Strategic Automation With Business Process Management

By: Alex Johnson

Traditionally, application processing has been a predominately manual process from start to finish. A loan officer will evaluate the application information by hand (a process that can take weeks) and then manually input the application in the bank's booking system. This manual approach to application processing is as inefficient as it is ineffective. The time requirements of processing a single application is so high that in order to process even a small number of applications, that bank would need to hire a huge number of loan officers for the task. Additionally, this manual approach is incredibly inconvenient to customers. In a time when drive through tellers, ATM's, and internet banking are commonplace; a bank that can't offer consumers an incredibly convenient process for applying for a loan will fail. The manual approach of processing a loan application can take weeks, today's consumers are beginning to demand minutes or seconds.

Clearly a faster, more effective and efficient approach to application processing is needed.

The obvious answer to the aforementioned need is automation. By implementing an automated application processing or loan origination system, banks can dramatically reduce the amount of time and staff needed to process a huge amount of loan applications. However there is a downside to complete automation. Many loan applications still require some manual processes. For example, an application that contains a fraud indicator requires (by law) that the indicator be cleared by manual review, a requirement that can't be addressed by a completely automated application processing system.

So if neither a completely automated system nor a completely manual system will work, what will? A strategically automated system.

Strategic automation involves automating all the steps in the loan origination process and then going back into the automated system and defining any necessary points of manual interaction. This approach to application processing allows banks to reap the advantages of both automated and manual processing without the drawbacks of either.

The most common method of implementing strategic automation involves the use of both an extremely robust loan origination system and a flexible business process management tool. The loan origination system reduces the time needed to seconds by automating every task in the process including:

&bullPulling all necessary credit data.
&bullMaking the credit decision.
&bullSetting the loan's terms and conditions.
&bullBooking the loan to the appropriate system of record.

The business process management software allows the bank's business users to define any necessary manual steps in the process including:

&bullClearing fraud indicators.
&bullVerifying missing or incorrect application information.
&bullPulling additional data or analytic information.

All applications are then processed in the automated system. Any time an application requires a manual review; the application is removed from the automated process and is put in a manual review queue. Once the application has been reviewed manually it can be seamlessly reintroduced into the automated process at exactly the point that it was removed. The application can then finish being processed automatically.

In today's market, financial institutions can't afford to not embrace the benefits of strategic automation. loan origination software combined with integrated business process management capabilities can help banks achieve strategic automation.

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