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lending automation
lending automation

Accelerate your loan operations with lending automation

Gergo Varga

Jul 20, 2023

Lending automation is at the heart of significant changes in the lending landscape in recent years. The advent of innovative technologies has transformed almost every aspect of lending, paving the way for a more efficient, transparent, and profitable approach to lending. 

While change is accelerating, there is still a long way ahead: according to 2021 research by ForwardAI, 33% of lenders are “collecting financial data within three days of an application, while 40% of respondents take more than one week and an astonishing 19% take more than two weeks”.

Amidst this rapid digital transformation, lending automation has emerged as a significant driver for fintech organizations seeking to stay ahead of the curve.

In today's increasingly fast-paced lending environment, time and efficiency are of the essence. The days of exhaustive, manual lending processes are being replaced by technologies that allow organizations to:

  • Process applications faster

  • Validate borrower data promptly

  • Make lending decisions in real-time

By definition, automating the lending process involves utilizing software applications to manage tasks that were formerly manual, a process that enables lenders to handle significant bottlenecks, reduce processing time, and lower operational costs.

At the core of lending automation is the ability to extract valuable insights from vast amounts of data, both structured and unstructured. By leveraging advanced analytics and machine learning, lenders can make more accurate predictions, detect fraud more effectively, and reduce risk.

In this guide, we will explore the many advantages of automating the loan process, including:

  • Increased efficiency

  • Enhanced customer experience

  • Streamlined lending processes

  • And improved data analysis.

Additionally, we’ll delve into key considerations for lenders seeking to automate their processes and the best practices that can help fintech professionals navigate the rapidly evolving digital landscape.

What is lending automation software for the financial industry?

Automation software for the financial industry is designed to streamline the loan origination process. Lenders can use software to facilitate and automate all aspects of the lending process, including: 

  • Data gathering 

  • Underwriting

  • Loan pricing 

  • And application processing. 

An automated lending platform also helps lenders manage risk more efficiently while improving the customer experience.

For example, instead of scanning documents and talking with a human agent, automated lending allows customers to use self-service portals that determine their creditworthiness and approve their applications accordingly, hastening the process from days to mere seconds.

Lending automation made accessible to everyone, not just banks: the embedded finance play

Traditionally, large banks and financial institutions were the only ones that could afford and implement sophisticated loan processing systems. 

Today, however, lending process automation has become more accessible than ever before.

Technological advancements have ensured that even small and medium-sized fintech companies can leverage automated processes to improve their business operations and lending capabilities by leveraging the power of embedded finance.

What’s embedded finance? 

Embedded finance is the integration of financial services into non-financial industries such as retail, healthcare, or transportation. 

In other words, it allows businesses to offer a wider range of financial products and services to their customers, such as lending, payments, and insurance.

Embedded finance makes for a smoother customer experience, encourages customer loyalty, and creates new business opportunities through increased cooperation and partnerships between financial institutions and other industries.

Lending automation plays a crucial role as non-financial service providers integrate financial tools and services, such as lending and payment processing, into their offerings. 

In short, what’s driving the next phase of fintech innovation is that merchants can now offer not just different payment options for their customers, but different payment plans as well, without carrying any additional risk themselves.

Now let's have a look at the actual steps involved when you are looking at automating your processes.

Key features to automate the lending process

When selecting loan automation software, lenders should look for some key features. Next, we’ll discuss four key lending automation features in detail.

1. Document Management

The document management feature allows the system to take care of all the loan documentation through the entire loan process, from the application stage to loan closing.

This feature eliminates the need for cumbersome manual documentation and enables the lender to keep track of all necessary documents associated with the loan in one place, such as the financials of the account holder, credit presentations, or tax returns, as well as collaterals. 

2. Workflow Automation

One of the primary advantages of an automated system is the ability to automate repetitive and time-consuming tasks, which accelerates the loan approval process. 

Automated loan processing can help your teams with borrower credit risk assessment, evaluating collateral, document verification as well as customer communications. The software automatically identifies and flags fields that need attention, enabling faster loan approvals.

3. Risk Management

Automated loan processing systems integrate with credit bureaus and other alternative data providers to help lenders assess the creditworthiness of potential borrowers accurately.

With relevant financial data like credit history and payment records accessible in one place, the system uses advanced algorithms to evaluate the credit risk of an applicant, thus supporting financial institutions in making an informed decision.

4. Data Analysis and Reporting

The data analysis and reporting feature enables lenders to compile data from loan applications and other sources in one place to gain insights into their lending portfolio.

Apart from being a source of competitive advantage, a comprehensive view of lending data is critical in identifying and addressing operational inefficiencies. Such insight enables lenders to advance their products and services, and most importantly, it supports lenders in making informed business decisions.

An automated processing system can also track loan performance metrics such as origination and processing times, loan types, credit scores, default rates, and other important data.

What are the benefits of lending automation, and why are automated loan workflows important?

Lending automation improves the overall customer experience, optimizes operational efficiency, and reduces the risk of errors. Its importance is growing in the digital era as instant gratification and high-quality customer experience have become essential.

Some of the main benefits of automating the lending process include:

  • Faster Processing Time
    The accuracy of credit risk assessment is crucial to the success of any lender. By automatically analyzing patterns and assessing credit risk, the right software can perform instant credit underwriting. Combining multiple data sources ensures quick and accurate loan application processing while also guaranteeing consistent and reliable decisions, leading to optimal risk management.

  • Improved Risk Management
    Sophisticated algorithms and powerful data analysis tools, enabled by lending automation, can help lenders assess complex and multiple risk factors. This can prevent certain risky applications from being approved, reducing the overall risk of the lending portfolio. Conversely, sophisticated software with smart decisioning flows can help with loan approvals where more traditional approaches would have declined them.

  • Improved Data Accuracy
    Automated loan origination software can capture data from multiple sources such as leads, internal systems, and external data, processing and verifying it in the same platform. This streamlines the work process and reduces the costs associated with manual errors and paperwork.

  • Lower Costs
    By automating repetitive manual tasks, such as underwriting and document collection, lenders can reduce operational costs.

  • Enhanced Customer Experience
    Automated loan applications not only improve the speed of the approval process but also provide borrowers with a better overall experience. By eliminating tedious manual processes, borrowers are provided with an intelligent, personalized experience.

One of our clients, Slope, found that using Oscilar to automate their underwriting process enabled anyone on their risk team to easily modify or deploy flows without needing engineers, seeing value in two months.

Essential integrations for an automated loan processing system

To create a comprehensive and efficient processing system, integration with other systems and providers is crucial. 

Here are some essential integrations that can enhance the functionality and effectiveness of an automated loan processing system:

Credit Bureaus:

Integration with credit bureaus allows lenders to access reliable and accurate credit scoring information for loan applicants. 

By connecting with credit bureaus' databases, the system can quickly retrieve credit reports, credit scores, and other relevant information.

For example, when a loan application is submitted, the software can automatically collect the applicant's consent and retrieve their credit report from a credit bureau.

Data Providers:

Integrating an automated loan processing system with data providers expands the range of available data for lenders to make informed lending decisions. These data providers can include sources such as property records, employment history, income verification, and even social media profiles.

By integrating with these providers, lenders can access and analyze a wider range of data points to assess applicants' financial stability and repayment capacity.

For instance, integration with a data provider that supplies employment history can help lenders verify an applicant's income, evaluate their ability to repay the loan, and further strengthen their risk assessment.

We at Oscilar for example offer 100+ integrated data partners out of the box, so you can have a 360-degree view of applicants during onboarding for KYC purposes.

Electronic Signature Providers:

Integration with electronic signature providers cuts friction in the loan application and approval process by offering a secure digital platform to facilitate document signing.

Electronic signature solutions eliminate the need for physical paperwork and enable borrowers to sign documents electronically, significantly reducing processing time and potential manual errors.

For example, when an applicant completes the loan application, the system can generate the necessary loan agreement and electronically send it to the applicant for a digital signature.

Payment Processing Providers:

Integrating an automated loan processing system with payment processing providers simplifies and expedites loan payment processing. By connecting to payment processing platforms, lenders can automate loan repayments, ensuring a smooth and timely collection of installments.

For instance, once a loan is approved, the automated system can seamlessly integrate with a payment processing provider to initiate automated recurring payments for the borrower.

This integration not only reduces the administrative burden of manual payment processing but also minimizes the risk of errors or payment delays, resulting in improved loan servicing and customer satisfaction.

We at Oscilar, for example, provide over 100 integrations out of the box, allowing you to customize your decisioning flows based on relevant data, tailored to the task at hand. If you want to see how this works in action, our team is more than happy to provide a demonstration.

Loan origination tasks that can be automated

Automated loan origination tasks reduce manual effort, accelerate the loan process, and improve accuracy. Some of the tasks that can be automated with loan origination software include:

  1. Application Processing: Loan origination software can automate application processing, making it easier for borrowers to apply for loans, and easier for lenders to process applications.

  2. Credit Risk Assessment: An automated system can seamlessly assess credit risk for lending applicants, evaluating various credit risk factors, application stack checks, and predicting repayment behavior, using sophisticated loan algorithms to score the overall risk.

  3. Documentation Gathering: Automated loan origination software enables borrowers to submit all necessary documentation online, and lenders have an easier time gathering and documenting data.

  4. Fraud Risk Management: Through sophisticated fraud detection algorithms, automated loan origination software can help lenders evaluate new loan requests and capture any fraudulent applications, increasing the accuracy and efficiency of the lending process.

  5. Automated credit decisioning: You can significantly improve your credit underwriting process by automating the decisioning itself with the help of credit decisioning software, processing more loans faster.

  6. Customer Communications: Automated customer communication expedites the application process and can help improve the overall customer experience.


Lending automation is becoming increasingly prevalent in the lending industry and can significantly improve operational efficiency, reduce the risk of errors, and provide an improved customer experience.

By automating the lending process and leveraging AI and machine learning to facilitate data analysis, lenders can make more informed decisions, minimize risk, and reduce the cost of operations.

Moreover, investing in an intelligent, robust, and automated lending system can make the lending industry more inclusive to businesses of all sizes, improving the overall efficiency and profitability of lenders while offering a high-quality borrowing experience to borrowers. 

By streamlining the loan process and identifying the most likely borrowers, automation is guiding lenders on the way to a sustainable future.

The cornerstone of an automated lending operation system would be the decisioning engine. At Oscilar, we provide fintechs with all the tools they might need to succeed under a single Risk Operating System. If you are curious about our No-Code solution, book a demo today - and level up your lending business.

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