De-Risking the Lending Process

Risk can be a good thing when it comes to personally expanding your horizons or trying something new — but not when you’re originating loans and working with confidential information. Yet, numerous risks still exist in the loan origination process, especially for those that use manual, legacy tools.  

These are not scare tactics. IT and process risks are real. Just think back to stories like the Citibank mishap or the TSB meltdown of 2018. This is why investing in secure, cloud-based software that proactively mitigates risk is so crucial. In loan origination, de-risking the lending process means:

  • Minimizing errors in data/information collection and form/document preparation

  • Creating consistency across applicants who are applying for similar loans

  • Centralizing application/loan-related information in one place for all stakeholders

  • Prioritizing compliance with more reliable, repeatable processes and procedures 

  • Improving the ability to assess creditworthiness with the right tools and data sources 

With automated lending software, you decrease risk across all areas of the loan origination process, opening your business up to faster revenue realization, greater customer loyalty, and future-proof operations.

The 4 Biggest Risks in Loan Origination

It’s not always easy to spot the potential risks in loan origination. That’s because they often start as minor inconveniences that seem par for the course. But these risks are real problems that can fester and grow into webs of inefficiency that will undoubtedly fail at some point. Look out for:

1. Data silos. Many lenders get wrapped up in purchasing different tools to do different jobs, resulting in disparate systems that are difficult to connect. This requires employees to manually transfer the information, creating multiple handoffs that are prone to human error.

2. Security vulnerabilities. Personal information is absolutely necessary to the loan origination process, but every new document and piece of information creates added risk. When lenders forgo secure data transfer capabilities that go directly to the recipient (inherent in SaaS software), they create multi-step data exchanges that add unnecessary touchpoints to an already risky process.

3. Poor technical support. Loan origination systems are complex tools that require numerous users of all skill levels and backgrounds. To ensure the most secure and effective use, UX design must be intuitive, regularly updated, and backed by premium customer support that’s there when you need it most.

4. Slow system updates. Many loan origination systems are decades old and have only been updated slowly over time. This makes it difficult to move nimbly when market changes arise or users require new capabilities. The best loan origination platforms release updates regularly to address users’ changing needs as they happen.

Did You Know?

SPARK is actively engaged in the vendor community and is often one of the first to launch new or updated capabilities that are eventually required by the SBA. In fact, during the creation of the PPP program, our team’s early testing of new features led directly to improvements in the SBA’s systems. 

Design Matters

A unified loan origination platform has numerous implications for more efficient processing with less risk. Not only does it allow new market entrants to hit the ground running with centralized, integrated data, but it opens up opportunities to blow by competitors still using legacy systems and processes that must be migrated and retired. Additionally, going “direct to digital” future proofs lending operations from the start with a system that was inherently built for automation and seamless connection.

From its inception, SPARK was made for collaboration and efficiency. As a SaaS offering, SPARK is accessible with just an internet connection and web browser. It also naturally de-risks the lending process by giving users the ability to:

  • Centralize information. All assets and documents are kept in one unified place for easy location and access. Plus, SPARK allows for customized views, document metadata, and on-the-fly rearrangement of document lists so users can focus only on files relevant to their role. 

  • Create secure access. Users can create unique roles for external stakeholders and grant direct access to the same information as their internal team. Applicants/borrowers can access the system to provide documents, check loan status, and receive alerts when new actions are required. Or, lenders can invite members of their outside legal team to review loan documents all in the same system.

  • Integrate with the SBA’s E-Tran system. SPARK has a direct connection to SBA’s E-Tran system, which eliminates the need to rekey any application information and supports directly transferring  loan documentation with the push of a button. SPARK also anticipates SBA eligibility requirements by proactively surfacing errors and warnings regarding missing information, avoiding unexpected delays later in the process. 

Most of all, we’re constantly innovating and seeking out improvements to our platform. Every eight weeks, we release new software updates, ensuring the functionality is dependable and the platform is growing. Plus, we look for new and useful partners who can streamline loan origination through process, data, and decisioning automation. 

With so many opportunities for data impropriety these days, risks are everywhere for businesses that manage data of any kind. But with digital processes and automated capabilities, we’re determined to manage it with the most dependable, efficient tools in the industry.

Experience the power of SPARK by scheduling a demo today.