Loan Origination

4 Benefits of an Automated Credit Application Processing System

August 30, 2023
4 Benefits of an Automated Credit Application Processing System

Automating the lending process can help financial institutions improve their operational efficiency, increase productivity, and drive growth in revenue.

To understand how, simply consider its manual equivalent. On average, it takes banks and credit unions up to seven business days to approve personal loans and anywhere from three to seven business days to fund them.

With such lengthy wait times, the lending industry needs automated credit application systems. Otherwise, lenders will be susceptible to competitors outgrowing their efforts.

Automation is here to change the lending game. Below, we will discuss four benefits lenders stand to gain by automating their credit application processing system for any loan type to improve long-term efficiency.

The Case for Loan Automation

Traditionally, the manual loan origination process involves teams of clerks, loan officers, and underwriters working together to process paperwork and review loan applications, sometimes case by case.

A financial institution will find this process slow because these teams need more bandwidth to extract data from hundreds to thousands of applications, verify them, and analyze them to make decisions. Furthermore, the manual loan origination process is subject to data input errors and compliance gaps that can risk the privacy and security of data.  

With growing automated technologies, many major financial institutions have invested in platforms like loan origination software for banks and credit unions that modernize customer-facing front-ends, manage loan origination system workflows, complete appraisals, and achieve compliance.

Key Benefits of Automating the Credit Application Process

So, what are the benefits of automating credit applications throughout the origination process? In general, lenders can expect loan automation to provide four key benefits.

#1 Increased Operational Efficiency and Productivity

With features like automated decisioning, financial institutions can process loan applications much faster, especially for less complex cases that do not require comprehensive evaluation.

Automated decisioning tools driven by machine learning algorithms are particularly adept at learning how to make decisions on loans just like a human underwriter would, allowing an institution’s loan officers and underwriters to focus their expertise elsewhere than on cumbersome manual tasks.

#2 Improved Accuracy and Reduced Manual Errors

Like any other manual process that involves processing hundreds of data points per day, there is a large margin of error when handling loan applications manually. Whether it is a misspelled name on an application or a miscopied set of digits from a financial statement, human errors can delay loan origination and approval.

An automated system leverages standardized processes to significantly reduce these errors and increase decision-making accuracy on loan application reviews.

#3 Cost Reduction Through Streamlined Workflows

Automating the credit application system also reduces the costs spent fixing outdated legacy systems or hiring staff to complete processes that could otherwise be automated.

Typically, loan origination costs for lenders can be attributed to gaps in streamlining front-to-back processes, which translate into significant delays in loan application processing, hence lengthier cycles and lower productivity.

#4 Enhanced Customer Experience with Faster Loan Approvals and Self-Service Options

Since the lending industry is largely customer-facing, automating loan processing workflows helps financial institutions win customer trust with faster approvals and assessing credit risk. Not only that, providing customers with options to optimize their loan application process via automated self-service capabilities improves the customer experience and increases the likelihood of retention.

For financial institutions, this could mean happier/delighted customers and a higher likelihood of repeat business.

Fuse Successfully Automates the Loan Process for Businesses

As a next-gen loan origination system (LOS), Fuse provides automated loan processing capabilities for lenders by helping them:

  • Define their business-specific goals—whether it is an optimized customer experience or faster scale-up—and identify pain points that might be hindering those goals from becoming a reality.
  • Assess existing processes and workflows to determine gaps across platform management, compliance, decisioning, or resource allocation.
  • Select the right technology solution for their company-specific needs, with over 100+ API integrations.
  • Integrate automation with their existing systems and workflows and minimize gaps that could render processes inefficient.
  • Ensure that any data migration processes are secure to protect businesses’ internal data and that of customers.
  • Manage automation-related change and foster the adoption of modern loan origination processes within financial organizations.

Key Automation Technologies and Tools for a Credit Application

In general, a strategic approach to automating credit application processes will result in much higher productivity and long-term efficiency. Typically, that may require investing in:

  • Artificial intelligence (AI) and machine learning (ML) – AI and ML enable optimized data analysis and decision-making during credit assessments, allowing lenders to generate the most meaningful insights from the data they collect from credit applicants.
  • Robotic Process Automation (RPA) – When automating repetitive tasks such as conducting due diligence for compliance, RPA redeems the time spent completing these tasks manually and increases the rate at which applications are reviewed.
  • Natural Language Processing (NLP) – During application intake, NLP’s intelligent document processing capabilities can help verify data from third-party sources like credit bureaus and bank statements, alleviating the need to do so manually—and accurately.

Automate Your Loan Origination Workflow with Fuse

Streamlining your lending workflows via automation is seamless when you integrate Fuse into your current infrastructure. Whether your business provides consumer loans or commercial loans, Fuse can help you achieve robust efficiency, speed, and accuracy while providing your customers with an industry-leading user experience.

Check out how Fuse works by scheduling a demo today.


Forbes. How Long Does It Take To Get A Personal Loan?
McKinsey. How Banks Can Reimagine Lending to Small and Medium-Size Enterprises.

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