An economy in recession coupled with rising interest rates has severely affected consumers. With the fourth economic quarter of 2022 looming around the corner, there has been a significant decrease in loan volumes as customers struggle to afford homes in such hostile economic conditions.
Loan mortgage applications have decreased to their lowest in the last 22 years. In such dire circumstances, most lenders have decided to cut costs with the age-old technique of staff layoff and other actions.
After carefully evaluating operations and expenses, lenders can focus more on expense control through integrating digital lending platforms rather than cutting costs with layoffs.
Lenders mostly rely on manual labor to approve loans and non-loan expenses, which is time-consuming and error-prone. With huge loan applications pending on the line, it is partially impossible to keep mistakes at bay, and human error is unavoidable.
Under such conditions, it is best to outsource tedious and strenuous tasks to digital lending platforms to improve productivity and efficiency and reduce overhead costs.
The sole purpose of relying on an AI-based digital lending platform is to take off some responsibilities and get that work done promptly. The concerns are more serious regarding the financial and mortgage industry. Thus, it would be best if you chose a system with no chance of a mistake.
AI-Based Digital Lending Platforms for Effective Cost Control
One of the most effective cost control methods is introducing automated loan processing and documentation systems as vendors for your financial establishment. These AI-based processing systems have quite a few advantages over manual lending.
AI-based platforms like Encompass Shared Services from Tavant have been designed to make the different stages of the loan service cycle faster and more efficient while controlling costs efficiently. The traditional lending procedures were mostly manual labor that was not only time taking but also quite cumbersome.
AI-based systems strive to iron out these issues and ensure that the process enhances user experiences.
How Can AI Automation Control Costs at Different Stages of the Lending Process?
Loan Origination Cost Control
This is the first stage of the lending process, where the AI system will discard all the repetitive manual tasks and make the whole procedure a better experience for the consumer and the lending platform. Here are the three major ways the AI system controls costs in this stage.
Reduce bad debts and risks: The automated system analyses patterns and identifies and predicts critical situations that can take place. The lenders can act accordingly to rectify the problem, saving time and money.
Tracking Borrowers with Automated Underwriting: Many variables are involved in the mortgage and lending business. Keeping track of all the money and transactions is a highly tricky job requiring error-free calculation. Automated systems make no calculation errors and can easily track all payments and transactions.
Data Access and Gathering: AI-based systems can access and gather any form needed from the mortgage documents within minutes.
Mobile Support: All AI systems offer mobile support, and the mortgage and lending process can take place on mobile devices.
Operational Cost Control
Enhanced Customer and User Experience: Adopting automated systems will not only streamline your internal process but also work to improve user experience. Here the customer can browse the products, get in touch with the organization and upload all necessary documents for the mortgage.
The lending institution, from their end, will also be able to access these files and determine if they are eligible for the loan once the customer profile passes the automated system basic filtration process.
Faster Decision-Making Process: Automation helps the customer with the mortgage but also helps the lender in customer evaluation. The system eliminates the repetitive process involved in decision-making and makes it faster and more streamlined.
While the steps are executed automatically, there is also the scope of human intervention. The financial institution can program the terms and conditions required for mortgage loan applications.
Working on the Same Page: With the help of a common platform, in this case, the automated loan process and mortgage evaluation system, all the departments and stakeholders will stay on the same page. There will be clear communication, and different departments will know what the others are doing.
Apart from that, the applicant will also know at what stage their loan application has reached and when they can contact the organization for an update.
Summing Up
With the help of AI and automation, lenders will now be able to close a maximum number of applications allowing them to save more through invoice evaluation. With the current state of the economy, these cost control measures will help a financial organization navigate the market safely.
