Lenders are undergoing a process of digitalisation and are adopting powerful automated loan underwriting tools that enhance critical underwriting processes. Automated underwriting software solutions are able to process various types of loans and also generate a schedule for payment instalments. These advanced tools empower lenders to automate application processing for credit cards, insurance policies, business loans, and mortgages.
Automated Mortgage Lending
The mortgage industry has been slow to digitise, and established lenders are facing difficulties enhancing their underwriting processes without automation.
Streamlining mortgage applications for future homeowners is a priority for both established companies that need to maintain market share and tech-savvy startups intended to disrupt the lending industry.
How Does Automated Underwriting Work?
Automated underwriting tools process a candidate’s information in order to immediately arrive at a decision. The human underwriter enters the candidate’s personal data into the underwriting tool, such as income, assets owned, credit history, and zip code.
These automation solutions streamline the first phase which generally takes weeks or even months to complete when performed manually.
In reality, a human underwriter plays virtually no role in the first phase of automated processing. If the application meets all the criteria, the application is approved automatically.
However, there are also complex cases that require the judgment of an experienced human underwriter. In these cases, automated underwriting tools spot and send applications to human underwriters to complete the underwriting assessment.
Advantages of Automated Underwriting
Automated underwriting radically reduces processing times, identifies inconsistencies and contradictions, and boosts the customer experience.
What follows is a short overview of the advantages of deploying automated processes.
Fraud prevention is an enormous problem when mortgage applications are processed manually, which is why businesses are turning to automation.
Automated underwriting tools examine various financial metrics and customer information and behaviour to fight against fraud.
Automated underwriting systems are practically error-proof because they use pre-defined rules and algorithms to approve cases.
On the other hand, mistakes can always occur during manual processing, even when multiple checks by the staff are done.
Also, lenders are able to reduce backlogs created by going back and forth chasing missing paper documents.
Lenders can approve an application in mere minutes as opposed to days or even it takes with manual underwriting. This fact plays a huge role in improving the customer experience.
Automated Underwriting with Rules Engines
A business rules engine is a pluggable piece of software that connects to underwriting systems to help automate and streamline decision-making. that instantly approves eligible candidates.
Underwriting requirements can be easily and quickly made and managed using rules engines. Non-technical subject matter experts can make updates to the underwriting criteria with just a few clicks, and without having to rely on support from the IT department.
Better Control of Decision-Making
Unlike outdated underwriting systems that make accessing and managing data difficult by hard-coding everything, a business rules engine provides a business-friendly way of updating business logic.
In fact, many lenders are connecting rules engines to their legacy systems to avoid having to deal with the drawbacks of legacy IT systems.