How Banks Can Leverage Document Automation

By James Sampson

As banks across the country assess investment opportunities in their digital capabilities to stay competitive in an increasingly digital world, the need for such innovation was laid bare by the sudden shift to business environments and consumer behavior in response to the pandemic in 2020.

When the rush of loan applications for the Paycheck Protection Program threatened to swamp lenders, some banks hired more staff to help process the spike in applications, incurring greater costs to capture the opportunity. Meanwhile, others had capacity challenges.

Many banks responded to the challenge by investing in automation technology to increase efficiency of operations, solving a common yet under-appreciated bottleneck in the lending process: document collection. Their investments resulted in dramatic increases in productivity, loan processing capacity and, most importantly, happier customers.

First Home Bank, a top-10 Small Business Association lender with locations across all 50 states, saw firsthand how digitizing and automating repetitive, routine processes and tasks in lending, like document collection, can have dramatic results. In 2020, the bank processed as many loans in a two-month period using document collection and management automation as they might have processed in an entire year using their previous manual methods with similar staffing.

As noted in Deloitte’s 2021 Banking and Capital Markets Outlook, the pandemic crisis has served as a litmus test for banks’ digital infrastructure. “While institutions that made strategic investments in technology came out stronger, laggards may still be able to leapfrog competitors if they take swift action to accelerate tech modernization,” the report notes.

The inefficiency of relying on email

Understanding which problem to solve is often half the battle. Even for banks with sophisticated technology employed across the organization, that may be managing customer accounts using customer resource management software, many still turn to email when it comes to the task of requesting and collecting documents from customers to complete the loan application process—especially as the pandemic closed many bank lobbies and forced transactions to be managed entirely remotely.

When document collection is handled by email, customers often struggle with printing, scanning, file-size limits, bounced emails and simply tracking which documents they have returned, and which still need attention. This can result in frustrated, confused customers who are less satisfied with their experience and may even abandon the loan process before completion, resulting in lost revenue, and decreased opportunities for repeat business and referrals.

On the business side, loan officers and administrators are forced into a highly manual process of pulling documents and information from email, entering it into other systems, creating spreadsheets to track loan status, searching for information in email, following up with customers to ask for missing documents and waiting for response. This results in tedious double handling of information, confusion, long loan processing cycles and introduces the potential for errors and privacy breaches as sensitive documents languish in email inboxes.

However, because of the ubiquity of email communication, many banks do not realize the problems associated with handling this essential step in the loan process via email, or that these problems can be easily solved.

Improving the process through automation

Fortunately, simple solutions exist that help banks advance digital transformation without needing to replace existing systems. Lenders can improve and accelerate their loan processing capacity and improve the customer experience with workflow and content automation solutions. Automated document collection platforms create an intuitive customer portal through which all documents are shared, processed, tracked, and collected.

Customers and loan officers can easily see the status of the application and approve or revise document requests. Automated workflows and reminders help guide customers through each step of the process. Customers can more easily manage documents with features designed to eliminate friction in the process, including the ability to use e-signatures, digitally complete online forms, upload original documents using their smartphone camera and authorize third-party data sources, such as bank statement feeds.

For lenders, automating document collection and follow-up enables them to easily approve documents or make requests from customers, while having greater transparency into loan status with a streamlined dashboard. For business leaders, there is greater visibility into the loan pipeline, broken out by region, branch or loan officer, enabling improved business decision making.

An automated document collection platform also improves regulatory compliance through standardized communication templates, automated file management, and removing the need for sensitive customer files to pass through staff email inboxes. It also creates a log of all communication and documents, stored securely and accessible at any time for review and auditability. Eliminating the time-consuming, manual nature of managing the document collection process through email enables banks to improve their capacity to process loans quickly and efficiently, getting customers their loan funds faster and with greater ease, and generating more revenue for the bank.

“Sometimes there is an opportunity to work smarter rather than harder,” says Matt Nicolosi, VP and director of strategic growth initiatives at First Home Bank. “It’s been a huge time savings that we never would have been able to achieve without it.”

As banks across the country increase their digital investments to improve operations during the pandemic and beyond, addressing inefficiencies like document collection can have a dramatic impact quickly without the need to overhaul existing systems or invest in extensive training and change management. And the resulting improvements set the bank on the best path forward in an increasingly digital world.

James Sampson is CEO and founder of FileInvite, a workflow and content automation company.