually tailored suggestions to their customers, helping those customers reach decisions as they journey on a process that otherwise can be both mentally and emotionally arduous.
Continued reliance on manual data entry
Another major consumer of human time and effort at traditional lenders is manual data entry. Such work is typically among the least liked by employees, and it contributes greatly to the wait times experienced by would-be borrowers. Ripcord's digital loan origination services take over the manual data entry components of the process (such as customer-account set-up), freeing up bank personnel for higher-level and/or more customer-facing work, which can lead to better, faster decisions and increased customer satisfaction.
We're Ripcord, and we're on a mission: to digitize the world, one industry at a time. With our vision-guided robots, AI and machine learning, our solutions enrich and organize an organization's most important paper documentation, no matter the volume. Ripcord saves organizations time and money and frees up human employees for more of the higher-level work they truly enjoy. Schedule a demo to see how we can help you.