Consumer loan processing enters the digital age

The technology behind consumer loan processing hasn’t evolved much in the past 25 years, but that’s rapidly changing as financial institutions look to digital transformation to improve the customer experience, cut costs and grow the business.

Loan servicing has been primarily a back-end function, oftentimes handled by a third-party service provider, that kicks in after the bank, credit union or auto finance company completes the loan. It encompasses the cradle-to-grave billing and collection efforts associated with making sure the loan is paid off. And that includes everything from a friendly welcome letter to, in some situations, repossession or bankruptcy.

The new imperative in financial services is putting digital enhancements and technologies in place so the customer has a better experience. Today, customers might not want to drive to a brick-and-mortar bank or do business over the phone. They want options, they want choices, they want a self-service experience and they want 24-hour account access.

These new expectations are bringing loan processing out of the shadows and into the forefront of the consumer experience. Existing web sites are being revamped to be more user friendly and provide more options for self-service, such as digital agents, chatbots and live chat capabilities.

A self-service experience, either on the financial institution’s web site or one hosted by the third-party loan processing company, enables customers to handle routine service requests themselves. This frees up customer service representatives to focus on the more complex or difficult situations. The result is lower wait times, increased efficiency and better outcomes for consumers.

Advantages of process automation

Financial institutions and companies that provide specialized loan processing services are also looking at automation of paper-based processes and procedures with an eye toward cutting costs and reducing errors.

New process automation systems will bring data analytics, machine learning, artificial intelligence and robotics to the world of consumer loan processing. Not only will financial institutions be able to do the basic blocking-and-tackling more cost effectively, they will also be able to apply predictive analytics and creative solutions to situations where a customer, for example, might be falling behind in their payments.

These new systems will help companies keep their existing customers happy, identify new opportunities to expand the business with current customers and attract new customers. Automated processes and procedures can also help companies comply with the complex regulatory requirements that are increasingly coming into play.

Of course, this type of transformative change won’t happen overnight. Many financial institutions are well along in their digital efforts, while others are just beginning the journey.

One of the key aspects of digital transformation is changing the culture, particularly where people have become accustomed to doing things the same way for a long time.

The first step in the process is to take a step back and analyze the entire technology landscape with an eye toward identifying what areas can benefit most from digitalization. Getting feedback from customers is also important in identifying their pain points and prioritizing the most pressing areas for improvement.

Working with process automation experts, companies can map the entire loan servicing process, from origination to closing out the loan, and re-engineer the process, uncovering new and unexpected ways to automate tasks. Companies can also use data analytics to predict customer needs, to be proactive in delivering customer service and to offer new loan opportunities to customers.

The upside of change

Both lenders and their servicers are in the midst of a significant change when it comes to technology, culture, and the way in which they do business.  Not only do they have to be experts in their field, but they need to understand how to incorporate technology into a process that they’ve been doing for a long time.  Consumers are expecting banks and financial institutions to have these types of options readily available, and as a result, it’s becoming an expectation of the third-party servicers as well.

And while change can be painful, in the long run it’s a good thing. Change is disruptive, and makes people look at things differently. It forces people to think outside of the box, which as we’ve seen in history time and time again, is usually when new ideas and innovations emerge.


Gina-Marie-Hawkins-headshotGina Marie Hawkins is the Offering Manager for DXC’s Consumer Loan Processing, responsible for leading overall strategy.  She is a seasoned professional and leader well-versed in sales and marketing, project management and account management in the insurance, property & casualty and banking industries. Prior to DXC, she worked in the reinsurance industry and managed global relationships with some of the industry’s largest firms.  She graduated with an international business degree from Rosemont College with studies in both the US and France, and is also an accomplished pianist from the Bryn Mawr Conservatory of Music.

Comments

  1. Dipankar Ray says:

    A very comprehensive view of how Digitization can transform the Loan Servicing landscape. Today’s consumer is more digitally aware than they were 20 years ago and it’s high time to transform the traditional Business to Consumer interfaces to be mobile friendly responsive websites integrated with chat-bots and high degree of personalization using Artificial Intelligence. This will result in meeting the customer’s needs more effectively and efficiently, making interactions faster and easier and, consequently, increasing customer satisfaction.

    Like

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