8 reasons for Automating Commercial Underwriting

Commercial underwriting is a critical process that helps mortgage lenders assess whether they should approve a loan request based on thorough risk evaluation. Underwriting also decides the ideal loan amount that the borrower should be eligible for.

However, commercial underwriting is quite time-consuming, and automating it will improve the process by leaps and bounds. In order to drive process optimization and be able to undertake all types of loan applications, lenders are widely adopting automation. Automated underwriting leverages algorithms that eliminate the requirement of human beings to make decisions and reduces the possibilities of human errors. 

Besides lesser errors, automation in commercial underwriting also leads to consistent decision making, enhanced operational efficiency, and better customer satisfaction. 

Here are some of the major benefits of automated commercial underwriting

1) Improved workflow

Once an application enters the workflow, it cannot be hampered through manual intervention. The presence of a unified workbench makes it easier to pass on the process seamlessly through all the stakeholders involved in the loan underwriting. This improves productivity and also ensures better customer satisfaction as the process is quicker and more accurate.

2) Better allocation of resources

By leveraging automated commercial underwriting, lenders can process simpler and standard applications within no time. This ensures that human underwriters are free to handle other complex applications. With optimal resource allocation, lenders would be able to process a broad range of loan applications, offer customized services to the borrowers and expand their business in the long run. 

3) Accuracy in fraud detection

Automation of the process lowers the instances of fraud in a systematic and considerable way. The procedure leverages predictive analytics to track the risks involved in the loan underwriting and disbursal. Commercial underwriting automation detects the potentially fraudulent transactions and raises concerns immediately, thus amounting to effective fraud.  

4) Consistency in decision-making

The automated commercial underwriting is based on standard processes that reflect the lending institution’s philosophy. Automation allows the lender to underwrite and disburse the loan in a customized way, yet maintaining the standardized policies. 

Many lenders have different interpretations, and versions of the underwriting policies and this might impact the process. Automation in commercial underwriting ensures that these vagaries are kept to a minimum during the entire process. Also, there could be many risk factors associated with the loan process, which conventional underwriting might ignore, but automation doesn't miss out on all these factors. 

‍5) Better compliance

The underwriting norms and regulations are subject to periodic changes, and it may have a cascading effect on the entire underwriting process. Due to manual involvement, many times, these guidelines are missed during the traditional underwriting process. However, automated underwriting ensures better compliance by incorporating all the changes throughout the process with a single change in the algorithms. 

6) Ease in auditing

Just like regulatory compliance, auditing of the underwriting institutions is also a critical factor as it ensures better governance. Instead of going through all the documentation and skimming across the details manually, automation in commercial underwriting makes auditing much more hassle-free and streamlined. There are also reduced chances of errors; at the same time, thorough and detailed auditing keeps fraudulent transactions at bay. 

7) Enables better scalability for lenders

Commercial underwriting is a complex process that requires a good understanding of the regulatory norms, risk factors, credit evaluation, and technical aspects. If all the highly qualified underwriters are involved in assessing each loan application, the lending organization would never be able to grow. Too much time would be spent on repeated stuff, and the cost of personnel would also be higher. Hence, automating repeated and standardized loan applications allows the lender to expand its operations and scale it higher. 

8) Encouraging paper-free loan approval

By automating the commercial underwriting process, lenders could do away with a lot of unnecessary paperwork. Physical documents would be minimal, which means lesser storage space, lower imaging cost, and minimal cost on the delivery personnel. A data-oriented set of rules goes a long way in eliminating paper and minimizing instances of forgery or misrepresentation of signature.

Conclusion

While commercial underwriting automation has immense benefits, it is essential that the software chosen suits the underwriter's business's nature. Docsumo's Document AI software with Intelligent OCR technology helps lenders convert unstructured documents like pay stubs, invoices, and bank statements to actionable data. The software is compatible with documents in any format. So set up a free demo with Docsumo us or give us a call to see how we transform your documents into chunks of relevant data seamlessly.