August 2021

Addressing the Lending Compliance “Gorilla in the Room”

Compliance has always been a headache in modern lending, but increasing regulatory scrutiny is becoming a breaking point issue for some financial services organizations. Every step of the loan operations process can involve navigating disclosures, verifying information accuracy, and backtracking to confirm 100 percent compliance before closing. These processes aren’t just tedious – they’re nerve wracking. No lender wants to fail an audit or cost their institution a fortune in fraud and regulatory fines.

The regulatory burden for lending can feel endless, resulting in ballooning loan origination costs and increased delays throughout the origination process. And in addition to navigating these byzantine state and federal rules, lending teams are also tasked with successfully:

Managing an intense volume of paper documents in a world that is increasingly digitized
Implementing fraud and verification practices to fight financial crime
Providing borrowers with a modern lending journey that accommodates their timetables and keeps them informed of their loan status
Attracting and retaining top talent through an efficient workplace that assigns them meaningful work instead of manual, repetitive tasks

Risk is one part of the equation; another is cost. Ongoing regulation changes mean rising change management costs. So do fraud prevention and other initiatives. Hiring more and more headcount to carry out these objectives just isn’t a feasible solution, as it cuts into revenue.

No doubt, compliance is a high-stakes game. But some lenders are transforming their compliance struggles with technology, leading not only to easier compliance for themselves, but a better experience for their customers. They’ve discovered that modern financial services organizations need modern tools – and these tools determine who will succeed in tomorrow’s lending landscape.

4 Essential Tools for Smarter Lending Compliance

Compliance has traditionally been a challenge because of the chaos of manual processes. Shadow copies of vital documents, outdated information, data entry mistakes, and failures in regulatory change management can all lead even a careful team to expensive compliance missteps. That’s where modern lending technology can transform commercial lending through a variety of digital tools – not only accelerating the loan lifecycle and reducing costs but creating a cleaner and more accurate compliance experience.

1  Digitized data capture and compliance tools

Paperwork and data classification can be a massive burden when it comes to compliance. From trying to find information in thick binders to tracking a lost contract, teams spend too many hours managing documents over the lifecycle of a loan – and the manual processes can lead to inaccurate data. Digital capture tools can collect data from a variety of document sources while validating and protecting the information’s integrity. By tracking all changes to loan and customer data, lenders can also maintain an accurate and accessible audit trail.

2  Automation

Lenders who can translate manual processes into scalable, standardized, and automated processes gain a marked competitive advantage. Not only does automation accelerate time to revenue, but it also reduces customer frustration and redirects staff efforts to more value adding tasks. Ultimately automation removes the friction from compliance through digitized, streamlined processes that guarantee the lender’s data usage complies with regulatory and lending laws.

3  Centralized information

A typical commercial mortgage loan involves multiple teams using multiple documents and systems at the same time. The potential for error is massive in manual workflows, and requests for information – often the same requests from different teams – can repeatedly delay progress by a day or more each time. A centralized repository ensures each team accesses the right data when they need it and keeps loan information current and accurate.

4  Advanced security

In today’s cybercrime environment, encryption obviously helps prevent fraud and appeals to risk-conscious customers. But it can also help lenders meet the increasing demands for digital security in regulatory requirements.

From Easier Compliance to Stronger Competitive Advantage

LoanExpediter solves compliance headaches for today’s lenders enabling them to deliver appealing customer journeys from onboarding to close. LoanExpediter’s clean, streamlined data ecosystem means higher data accuracy, stronger regulatory alignment, and a sophisticated, digitized experience for staff, customers, and regulators alike. There’s no easier way to maximize revenue and minimize risk – and create an exceptional industry reputation.

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