How Robotic Process Automation is Disrupting the Mortgage Lending Industry

Well what is RPA?

According to the institute of Robotic Process Automation & Artificial Intelligence, robotic process automation (RPA) is the application of technology, that allows employees in a company to configure computer software or 'robot' to capture and interpret existing applications for processing a transaction, manipulating data, triggering responses and communicating with other digital systems.

RPA is designed to primarily help with business processes that often require the ability to do several types of tasks in a specific order. It creates and deploys a software bot with the ability to launch and operate other software. The basic concept is similar to traditional manufacturing automation, which focuses on creating a specialized physical bot for one portion of a workflow or even just one task. Business processes often require the same sort of repetitive effort. But since it is data being processed across platforms and applications, a physical robot is not necessary. Many businesses believe that RPA can save their time on redundant tasks and increase the quality and accuracy of their work. Forecasts predict continued growth in the coming years with a market value that is set to reach more than $10 billion by 2023.

Is RPA ideal for Mortgage Lending?

Robotic Process Automation (RPA) is marketed as a robot to replace humans. However, we believe RPA is best suited to digitize the back office while subjective and high risk tasks continue to educated and experienced humans. We view RPA as a tool to make people more efficient – thus reducing the overall cost and time to complete a set of tasks. We claim this in the context of midsize lenders with limited technical know-how and tight budgets & lean IT Teams.

Mortgage Lenders are embracing digital transformation that include mobility, analytics, paperless processing and social media. The mortgage industry is known for being process oriented as well as engaging with the wide number of players, including loan officers, processors and underwriters across processes such as fraud checks, appraisal orders, title orders and so on.

The latest three-year growth rates of the top three RPA bots are 62,000%, 46,000%and 42, 000%, UiPath, Automation Anywhere and Blue Prism respectively are driving as a key driving force in technology impacting almost every industry and more importantly the mortgage industry. There are numerous routine processes in the mortgage industry that can be subject to RPA, resulting in improved efficiency, reduced cost and improved turn around time.

According to the institute of Robotic Process Automation, an RPA software robots costs about one-third the price of an off-shore full time employee (FTE) and one-fifth the price of an onshore worker.

Lets sneak into a few interesting Use-cases of RPA in the Lending Industry

Lending customers today expect a lot from their lenders. They want instant responses to inquiries. They expect online portals. If they have questions, many of them will look for a chatbot to help them out before they’ll call a helpline or walk into a nearest Branch or Customer Service Center.

1. RPA Workflows Make Processes More Consistent, Faster, Better Defined, and More Reliable, Control Costs

That's a mouthful, but it’s true. Consider the current state of your processes. Are they defined? If different people from your office were asked to define each step of a process, would their answers all line up? If not, perhaps your process isn’t as defined and consistent as you’d hope.

Furthermore, if you still have steps in your process that could be automated – like data entry, document routing, task assignments, or email notifications – then your processes could be improved with an RPA platform that would speed up them up by automating those steps.

With the entire industry going through a massive turbulence caused by the global pandemic, Lenders have no option but to look at all possible levers to drive their revenues & reduce costs wherever possible. Also, with a major amount of their workforce operating from home/remote, it is certainly going be a challenge to witness the same amount of productivity as they did at a Branch or Back-office.

2. Faster Loan Processing & Loan Cycle Time

What’s the point of automating and speeding up your processes? The benefits are two-fold.

First, of course, automating tasks is going to save you money internally. It’s cutting the overhead of your back office, reducing human errors, and allowing you to process more loans in less time. That’s huge!

But it’s also bringing those same benefits to your customers. And if you don’t think they care about faster loan processing, think again.

We live in a culture of instant gratification and immediate results. When was the last time you sat through a 3-minute commercial break?

Something that used to be the norm would now seem like an inconvenience, especially for generations that didn’t grow up having to wait before continuing their regularly scheduled programming.

3. Improved Visibility into the Lending Process

With workflow automation, each step of the lending process is electronic, which means that you can collect data with each step. Hunting down a loan application to figure out its current status is now a thing of the past. You can search for the document within your document management system, and immediately find out its process status.

Further, analytics can be gathered from your processes, enabling your organization to make better decisions, refine processes, and adjust resources as necessary.

4. Easy Lending Auditibility

By automating all lending-related documents and processes, you increase your ability to respond quickly to risks and to implement future compliance guidelines.

5. Better Customer Experiences in General & diverting traffic to new Channels

On top of all the reasons listed above, there’s one more way RPA can make your customer experiences better.

Consider the current communications you’re having with customers. If most of your conversations are purposed around reminding customers to get in certain documents, or customers calling to check in about the status their applications, consider how you might be able to change that pattern.

When your customers are sent automated notifications for outstanding tasks, and when they can already see the status of their applications online through customer portals, what might your communications be about? How might they be improved?

With RPA, you can leverage communications to build personal rapport, not to nag about the documents you still need. After all, the system takes care of all of those “strictly business” communications for you, liberating you to have more positive conversations and building customer relationships, which can help with retention in the long run.

With the current Pandemic situation & the Social distancing guidelines, Branch operations would certainly be impacted, hence it is imperative to divert some of the traffic to new Channels and ensure the Response time & Customer experience is intact.

In fact there is a joke among Automation Thought Leaders that next time a Mortgage Lender hands over a piece of Paper for a Loan Application, it would be out-of-business in 5 Years, unless it makes quick strides in re-inventing itself.

While automation is beneficial to organisations, individuals are wondering what their role to play will be in future years.

Although significant parts of the process can be automated, elements such as complex review processes and advising still require that human touch.

Technology is not a complete replacement for humans. Instead, it is an opportunity for those working in the mortgage sector to evolve their day-to-day role beyond processes.

With humans and tech working together, people can spend more time adding value to the mortgage process, while automated processes can take care of the administration tasks.

“Early adopters of technology often have the greatest to gain as a result of driving innovation, but change cannot be ignored and the mortgage approval process will always evolve to meet the expectations of the market” Lets remember the – Paper!...Out-of-Business