High level of approved not-funded applications. Large volumes of manual reviews. inconsistent  decisions. inability to meet real time demands. Do these sound familiar to you?  These challenges are familiar with manual underwriting systems and process, and can negatively affect your loan portfolio. Automated underwriting is the answer to solve many of these challenges.

Automated underwriting would assist the CUs by reducing the time and cost involved and benefit the insured by enhancing the customer experience. 

Credit Unions has already seen the advantages of digital integration in its day-to-day processes like claims, payment processing, etc. However, the underwriting process still requires a lot of human intervention in its operations.

Automation of underwriting would assist the CUs by reducing the time and cost involved and benefit the insured by enhancing the customer experience. With the lending market becoming increasingly more competitive, credit unions must look for speed and innovative means of growing profits while maintaining quality. To remain profitable, it is necessary to expedite processing new loan accounts for closing.

How Automated underwriting works?

Underwriting is the process of evaluating the risk involved with a financial transaction, such as a bond issue, bank loan, or insurance policy. Automated underwriting uses algorithms instead of human beings to make underwriting decisions that are quicker and less prone to errors. Credit Unions can upload the information’s from the loan application to an automated underwriting system. which retrieves relevant data, such as a borrower’s credit history, and arrives at a logic-based loan decision. 

Automated underwriting engines can provide near-instantaneous loan approval or denial decisions based on the information submitted to the system. Implementing automated underwriting systems save Credit Unions a considerable amount of time, as manual underwriting can take as long as 60 days to complete.

Borrowers prefer reaching out to a lender that is not going to demand tons of paperwork and then say no after a 6-week process. This is where automation has made life easier.

Automation of credit underwriting for banks and credit unions covers the shortcomings of the traditional underwriting techniques. The automated underwriting process models the legacy underwriting system and powers it with artificial intelligence and machine learning to support faster yet cheaper and more effective credit underwriting.”

Benefits of automated Credit Underwriting

1. Better Productivity: Here, it is a win-win for both the lenders and the borrowers. The automated credit underwriting system saves time for both the parties which facilitates quicker decisioning and reduced processes that traditional underwriting requires.

2. Better Decision Making: Automated underwriting uses algorithms instead of human beings to make underwriting decisions that are quicker and less prone to errors.

3. Smarter Fraud Detection: Loan fraud is steadily rising. Credit card fraud is a multi-billion-dollar industry. Automation cuts down the risk of fraud substantially and systematically.

4. Easier and improved compliance to the regulatory requirements: The best part of automation is that you update a rule, and it gets implemented throughout as per the filters you put. Thus, the regulatory requirements which might sometimes be overlooked in a traditional system, are always in check in the automated systems, which results in better compliance.

5. Consistent and better-defined workflows: Automation makes underwriting well-defined, resulting in the consistency of the process and results.

Increasing automation now will lead to stronger futures

Credit unions that increase automation can originate more good loans without requiring manual review. They will be able to handle the larger and more profitable loan books likely to occur once the recovery gets fully underway. Increased automation also helps credit unions offer a better experience to members, increasing longer-term profits without making more demands on already overworked staff or significantly increasing costs. With greater automation, underwriters and loan officers can spend more time on the customers that really warrant their time and attention. 

More good loans can be automatically approved, and more bad loans automatically denied. Recent times have stretched credit union operations to the max. Increased automation, enabled by explainable and transparent machine learning credit risk models, can help credit unions safely and responsibly increase auto-decisioning, allowing staff to focus their attention where it is most needed.

How can Insight Consultants help you?

Though the benefits are numerous, many Credit Unions holding back in implementing automated Underwriting. We can help determine the optimal approach to implementing an automated underwriting system. Insight Consultants specializes in digitizing the Credit Union ecosystem. We serve Credit Union entities in the technical advisory, software development, and fintech services space. 

We can help you transition from an offline way of working to a digitally streamlined one that includes paperless operations, workflow-automated decision-making, and credit scoring powered with insightful analytics.

Contact Us to learn how we can help you.