Read time: 5 minutes
Fintech allows community banks and credit unions to compete with the larger financial conglomerates. Most banks are likely already utilizing some fintech, but the addition of artificial intelligence and machine learning produces better outcomes. For example, automated loan underwriting software can help a bank to increase the number of applications that can be processed at a given month and/or decrease the number of credit staff required.
How Fintech Has Allowed Community Banks to Thrive
It’s been just over 10 years since the great recession ended after the bailout of big banks due to the housing bubble burst. Trends in commercial banking post-recovery saw consumers demanding better service, and the fintech industry exploded onto the scene.
Talk of the need for community banks and credit unions, obsolete brick-and-mortar systems, was viewed as a prediction of the future. However, fintech companies quickly realized that their products and services could serve the industry better within a partnership.
The banking industry is slow to adopt new technology and processes, due in part to regulations and fear that mistakes will result from hasty updates. This fear of the unknown has held some institutions back, but luckily, you have access to powerful fintech solutions that can be implemented easily without major disruption in processes.
Automated underwriting and digital banking are amongst the fintech solutions that are fairly easy to implement. They have allowed community facilities to prosper with increased revenue streams while reducing the time and costs associated with manual loan processing systems. You also benefit from modest startup costs when utilizing fintech companies such as MonJa, which offers a pay-on-demand cost model and white-label product for loan application processing and underwriting.
How Fintech and Digital Banking Produce Best Outcomes
The key factors you need to consider when moving your organization’s model forward should be which fintech and digital solutions are manageable and desirable to consumers. Mobile devices connect everyone to the internet of things (IoT), so you must create digital solutions that let potential customers access your banking in real-time.
By pinpointing your customers’ pain points, like the need to a bank outside of normal hours, you can reach a larger audience, even outside the brick-and-mortar address area. These generally rely on artificial intelligence (AI) and machine learning models to create trackable, unbiased outcomes.
The system can scan for missing information and give the customer the feeling of having support throughout the online banking experience. Using fintech and digital banking is like leaving your doors open for business around the clock, even on weekends and holidays.
Digital Automation of Underwriting Improves Results
If you put your loan application process into a digital format, coupled with an underwriting platform that utilizes AI and for example, Smart Scan Technology to speed up the statement spreading, you extend the hours and reach of your loan department.
MonJa Platform for underwriting automation helps traditional financial institutions as well as online lenders to increases loan origination volume by up to 20%. The increase in volume is easily achieved as the portal allows credit officers to upload borrower’s scanned tax returns and financials (PDF or digital files) and download the credit memo draft within 24 hours. MonJa’s engine parses the documents, extracting the data fields and calculating the ratios behind the scenes, saving the biggest chunk of the time required for manual statement spreading otherwise. The credit analyst can use the saved time on deeper analysis, more complex deals or simply devote more time to personal communication with business borrowers. Worried about the quality of the extracted data? MonJa is the only vendor that has complex additional workflows to guarantee the data quality so that you5r credit team does not have to spend time assuring the fields are correct. Engine’s confidence score, as well as additional layer of human analyst revision of “flagged” data fields, make sure the data is correct.
When it comes to risk assessment of the application, your team has the input to personalize the risk parameters that your lending organization currently uses. This becomes a process upgrade, not a complete overhaul of systems, so the normal internal red-tape holdups can be minimized.
Plus, using risk algorithms based on results from similar applications in a large information database makes a risk assessment and loan scoring results more accurate to the individual case. Your loan officers have a powerful tool that enhances their credit assessment skills. And with a 70% reduction in manual loan paperwork time, processing the increased origination doesn’t require you to add more staff to the underwriting or credit administration teams.
Automated underwriting can decrease loan delinquencies, reducing loan portfolio risk for your organization. You create a more consistent outcome and a reliable revenue stream. Even smaller loans become lucrative when the manual process is replaced with digital automation.
The benefits to your customers are obvious too. The process reduces the total time from application to decision by 42%. You’re able to provide the money that qualified individuals and businesses need faster than before, which can increase satisfaction and the experience of business borrowers.
Getting Started is Quick and Easy
Request MonJa's Statement Spreading Software Demo
MonJa Smart Scan Technology speeds up commercial loan underwriting by up to 70%.