Loan Automation

Revolutionize Your Lending Process: 8 Steps to Automate for Enhanced Efficiency

June 21, 2023
Revolutionize Your Lending Process: 8 Steps to Automate for Enhanced Efficiency

Financial technology, especially in the automated category, is rapidly growing and enabling all types of lenders to streamline their lending processes end-to-end, increasing productivity and reducing errors. And today’s competitive lending market is driving many financial institutions to leverage automated platforms to gain data-driven insights into best practices for optimizing the lending process.

Here, we’ll cover common challenges inherent to the traditional lending process and provide an 8-step process to help you automate your lending workflow to expedite the loan approval process.

Common Pain Points in the Traditional Lending Process

Traditionally, prospective borrowers apply for loans either in-person or online but have to wait days or weeks for notification about approval or rejection of the application. Then, if approved, borrowers agree to the loan terms and close on the loan, after which the lender disburses it.

Although this process is traditional to the lending industry, it’s inefficient in the following areas:

  • Legacy loan origination system workflows – Many companies still use grandfather contracts whose language complicates modern loan origination processes and creates a fragmented customer journey. Additionally, processing loan applications using outdated software increases the likelihood of bugs and data security risks.1
  • Slow rule updates – Older loan origination systems also lack the speed necessary to update rule-based processes quickly, especially when making fast decisions on loan approvals or referring specific applications to underwriters for extensive review.
  • Delayed approvals – Between reviewing loan applications, underwriting them, and pricing the loan, traditional processes have lengthy approvals—ranging anywhere from 30 to 60 days for a mortgage, depending on market conditions.2

8 Steps to Automate the Lending Process

So, how can you improve the efficiency of lending without compromising productivity or increasing friction end-to-end?

Here’s a step-wise approach that can help automate the lending process:

Step 1: Assessing Loan Eligibility

Instead of assigning full-time staff to evaluate borrower eligibility, you can automate the systems that do so. Here, implementing criteria-driven scoring models helps accurately assess the risk of lending to borrowers and expedite preliminary approval.

Automating loan eligibility assessments like checking credit history, background checks, and employment also reduces the likelihood of errors during loan approval or rejection and frees up the time spent manually reviewing applications.

Step 2: Simplifying Loan Applications

Between manual data entry and safe storage and disposal, paper-based application processing is cumbersome and risks data privacy and sensitivity.

A simpler way to process loan applications is to leverage digital platforms to collect application data while integrating intelligent form-filling tools and document upload features to move these applications from one phase to another.

Step 3: Efficient Loan Processing and Underwriting

Automating the loan origination process also improves the efficiency of data verification and validation, increasing the accuracy of loan application evaluations while simultaneously standardizing how you confirm borrowers’ information.

You can also automate underwriting processes using advanced data-driven algorithms that effectively classify risk based on known historical patterns, increasing the overall efficiency. Explore our loan origination software for banks and credit unions that provides 100+ API integrations to help you close, regardless of the loan type.

Step 4: Automated Credit Decisioning

AI-driven machine learning tools help expedite credit approval decisions because they evaluate borrowers’ creditworthiness based on standardized criteria. As such, these tools reduce manual intervention in a credit report and significantly minimize the inherent subjectivity bias.

Step 5: Automating Loan Documentation

Whether you receive hundreds or thousands of loan applications each month, relying on paper storage is unsustainable in the long term. Digitizing loan documentation makes it easier to access applications on demand throughout the application process.

You can also speed up loan approvals by implementing e-signature solutions such as Adobe Sign to eliminate delays related to correspondence gaps.

Step 6: Automated Loan Servicing and Collections

After a loan is approved and disbursed, automating loan servicing and collections will help you stay up-to-date with repayment activity throughout the life of the loan. Here, you can leverage intelligent software to track loan payments but also resolve any issues your customers may face.

If it comes down to collecting payments on the loan, automated collections processes can improve recovery rates and prevent unexpected losses. That’s why investing in an excellent consumer loan software is paramount to a financial institution’s success in the digital world.

Step 7: Enhanced Compliance and Risk Management

The lending industry is heavily regulated to protect borrowers from predatory lending. One way to remain fully compliant with multiple regulations is to automate compliance processes at each step of loan origination through disbursement and servicing.

Automated regulatory compliance via monitoring and reporting dashboards also increases your visibility into the risks intrinsic to lending processes and helps you steer clear of non-compliance penalties.

Step 8: Real-Time Analytics and Reporting

Applying automated data analytics tools is another strategy to generate comprehensive reports for insightful decision-making. These tools can help you optimize loan origination, increase the throughput of loan application processing, or streamline your lending workflow.

Automate Your Lending Process with Fuse

At Fuse, we believe customized lending solutions can streamline loan origination and help lenders meet their customers’ needs while increasing revenues, improving productivity, remaining secure, and scaling business up.

Our loan origination system (LOS) is 100% tailored to your company’s lending processes, achieves industry-standard security, and deploys on-premise or in the cloud. Your staff does not require coding experience to use our LOS, and you can choose from over 100+ API integrations to customize lending automation.

Ready to see how Fuse fits into your workflow? Schedule a demo today.


  1. The Financial Brand. The 6 Process Pain Points that Kill Banking CX.
  2. How Long Does It Take to Get a Mortgage? Longer Than You Might Think.

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