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Cracking agile home loan origination – Part 2

  • Posted on April 14, 2022
  • Estimated reading time 5 minutes
Agile Home Loan Origination Part 2

In our previous blog post, we covered how large banks can immediately make important inroads into accelerating approval turnarounds. Here, we will cover the various benefits and how to start working towards new levels of operational maturity.

Characteristics of quick wins
Prioritise potential ‘quick wins’ projects that:

  • Offer fast payback – These projects deliver a solid return on investment (ROI) within a year, and often in just a few months.
  • Are aligned with business priorities – ROI comes from core strategic priorities and drivers, such as reducing costs or growing revenue.
  • Puts humans at the centre – Implementation immediately improves the experience for customers, employees and brokers. Take the time to map the customer journey to assess which are the most critical to solve immediately.
  • Scale across multiple brands and teams – Tasks like automated triage and document intelligence are often transferrable throughout the bank in different business units and operational areas. Scaling a tiny, automated task across a large organisation can deliver multi-million-dollar savings.
  • Move towards the transformation target state – Where possible, quick wins should be steppingstones towards long-term digital transformation (see below). Although, some of our clients are comfortable implementing quick wins, even when they may eventually be replaced by transformative initiatives, because they can deliver payback within months, helping to fund transformation programs.

Give the bank time to transform
While the quick wins team is resolving immediate pain points, banks have time to reimagine end-to-end application and approval processes. Importantly, this is about exploring new ways of operating, not just automating existing processes. For example, new types of seamless, zero-touch processes will return simple loan approvals (75% and under LVR, full-time employed, existing customers) in less than an hour.

Our clients are using process excellence, automation and advanced analytics to validate and risk score the application until it reaches the human review moment, when an analyst makes the final decision based on dashboard information on a single screen. Most of an analyst’s time can now be spent focused on getting more complex loans through the approval process, still augmented by intelligent automation.

Reaching this goal requires wholesale transformation where the loan origination process:

  • Automates at scale to augment human talent – Intelligent Automation has changed how humans work and the skills they need to be successful. It shifts higher-value tasks to humans, making people more productive and work more satisfying.
  • Boosts AI power across the enterprise with cloud – AI’s powerful advantage yields insights into performance measurement and improvement that leads to reduced operational risk, higher compliance mitigation and increased customer satisfaction. Banks can also improve their core processing accuracy and efficiency with advanced AI-powered data and analytics platforms.

Ultimately, with intelligent operations, banks can realise the full value of digital banking: lowering costs, increasing resilience and taking the customer experience to the next level. The more they thread intelligence into their operations, the better positioned they will be to outmanoeuvre uncertainty and meet tomorrow’s performance aspirations.

A large bank reimagined its commercial lending operations with new digital capabilities. A new cloud-based commercial lending origination system, 60 automation tools, AI-assisted assets, and predictive analytics transformed the bank’s core systems and strengthened customer retention by predicting loan pre-closure propensity. The bold move to align business and technology paid off: The bank accelerated loan approval time by 26% and can disburse loans under US$350,000, three times faster than before.

Meaningful benefits in six months

Quantitative benefits
Introducing intelligent automation into your lending business doesn’t need to be a large undertaken. You can start small. When they add up the total savings from automating minor tasks, our clients find they are saving hundreds of thousands of dollars. At the same time, speedy approvals are driving up conversion rates and boosting revenue:

  • 30% increase in turnaround time
  • 50% reduction in overlap
  • 75% reduction in handoffs
  • a 2-5% increase in conversion rate may generate indicative additional revenue of $5-15M (interest only) per annum

Qualitative benefits
Harder to measure, but equally as important, are the improvements in:

  • Customer experience – Like every other brand they interact with, consumers expect their banking experience to be seamless, convenient and personalised. Automated, standardised processes are the foundation of a better customer experience.
  • Internal change appetite – Quick wins allow people to experience the value of digital transformation in small, manageable bites that deliver immediately benefits. They also quickly embed digital skills, building the new expertise needed to be part of a ‘human + technology’ workforce. A workforce that’s been through a quick wins program will be more comfortable and confident to participate in wide-scale digital transformation.
  • Employee experience – Banks can support internal employees: first by reducing their workload through streamlining administrative tasks; second by providing a pathway to increase their skills and capabilities so they can work on more challenging and meaningful work.
  • Broker satisfaction – Intelligent automation can improve the overall broker experience, which banks can measure using NPS scores.

How to get started
It’s time to start working towards new levels of operational maturity where, like digital natives, major banks can act faster and win sooner. By fast-tracking the journey, banking operations can become a true catalyst for competitive advantage – starting now.
We recommend:

  • Understanding your strategic intent – Ask yourself: What is the business or organisational strategic focus? Where do you want to play? What is important and what is not important? By understanding this, you can target your area of focus to get the most value for the business.
  • Identifying quick wins and move quickly – By understanding your current state and knowing what your strategic focus is, you can identify key gaps or blockages or areas for opportunity. Using a design led approach, uncover the major pain points for the end user and the business and formulate ideas to solve for these problems. Develop a value-led roadmap, defining benefits and prioritise against business criteria.
  • Building it with them not doing it to them – Get your stakeholders involved in the identification and design process. The people in the business are often the experts and know where the key points for consideration are. Bringing them on the journey through to implementation will ensure the solution meets both business and customer needs.

For more information on how banks can renew and grow, download our guide: ‘Where do you want to grow next?’

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