The Lending Automation Imperative

The Lending Automation Imperative

January 2, 2024

Loan Operations

In our discussions with bankers, efficiency and automation in lending keep coming up. Automation should augment and improve what humans can do and increase their capacity. It should also make self-service channels more effective. In the CSI 2025 Banking Priorities Survey, digital engagement with customers topped the list of lending areas bankers said would benefit from automation, picked by 46% of respondents. That was followed by regulatory compliance and credit scoring and decisioning.

Here’s a look at how these areas might profit from automation:

Digital channels are automated in the sense that users don’t need human bankers to conduct basic tasks. But there are opportunities to go beyond that. For example, customers may receive immediate offers for products in context. Or when a customer fills out a digital loan application, a virtual assistant may answer questions and route topics to agents at a contact center. On the agent side, it may create context for the inquiry in real time based on customer information and activity, predicting immediate needs.
Regulatory compliance is a human task that automation can streamline. Modern governance, risk, and compliance solutions may manage compliance polices, suggest policy changes to match emerging standards, produce reports and file them with regulators, and simplify the audit process. An AI copilot and no-code interface could make it quicker for risk and compliance employees to tweak settings and reduce the burden on IT of managing it. (Integrated risk management software also applies to cyber risk, which is increasingly top of mind.)
Credit scoring and decisioning is evolving with more, better data sources and machine learning-driven decisioning engines. Traditional credit scores, using a FICO score or similar, are already automated based on a credit scoring model and data from consumer credit reports. Now, automated cash flow-based approval is increasingly possible as open banking enables the connection of more financial data sources. But it and other new approaches need substantial data handling and analytics capabilities to work efficiently. Ideally, decisioning is straight-through nearly all of the time with certain cases subject to human review.

Lending automation isn’t limited to these top three items — it has a role in other areas like document imaging and verification, application, origination, and onboarding workflows, customer follow-ups, and underwriting. Progress with automation in any of these areas reduces manual tasks and minimizes human mistakes and inconsistent judgements, reducing the headcount needed to run a risk-conscious and profitable lending business. It may also improve the customer experience by accelerating the pace of loan origination.

Bankers need to think about the investments they should make to modernize their lending operations and what they’re willing to wait for from their core provider. Legacy point solutions handle basic digital, compliance, and decisioning tasks but are built for another era. Vendors now advertise platforms that integrate functions throughout the loan lifecycle, minimize the work that goes into the lending process, and enable the integration of best of breed applications. But data availability is still a problem. Siloes limit automation and fixing them is bigger than a single product line.

The Lending Automation Imperative

The Lending Automation Imperative

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