Whether or not it will be easy to drop the Dodd-Frank Act, the new administration seems to have burnt the bridges of the bailout era.
Lenders might lose some fetters under Trump, but accurate risk assessment has to be considered top priority. The regulations had brought in some best practices and doing away with them doesn’t make any sense. While best practices can be expensive, technology helps reduce the costs and converts your workflow into a fully digital one.
On-the-go decision makers and executives make banks what they are now. Technology-driven workplaces are now the norm in the consumer-lending sector, because the regulations drove up the cost of loans and mandated banks to make their practices more diligent and conservative.
The benefits of technology span the vital map, from branding promotions to customer retention. The big tasks of performing analysis and controlling administrative overheads are also easier for lenders adopting mortgage software solutions.
Evolution of loan origination software
The technology was earlier considered insufficient to automate the lending process. But it changed with cloud platforms that brought together app users and management personnel. Earlier, the cost per loan was high due to in-person service formats and paper-heavy processes. And smaller lenders, to keep pace with larger banks, had to incur huge expenses in analyzing the risks of lending.
Loan origination is a key cost center which should be automated and equipped with technology. Cloud data and business rules is a robust combination for lenders. It is the foundation on which technology can simplify the process for customers. Automated underwriting can help the staff focus only on exceptions so that tasks are left to manual needs viable.
Risk appetite and technology
Automated analytics can be used for populating your decision-making dashboards based on underwriting data. Thus, health checks are easy. A tech-based value addition will leave no room for unhealthy risk appetites and anyway, it is a no-go area. The financial crisis, barely over the horizon, is likely to lead banks to automation and data-intensive analytics so that they can self-govern better.
Right from accurate targeting to cross-selling, reach is the key to helping banks experience stable growth. It’s also time to be prepared for interest rate fluctuations well in advance.
Housing issues and sentiments
People would like to get back to the daily life they experienced during the pre-crisis days. It will be easy for banks to disburse loans for a broader base of people, risk-free, if executives use specific data on individuals to create loan offers that fit their requirements viably. That’s more loans disbursed while remaining conservative with your policies.
Interest rates are also likely to change soon. Making the right decisions will prove crucial for coming out of the bear market, suggest analysts. What this means is a serious need to depend on machines—not just for intelligence—but future strategies. Prescriptive analytics has taken over major industries because they tell decision makers the advantages and disadvantages of going with a particular combination of interest rates, targets, workflows, conversion rates, etc.
Responsible behavior in any business is not just for helping customers. While accurate risk assessment protects borrowers from unrealistic loans, it is the key to surviving in a competitive industry like consumer lending in the US. In an unregulated market, high-risk loans turn into dangerous blind spots. The mortgage companies fail to retrieve the property value if such loans are based on area-level, demographic, or category-of-housing level customization. Thus, mortgage technology should dig deeper into repaying potentials and make every loan a sound one in all possible ways
