Increasing profits for lenders through automation

Automation has emerged as one of the key tools that lenders can use to drive efficiencies and increase profits. Automation can also be used to reduce delinquencies, cut down on human error and reduce compliance violations. For lenders with an eye to the future, automation has moved from a nice-to-have to a competitive necessity.

Studies have shown companies that embrace automation in their workflows can accrue significant cost savings and allow their teams to focus on key tasks. A study by Unit 4 revealed that globally, office workers spend 69 days a year on administrative tasks, costing companies $5 trillion a year. Contrary to popular belief, multitasking can be counterproductive and costs companies 40% of lost productivity, simply due to constant task-switching.

Large lenders have had the benefit of automation for several years, with the ability to offer approvals within minutes. Today, automation is more readily available to smaller lenders, proving to be a game-changer.

Small and mid-size lenders deal with complex consumer lending profiles that require the intervention of experienced credit officers to make astute judgment calls. Without automation it can take hours, and sometimes even days, to come back with an approval.

Speed in adjudication is important and can be the critical factor in securing the transaction. Lenders quickly realized that if they could shave even minutes off their approval turn-around time using automation, they would accrue a tremendous competitive advantage.

A key factor in designing automation that can navigate the complexities of the market is the ability of these systems to integrate with alternative sources of consumer credit data to assess risk exposure. It should come as no surprise that legacy lending systems struggle to handle this level of complexity — for most of them it’s a non-starter.

Today, whether lenders play in the automotive, direct to consumer, equipment or commercial lending space, the benefits of automation are within reach for all. As technology becomes more flexible and nuanced, advances in automation benefit lenders who want to increase their auto-adjudication rates and their decision-making speed to outperform competitors. Automation can also be a game-changer for lenders that want access to the most advanced solutions available to increase profits, reduce errors or extend the size of their market.

From global giants to “mom and pop” lenders and startups, automation can implement business logic across all collaborating lending modules. For larger lenders, the potential to scale high loan application volumes and add new business lines can be even more lucrative. For smaller lenders, automation can handle the tedious manual tasks.

Automation can also play a role in enabling lenders to keep up with modern consumers. Direct to consumer lending models may have initially seemed risky, but consumers prefer direct channels because of the simplicity and convenience of the process. Automation provides the immediacy and convenience consumers have come to expect.

Clearly, automation is here to stay. Consumers, small businesses and the largest organizations can benefit from it. Automation enables lenders across all industries to make more immediate decisions, book more deals and capture growth of new channels.

Vlad Kovacevic is the founder and CTO of Inovatec Systems. With a focus on efficiency, flexibility and connection, JAVELIN by Inovatec is a state-of-the-art lending platform.

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