With recent technological advances in the financial industry, banks in the United States (and the rest of the world) continue to look for tools to streamline traditionally manual processes. With administrative costs comprising such a large portion of a bank’s annual expenses, banking software systems that provide effective automation will continue to see strong growth for decades to come. An important trend among banks is the automation of loan files. As any banker knows, a single file can represent mountains of paperwork and possibly years of work. This article looks at the ways that banks use bank imaging technology to streamline the management of loan and credit files.

Questions for consideration

Before considering your options for loan file automation, it’s wise to first review a few basic questions about your bank’s current situation. By thinking critically about your bank’s workflow as it is today, your financial institution can maximize return on investment. The following questions may be helpful when starting the optimization process.

• How efficient/effective is your current paper loan filing system?
• How much money does your financial institution spend each year creating and organizing physical files?
• How often should physical files be transferred from one branch to another?
• Things to consider: messaging costs – routing for credit analysis, approval officer review, etc.
• Has your bank lost, damaged, or lost a loan file entirely, creating mountains of duplicate paperwork to restore the original files?
• Have customers or loan officers ever complained about the time it takes to approve or update loan files at your bank?

Loan Approval Process: A Great Place to Start

Once you’ve identified the need to automate your loan process, a good place to start is at the beginning of the application process. By implementing a banking software system that can manage your loan files from start to finish, your organization will realize the highest ROI from such a platform. When evaluating offerings from different banking software companies, it’s a good idea to find a system that integrates with your existing applications, subscription software, credit analysis platform, and documentation. It’s also important to find a system that provides up-to-date loan status information, electronic routing, and multi-party document viewing rights. Through automatic updates of assigned user, loan status, and approval status, your bank will experience economies of scale not previously realized.

Optimization of your bank’s loan portfolio

With the volume of loans processed each day at a single bank branch, historically keeping up with the status of each paper loan file has been a challenge for institutions of all sizes. When implementing bank lending software to centralize such activity, it is critical that your bank select a banking software company that offers a loan portfolio management and reporting tool. These tools typically offer a customizable dashboard for instant analysis of a bank’s existing loan portfolio. Additionally, such platforms should provide a wide variety of reporting options, allowing users to subscribe to email alerts for specific pipeline activity. Additionally, reports should have the ability to be easily exported to standard formats, such as .pdf and .csv, allowing for deeper analysis by management.

Customize loan files for your banking workflow needs

Perhaps the biggest benefit of automating loan files through bank management software is the ability to take a quick look at the entire documentation workflow and instantly understand what documents are still missing. As documents are routed from one user to another through your banking workflow, users can receive automatic email notification that their action is required. When choosing a bank document management system to streamline your loan submission, it’s vital that you choose a provider that allows you to set up unlimited workflow actions on your system. By customizing each workflow action to your bank’s needs, you can ensure that your system reflects your institution’s operational goals. Such items to consider in automating your workflow include: managing exceptions, defining user groups, email notification recipients, setting loan limits, etc.

Final Thoughts: Digitizing Loan Files

By automating the approval and lifecycle of a loan file, your bank can reap significant benefits. Studies have shown that many financial institutions can recover their investment in loan portfolio management software within twelve to eighteen years. By digitally capturing every action associated with a loan file, banks are known to save money in the areas of administrative costs, courier/overnight shipping charges, storage space, and overall productivity.