Haven’t Reevaluated Your Document Automation Strategy Yet? Now’s the Time
Kim Weaver is director of product strategy for Paradatec, Cincinnati, a market leader in AI-based document analysis technology for the lending and real estate industry.
Whether you’re an originator, servicer, wholesale lender or investor, managing loan documents and data effectively can mean the difference between the success or failure of your process automation strategies. Without the proper technology, it’s just about impossible to perform these tasks efficiently and without errors – as many organizations discovered during the recent volume spikes in originations and MSR transfers.
For adopters of proven AI document automation, however, that’s simply not the case. Finding the right technology to reap the rewards of AI has helped them outpace their competitors when it comes to lowering loan production and servicing costs, providing better customer service and managing risk.
Here, I present three different perspectives on the value of finding the best AI document automation partner to help your organization take advantage of market cycle opportunities.
CIO/CTO View:
Ideally, AI document automation technology should streamline document management processes, enhance workflow efficiency, and improve data accuracy throughout the lending and real estate lifecycle. Having different providers for each functional area requires organizations to constantly reconcile the results and adds to overall support costs.
Additionally, many process-specific vendors price their solution as a whole, requiring you to invest in their complete solution as-is. You end up buying capabilities you don’t need and reduce or eliminate the potential for using the solution in other areas.
When considering an investment in technology, organizations need to evaluate the total cost of ownership and return on investment. Fortunately, with proven AI document automation technology, a single solution can support multiple use cases and needs in different areas of the company while reducing overall costs. It can also provide configuration flexibility, ensuring you only pay for what you currently need – and enabling quick expansion as your business strategies change.
Another issue: lenders and servicers are using software that isn’t delivered in the cloud, nor is it easily integrated with their own systems. Because of that, they need to divert precious IT resources to build workarounds while continuing to rely on human staff to review documents and data manually, then scrambling to adjust every time volumes change.
On the other hand, proven AI document automation comes equipped with modern APIs and multiple deployment options— including using a hosted cloud or your own cloud environment—as well as robust technical support. This provides flexibility to address future business needs while helping you manage incremental investments and the overall cost of capability delivery.
Ultimately, investing in flexible IT can reduce and smooth out the cost impact of market cycles.
COO View:
Despite the growing use of automated AI and machine learning technologies, both loan production and loan servicing costs continue to climb.
In April 2023, the Mortgage Bankers Association reported that nonbank lenders posted an average loss for every loan last year for the first time since 2008, as per-loan production costs rose to a record high of $12,450 in 4Q 2022. To manage origination costs and prepare for the potential increase in non-performing loan servicing costs, accurately understanding and predicting unit-cost metrics is critical.
Document technology providers that have not kept up with AI advances or make overinflated claims about AI don’t help matters. In fact, they can actually increase costs. And when the automation is powered by people in the background, the overall increased costs include longer cycle times and higher error rates when compared to a high performing, AI-based system-centered approach. This approach shifts the staffing focus to QC audit oversight of the system instead of requiring valuable staff time to perfect the data.
Optimizing operations for sustainable high-performance results includes analyzing the interaction of people, process and technology. Being able to measure the system performance in accuracy and process automation is crucial to understanding your ROI. The best solution partners provide reporting transparency for assessing system results and invest in the mutual goal of ensuring the results are maximized for your needs.
In addition to delivering assessment tools to measure system results, look for partners who also deliver excellent visibility into end user activity and overall document/data patterns. Having this data is crucial for managing team workload, establishing delivery times, and identifying superstars and those who need help. Likewise, meta-data generated from processing the content you’ve received can be used as part of your data analytics plan to help identify and create opportunities for proactive risk management and new business.
Using the right technology provides clarity on ROI and delivers easier ways to implement, operate and measure ongoing system performance.
CEO View:
The mortgage industry is no stranger to downturns and challenging times. Historically, these times have been opportunities for organizations to invest and emerge as leaders when volumes recover. Invariably, organizations that did so leaned into digital processes and were the most aggressive at embracing automation.
Whether your focus is on redesigning your processes, enhancing your customer service advantage, opening new business channels, or expanding your existing ones with new loan programs or locations, you’ll want to invest in a technology partner that shows they can invest in your success. That means looking for partners with a record of past business experience, successful clients, strong financials, and a verifiable track record of ongoing innovation in which clients are the primary stakeholders.
From immediate ingestion and conversion of borrower data and third-party-provided documents, to pre- and post-closing audits, to wholesale lending file reviews and MSR transfers, proven AI document automation is key. It’s the best way to achieve greater data accuracy by eliminating mundane, manual processes and the rekeying of data, which are the primary culprits behind higher costs and increased risk.
But you’ll need to find the right technology provider who can support you through lean and growth times, including truly viewing your challenges as their own and proactively offering ways to execute your business strategies. A mutual commitment to dependable results and meaningful innovation is a partnership that will add value today and for the future, especially when delivered on a foundation of proven longevity through different market cycles.
In the current climate, mortgage lenders, servicers and investors cannot afford to stick with underperforming AI document automation any longer. Before origination costs get any higher and increased loan defaults return, the time to re-evaluate your document automation strategy is now.
(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions. Inquiries can be sent to NewsLink Editor Michael Tucker at mtucker@mba.org or Editorial Manager Anneliese Mahoney at amahoney@mba.org.)
