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Automation and analysis support for lenders facing tighter standards

17 Aug 2023
featured automation and analysis support for lenders facing tighter standards

In today’s evolving financial market, the lending industry is going through a substantial shift. Tighter lending standards have gone into effect, posing unique challenges for lenders of every size.

The July 2023 Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS) found lending standards for residential and commercial real estate loans were stricter in the first half of the year – and expected to tighten in the second half of 2023. Lenders attributed these shifts to concerns about the economic outlook, uncertainties and worries about deteriorating quality of collateral and loan creditworthiness.

As lenders continue to take a cautious approach amid market uncertainty, they are increasingly turning to automation and advanced data analysis to more accurately assess borrower creditworthiness and reduce risks.

By combining these technological tools with prudent lending strategies, lenders can strike a balance between responsible risk management and meeting the financial needs of borrowers, all while navigating the complex landscape of economic uncertainties.

The role of automation in the lending process

Automation streamlines the process of gathering and analyzing vast amounts of financial and personal data, enabling lenders to make more informed decisions swiftly and consistently. With tightened lending standards, the demand for accuracy, efficiency and compliance has grown significantly, emphasizing the value of automation to lenders.

Through the automation of document collection, extraction and analysis, lenders can massively improve the efficiency of their underwriting. Ocrolus’ advanced algorithms and machine learning, for example, quickly review cash flows and financial statements, speeding up the lending process while minimizing the risk of errors.

Document automation helps financial institutions rise to meet the challenges of changing standards by revolutionizing the way lenders gather and analyze vast troves of financial and personal data. These technologies expedite the review of cash flows and financial statements, effectively expediting the lending journey while minimizing the potential for errors.

Streamlining cash flow analysis

As lending standards tighten, assessing the cash flow of borrowers has become a critical aspect of the underwriting process. Traditionally, this analysis involved sifting through countless financial documents, manually extracting relevant information, and piecing together a comprehensive view of the borrower’s financial health.

However, with the integration of advanced automation tools like Ocrolus, lenders are now able to effortlessly collect and analyze extensive sets of financial data. Complex algorithms swiftly process cash flow data and financial statements, identifying patterns and discrepancies with unprecedented speed and precision. This not only expedites the underwriting process but also significantly reduces the likelihood of errors that can arise from manual data entry and interpretation.

Automation also ensures a more consistent and standardized approach to cash flow analysis, eliminating the variability that can occur when multiple individuals interpret data differently. Plus, by eliminating the need for tedious manual tasks, lending professionals can redirect their focus towards more strategic aspects of the lending process, such as engaging with borrowers and crafting tailored solutions.

Ensuring compliance in a changing regulatory landscape

While lenders are working in a market that asks them to be both nimble and precise, they also need to ensure they are able to comply with regulatory requirements.

This data collection and reporting can be labor-intensive, and can take lenders’ valuable time and bandwidth. In place of traditional manual methods, document automation, like that powered by Ocrolus’ cutting-edge technology, can bring a new level of reliability to the otherwise challenging process.

With automation solutions in place, lenders gain efficiencies in gathering, storage, analysis and interpretation of rich data, enabling them to generate reports more quickly. This automation can help reduce the cost of regulatory compliance and provide financial institutions with the data they need to navigate the challenging regulatory landscape.

Ocrolus’ intelligent document processing platform

Ocrolus helps lenders manage risk and avoid fraud with AI-driven document processing automation. By automating sorting, classifying and capturing financial data, Ocrolus enables lenders to efficiently analyze and qualify lenders, even as standards continue to lighten.

At the heart of the Ocrolus is smart document processing, which automates the collection, extraction and analysis of important financial documents. By swiftly and accurately assessing cash flows and financial statements, lenders can improve their underwriting efficiency, ensure compliance with heightened standards and make confident decisions in a rapidly changing regulatory landscape.

Case study: Deephaven Mortgage

Deephaven Mortgage stands as a pioneer in mortgage lending  – they leveraged Ocrolus’ technology to redefine industry standards. Specializing in non-QM lending for borrowers often overlooked by traditional requirements, Deephaven’s collaboration with Ocrolus has yielded incredible outcomes.

Through the automation of bank statement analysis,  powered by Ocrolus’ advanced verification technology, Deephaven was able to speed up income assessment and enhance cash flow accuracy. This has not only accelerated their underwriting processes but also has empowered their underwriters to focus on higher-value tasks.

As a result, Deephaven facilitated an impressive $5 billion in private-capital liquidity for mortgage loans in 2019 alone, demonstrating how intelligent document processing can help support accuracy, inclusivity and efficiency in an evolving industry.

As financial institutions continue to tighten their standards amid economic uncertainty, automation and advanced data analysis have become critically important. The evolving financial landscape demands a delicate balance between adaptability and precision, prompting lenders to explore innovative ways of assessing borrower creditworthiness and managing risk.

By embracing automation, lenders ensure accuracy and reliability, effortlessly integrating real-time regulatory updates. This paradigm shift not only solidifies lenders’ reputations as dependable partners but also empowers them to confidently navigate the intricate regulatory landscape while maintaining operational efficiency.

Book a demo to learn how Ocrolus can help you take steps now to secure the future.

Key takeaways

  • Amid tighter lending standards, automation and data analysis offer a strategic edge by streamlining decision-making by swiftly processing financial data and meeting the demand for accuracy and compliance.
  • Automation revolutionizes borrower credit assessment, rapidly analyzing cash flows with minimal error risk. This expedites underwriting and ensures consistency in data interpretation.
  • Automation is essential for keeping up with evolving regulations, fostering reliability and efficiency while navigating the regulatory landscape.