Why Automated Loan Underwriting is Important to Modern Lenders

Why Automated Loan Underwriting is Important to Modern Lenders
4 min read

Automated underwriting also improves customer satisfaction and makes loan providers more money by cutting the cost of manual underwriting labor. If a company wants Automated Loan Underwriting, there are good reasons to back up what they think. With Automated Loan Underwriting, verification processes can be done digitally at any point in the loan cycle. It automates the process of processing and underwriting, as well as making documents and delivering them digitally. The process makes it easier for all involved parties to connect to the loan origination system (LOS) in real-time so that data can be shared between applications. It also adds options for e-closing, recording, and vaulting.

Automated Loan Underwriting—How Does It Work?

Many technological tools on the market today are changing the lending industry around the world. AI, RPA, ML, NLP, and OCRs are some of the few new technologies that have the potential to change how loans are approved and paid out worldwide.

For example, RPA has the potential to change the digital lending space because it can cut the time it takes to process loans by up to 80%. This is clear from how quickly fintech companies are adopting it. RPAs cut down on human mistakes by a lot, automate boring tasks, help with regulatory compliance, save a lot of money, promise support, and lower the risk of cyber fraud.

In the end, RPAs speed up the processing and distribution of loans and make workers more productive. Let's look at some other technologies that make the loan process easy and convenient:

Loan Application

When it comes to keeping track of people who don't pay back their loans, AI models keep track of all the payments that come in and predict a loan default score that changes over time. If a customer is at a high risk of not paying back a loan, the underwriting software system tells loan officers to make a different deal for that customer.

CSA found in a recent survey that mortgage companies are trying to cut down on the time it takes to get a loan from prequalification to closing. Their goal is to cut cycle time by at least one day. About 35% want to cut cycle time by five days by implementing process efficiencies. Another 30% want to cut cycle time by 6–10 days, and the others want to cut cycle time by 11 days or more. From the same survey, we also learned about the effects of automation and that 70% of respondents think technology or automation is the way to improve performance.


Consumer mortgage lending has always used a lot of paper because each application needs hundreds of documents, which doesn't even count the documents for loan servicing. Such needs come up because mortgage lending is a complicated process. Organizations depend on databases, multiple systems, workflow tools, and reports throughout their operations, so processors must use many resources to finish specific tasks.

Without a smart automation solution, managing these kinds of loans can take a lot of time and effort. Businesses can use automation to manage their documents and data by reading and putting together data from different sources and formats, like third-party websites, PDFs, and emails, into a single view. Automation also makes it easier for the lender to do audits, and putting checkpoints into the bots will create a secondary review and testing faster and smoother

Credit Assessment

With the spread of automated loan underwriting, lenders can now program their creditworthiness and risk parameters into an automated lending solution. This helps companies move away from manual assessment, which takes too much time and is prone to mistakes. Even people with little experience can quickly screen loan applications with the help of automated systems. This improves customer service by giving loan applications a quick response time.

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