Totality
Lenders have faced a unique set of circumstances over the past few years with the pandemic, shutdowns, and work-from-home policies, procedures, and pivots. Persistent staffing shortages have bumped up labor costs. Inflation’s impact on household budgets has meant that a lot of online lenders have begun to see an uptick in default rates. Expectations of a global recession and uncertainty about its potential effects are keeping every organization on its toes, lenders included. And there’s not a whole lot that anyone can do about it.
But what can lenders do to build better businesses despite these challenges is to take a smart look at the things you can control, and put systems in place that help make the most of the staff, customers, and opportunities you have. Improving operational efficiency, providing a great customer experience, giving agents tools to be successful, and simply making sure that you’re making decisions based on data and not just gut instinct are all areas that could benefit from increased attention—and automation.
Today’s loan management systems make it easier than ever to automate time-consuming manual tasks across the organization, which makes for more focused use of staff time and a better customer service experience for borrowers.
The first thing to do if you’re looking to automate tasks is to examine daily processes to identify where efficiencies might be possible. Everyone in the organization completes repetitive duties throughout the day that add up to a lot of time—loan officers, collectors, call center managers, even the CEO. For example, cutting the average call time for a loan officer from seven minutes to five minutes adds up fast, especially if they’re closing 20 loans a day. Some tasks could be eliminated altogether, while others could simply be shortened. Ultimately, if you can take away a mundane task, not only does it help the bottom line, but it also allows employees to be more creative and happier at their jobs.
Rather than trying to automate tasks across the entire business all at once, focus on one department. Start by documenting the tasks that are performed on a regular basis with a summary of the work—who performs it, the time spent, and at what interval (e.g. daily, weekly, monthly, etc.). Make sure to think about each task as part of a larger, intertwined system, and document the whole system. Following a task, does the customer need to receive a text? Does a contract need to be reviewed? Does a file need to be saved? The people responsible for operations in that department need to have ownership in this process, as their knowledge and buy-in are essential for success.
Once the processes are mapped out and tasks for potential automation are identified, prioritize the list based on the opportunity to save or make money. This should be a collective effort undertaken by the people whose day-to-day work will be impacted by any changes to procedure or practice. Start to identify the quickest wins and the lowest hanging fruit based on cost savings and whether more profitable work could be done in the time saved. To get a rough idea of cost savings, calculate the cost of the action at this moment. For example, a task performed every day for 30 minutes by an employee who makes $30 an hour costs $15 per task, times five business days. Multiply that by 52 weeks of the year and you’ve arrived at an annual savings of $3,900—for one task performed by one person. If you could automate a 30-minute task and use that freed-up time to spend on new business activities that require human skill and attention, even better.
1. Customer Communications
While some still interactions still require human contact, many are improved by automation. Communication to your customers and potential customers is more important than ever. As attention spans grow smaller and smaller, people expect immediate responses. Seventy-nine percent of consumers prefer to communicate via web chat because they receive a response that’s more immediate than calling or emailing. That speed of response draws them back to your site, and it makes them choose you.
Streamlining communications is also an opportunity to deliver quality messaging—confident, clear, concise responses with no typos. Implementing as many scripted, automated replies as possible creates consistency and professionalism across contacts, ensuring the customer hears a unified voice when interacting with your company.
2. Loan Application Process
This is an area that’s ripe for automation, especially with repeat customers, simple transactions, and common loans. We have lenders on Totality that automate the majority of their loans from start to finish without loan agent assistance. It’s dependent on the lender and their specific decisioning waterfalls and rules, but some lenders have achieved 80 to 85% automation across their portfolio.
3. Key Performance Indicators
Where are you closing the most loans? Where are customers going? Where are you slow to respond? Where do you get the most feedback? Where are getting the best response from weekly payers, people who are late, and weekly payers versus monthly payers? Every successful lender wants to be tracking KPIs like these as much as possible to understand and identify areas of opportunity, and to be able to make decisions based on real, on-demand data.
It’s smart to look at the entire customer experience and pull KPIs at multiple points throughout the whole journey. By understanding things like where in the loan process they’re falling off and where they’re spending the most time, you can improve the end-to-end experience for everyone involved.
4. Back-Office Operations and Accounting
When it comes to automation, most lenders don’t think about accounting, back-office operations, and reporting as areas where major efficiency gains can be made. But just think of the little tasks that need to be done—and need to be accurate—on a daily basis.
One example is the detailed reports an accountant reconciles every day from one lender’s loan management software. The total from that detailed report should tie out to the balance that’s going in and out of the bank account, which should match what’s in QuickBooks. If it all reconciles, an accountant books those journal entries. A bot could do all of that automatically. With a click of a button, it can pull all the information, all the reports, and all the reconciliations exactly how an accountant would typically do it every morning. And if it was accurate and everything tied out perfectly, it could automatically book the journal entries on behalf of the accountants, saving them anywhere from two to four hours a day. If there was an unreconciled issue, the program would flag the accountant to know exactly where to focus their attention to resolve the issue. That one automation results in a savings of 10 to 20 hours a week—the difference between a full-time and a part-time bookkeeping position.
If you’re curious about how your loan portfolio could benefit from automations like these, get in touch with us today.