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Loan OriginationLoan Origination
As the interest rates begin climbing, banks are looking for ways to narrow the interest rate margins on loans while improving the customer experience of the origination process, specifically by reducing the turnaround times and allowing customers to originate loans via multiple channels.
At present, many banks have implemented automation systems for retail loan origination and mortgages, however most existing solutions are weak on the integration side and provide limited support for collaborative origination processes (workflows).
When it comes to commercial loan originations, automation is virtually an untapped area at many banks, which still don't have systems in place to support the related business processes. The underwriting packages are typically created by hand as Word documents, and the main "workflow system" for loan collaboration/concurrence process is usually a fax machine. Considering commercial loan origination is an iterative process by its nature, this lack of automation leads to high labor intensity, high costs and high turnaround times of loan originations (average turnaround time for a commercial loan is 2-3 weeks), as well as considerable operational risks.
The above challenges call for next-generation retail and commercial origination solutions that combine a high degree of origination process automation with advanced integration capabilities. Avantek provides such next-generation loan origination solutions by leveraging the following assets:
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- Avanta Banking Services Hub provides a complete integration foundation for commercial and retail loan origination systems.
- Financial Data Integration allows establishing a structured, minable historical database of borrowers' financial data based on unstructured spreads.
- Application Components are utilized for accelerated assembly of highly-customized loan origination systems from pre-built and pre-tested components.
As interest rates inch up, banks are scrambling to develop marketing and IT strategies geared towards maintaining strong growth in originations. Next-generation solutions will provide users with greater work process automation capabilities and better integration with third parties, thereby eliminating many of the manual processes still in place today. A large portion of the typical loan process is still conducted via phones and faxes, creating bottlenecks and unhappy customers, who expect greater speed. New solutions will also be better integrated with the front end, creating greater straight-through processing.
A Look into Banking Trends for 2004.