By Vlad Kovacevic, CEO, Inovatec
In the past, lenders were reluctant to adopt new technologies. But as remote work has become mainstream, the transformation from paper to digital processes has become more of a priority. While some providers had already implemented electronic solutions such as eContracting systems with signature pads, the pandemic provided an urgent incentive to go beyond simple no-touch equipment and seek out more encompassing document management platforms. This would decrease the dependency on paper-based systems and increase functionality. After all, with no one at a centralized office location, even knowing where to send paperwork became murky. One of the upsides of the shift to remote work is that automated digital systems have reinvented workflows and introduced efficiencies and greater accuracy for lenders and dealers.
Other unforeseen consequences of the pandemic, like inventory shortages and hiring woes, have made it that much more difficult to stay ahead of the competition. Lenders need to process loans fast so that their dealers can close the sale. This is important because the faster deals close, the sooner lenders can generate income. The right document management system not only speeds up underwriting by digitizing those laborious and expensive paper-based processes, but it also reduces human error and helps centralize and safeguard customer data, adding a level of precision and security to the organization.
Gaining Efficiencies, Protecting Your Brand
We all know that lending money has a degree of risk. Documentation has to be comprehensive and astute. To help mitigate risks, both dealers and lenders need solid policies around document review processes—which is that much harder to accomplish when personnel are in different locations. By leveraging smart technology like document management systems with optical character recognition (OCR), documents and signature items like a bill of sale or proof of insurance are all deposited and stored electronically on the same platform, as opposed to in file drawers in disparate offices.
Also, in an economy where staff turnover is high, there’s a great advantage to a consolidated digital archive compared to chasing down others to locate documents. Moreover, the learning curve is reduced for new recruits. An online system standardizes processes throughout the company, and many offer video-based, self-service tutorials that are accessible 24/7. If the system can automatically identify and sort documents, it’s less guesswork for new employees when it comes to finding individual documents when needed.
Sophisticated, integrated document management technology automatically stores all contract documents in their correct folders. This mitigates security risks associated with complex and cumbersome paper processing and allows users to manage the process all through a unified LOS window instead of toggling between software applications. Lenders should also look for a system that allows for significant customization to incorporate whatever specific company jargon, language, or look-and-feel that they prefer. This tailors the user experience to the lender’s requirements, allowing them to better control that experience.
Compared to electronic management, paper isn’t always practical or secure, either. Documents can be misplaced or misfiled, and need to be stored in fireproof vaults. A system that has OCR capabilities can file the supporting documents for a loan together in one place, eliminating stacks of paper where individual forms can easily get lost. Meanwhile, digital documents don’t even require physical space.
Proper completion of all this documentation is crucial for the lifecycle of the loan. If at some point, a loan stops performing or is sold to another lender in the capital markets, these situations require full documentation. The ability to seamlessly locate and access documentation not only reduces downtime but enhances a company’s reputation. This kind of accuracy and all-inclusive documentation helps protect the dealer’s brand, reaffirming their standing as a reliable and efficient entity.
Gaining New Capabilities
Advanced document management platforms can identify documents using OCR and incorporate business intelligence capabilities. The technology doesn’t just store electronic documents; it can use AI-powered tools to determine things like what elements are missing, or if a document has an incomplete field, enabling the lender to build an accurate funding worksheet with robust policies and procedures to properly inform dealers what specific documentation is needed to complete the funding process.
The future of document management technology is even more promising. AI-driven systems can identify and accurately read a document and prefill an application to save even more time. Streamlining this process will allow teams to focus on other areas of expertise instead of labor-intensive document management. Advanced document management capabilities integrated into a loan origination system are highly valuable from a funding standpoint, as technology enables lenders to expedite funding and keep dealers satisfied, rather than chasing paper. It frees up capacity and smooths the entire workflow.
Lenders with the right document management system are better equipped to form successful relationships with dealers that will ultimately result in more loans—and profits—each of which are critically important in a hyper-competitive environment.
About the Author
Vlad Kovacevic is the founder and CEO of Inovatec Systems. Inovatec offers state-of-the-art LOS and LMS technology with a focus on efficiency, flexibility, customization, and the delivery of exceptional customer experiences.