Laoan approval shouldn't take weeks or days, but hours
.

Loan Approval Shouldn’t Take Weeks or Days, But Hours

Read Time: 5 mins

Customers are often attracted to financial institutions that don’t overlook what matters – customer experience. That is especially true when they are seeking loans from your institution. You may lose them faster than you can say ‘sorry’ if your loan approval process takes days or weeks instead of just hours when done right.

10x Banking found that 1 out of every 8 banking professionals worldwide have confirmed losing up to 40% of their clients because of poor customer service.

The report that also sampled over 150 key decision-makers from different global industries (Africa, The United Kingdom, Australia, Vietnam, Germany and India) found that 64% of them agree that digital transformation decisions affect customer retention.

 

The Above Report Evidences Two Key Things:

 

  1. Every financial institution, large or small-tiered, must improve how it delivers services if it wants to retain those customers.
  2. They must also adopt new technologies to improve service delivery and keep their customers loyal and happy.

As a credit department, you know what it means when just a handful of customers are knocking on your door. If you’re not intelligent enough, you might begin thinking all is well. Your customers are simply telling you that:

credit department discussion low loan application submissions

 

We don’t have trust in your lending process. It is so frustrating. You demand too many documents and you take too long to approve loans.

 

The main reason for such dissatisfaction lies in your loan approval process. The process could be having multiple, tiresome steps, which only lead to more and more delays.

Yet what your customers need is simple:

Think about solving our problems in a way that makes our lives easier.

This is a good thing for both of you to build loyalty.

 

This whole Thing is a Test of Speed and Efficiency

 

It tells how long you take to process loan applications, approve them, and release the money to the borrowers.

Reducing that time requires you to speed up your entire loaning process. This reduction in time is crucial for your customers, the credit team, and the entire financial institution.

 

Sages Where Things Can Slow Down in Loan Approval

 

A typical loan approval process involves the following key steps:

Stages in Loan OriginationHere is a detailed view of the above critical steps:

i. Lead Management

This stage is where your potential customers express their interest in taking a loan from your institution. What follows is the gathering of basic information from them to start the process.

ii. Credit Application

The borrowers formally submit their loan applications detailing information about themselves and the reason (s) for borrowing.

iii. Credit Scoring/Risk Assessment

You evaluate whether a particular borrower qualifies to be awarded the requested loan. This verification is based on the borrower’s income level, credit history, debts, or other key financial indicators.

Ideally, you are trying to determine the risk of giving out the money to that borrower.

iv. Decisioning

The risk assessment report helps you to decide whether to say YES or NO to the loan application. It also determines whether you can request further information about the borrower to make better informed decisions.

v. Document Management

At this stage, you gather all the required customer documents (tax returns, income statements, legal disclosures, etc.) and ascertain.

vi. Disbursement

If approved, you disburse the money to the borrower through the appropriate channel.

vii. Analytics

This is where you now analyze data from the entire process. The intention is to help you manage risks, improve your lending process, and make more informed decisions in the future.

These processes are critical. The borrower must go through the entire screening stages to enable you to determine their likelihood of repayment and calculate the loan interest rate and terms.

 

What Causes Delayed Loan Approvals?

 

What causes delayed loan approval?

Several factors can be at play, depending on a particular loan or customer:

  1. Incomplete Information: Some customers may submit incomplete/inaccurate information while applying for a loan. Such incomplete applications may prolong the approval process since you still need to collect additional information to complete the process.
  2. High Volume of Applications: Volumes of applications mean there could be delays in processing them, especially when the process is manual.
  3. Manual Loan Processing: when done manually, reviewing loan applications can be time-consuming. However, a simplified process makes it faster.
  4. Credit Scoring Issues: Low credit scores or previous delinquencies may require additional scrutiny, which contributes to an even longer approval time.
  5. Regulatory Requirements: Being under the regulator’s watch means you must comply with some requirements and internal policies. This compliance can lengthen the approval process, especially when dealing with loan applications involving higher risk or huge sums.
  6. Communication Issues: The approval time can also lengthen due to poor communication with your customers. Moreover, customers may delay responding to your requests for information.

Properly addressing these issues can help you reduce delays and speed up the process.

 

Speed Matters A Lot in Loan Approval

 

Speed matters in loan approval

When you approve loans faster, you are saving your customers a lot of time, and even encouraging them to pay back fast. They are even likely to refer others to your institution. However, when your process is too low and complex, the same customers might decide to seek loans elsewhere.

 

But Speed is Nothing Without technology

Speeding up the processing and approval of loans is only possible with technology, precisely, automation.

Automation in the sense that you can use some special tool or software to make loan approval tasks easy to do automatically and quickly than humans.

 

In this case,

 

Simplifying your loan approval process can mean the following:

 

  • digitally collecting information from the borrowers
  • digitally verifying the information throughout the loan cycle
  • digitally assessing whether borrowers qualify for the said loan
  • efficiently managing documentation about the loan (collection, verification and organization) to ensure completeness and compliance
  • enabling real-time integration of all associated parties with loan origination system (LOS) for exchanging data between applications
  • automating alerts and notifications to keep both borrowers and staff informed of the status of the loan application, reducing the need for follow-up calls and emails
  • automating workflow models in the loan origination to complete events automatically
  • making informed decisions about whether to say YES or NO to the application.

 

Since consumer behaviors are unpredictable, you might want to consider changing your way of doing things before it’s too late. And the only way is automation.

 

That’s All Excellent. What Can NLS Do?

 

NLS has been customizing their Credit Management System (TERA CMS) to several financial institutions for quite some time now (10+ years).

The most essential feature of Tera CMS is its Loan Application Processing Workflow.

Here’s a quick overview of what the system offers:

  • an end-to-end approach to loan origination
  • a structured workflow.
  • room for multiple loan products with different origination channels.
  • easily integrates with other existing systems
  • a robust credit scoring engine and archiving for various loan application-related documents.
  • credit scores from third party scoring agencies
  • credit scores parametrised (originators input credit scores, and the system determines the ratings).

With that said, take the step to bring several lending benefits to your bank, Sacco or microfinance institution .

Make Faster Decisions When it Comes to Loan Applications.

Let’s chat.

 

 

 

 

 

 

 

Categories
Latest Posts
Reconciliation errors

Reconciliation Errors Have Dire Consequences

While account reconciliation errors are rare, they do occur. In 2014, two Kenyan enterprises appeared before a court of law where the accused faced a tax assessment based on an analysis of their bank statements. The investigation revealed errors between reported sales and actual bank credits. This led to tax demands amounting to over Ksh 87 million, exclusive of penalties and interest. Though it may seem history, 2014 is still a fresh reminder of how easily accounting errors occur and…

Reconciliation Errors Have Dire Consequences

While account reconciliation errors are rare, they do occur. In 2014, two Kenyan enterprises appeared before a court of law where the accused faced a tax assessment based on an analysis of their bank statements. The investigation revealed errors between reported sales and actual bank credits. This led to tax demands amounting to over Ksh 87 million, exclusive of penalties and interest. Though it may seem history, 2014 is still a fresh reminder of how easily accounting errors occur and…
Reconciliation errors

Reconciliation Errors Have Dire Consequences

While account reconciliation errors are rare, they do occur. In 2014, two Kenyan enterprises appeared before a court of law where the accused faced a tax assessment based on an…
Reconciliation errors
While account reconciliation errors are rare, they do occur. In 2014, two Kenyan enterprises appeared before a court of law where the accused faced a tax assessment based on an analysis of their bank statements. The investigation revealed errors between reported sales and actual bank credits. This led to tax demands amounting to over Ksh 87 million, exclusive of penalties and interest. Though it may seem history, 2014 is still a fresh reminder of how easily accounting errors occur and…

Reconciliation Errors Have Dire Consequences

Reconciliation errors
While account reconciliation errors are rare, they do occur. In 2014, two Kenyan enterprises appeared before a court of law where the accused faced a tax assessment based on an…
While account reconciliation errors are rare, they do occur. In 2014, two Kenyan enterprises appeared before a court of law where the accused faced a tax assessment based on an…

Reconciliation Errors Have Dire Consequences

While account reconciliation errors are rare, they do occur. In 2014, two Kenyan enterprises appeared before a court of law where the accused faced a tax assessment based on an…
Reconciliation errors
While account reconciliation errors are rare, they do occur. In 2014, two Kenyan enterprises appeared before a court of law where the accused faced a tax assessment based on an analysis of their bank statements. The investigation revealed errors between reported sales and actual bank credits. This led to tax demands amounting to over Ksh 87 million, exclusive of penalties and interest. Though it may seem history, 2014 is still a fresh reminder of how easily accounting errors occur and…
Low Loan uptake

Low Loan Uptake: Borrowing Process Too Complex for Customers

Low loan uptake is a pressing issue for most financial institutions. When not many of your customers are taking loans, they are simply saying that you are making it too hard for them to get a loan, you are being too strict about who gets the money, and the process is too complex.   Money only comes when you give out loans and charge interest on them. According to the latest FinAcces report, the demand for credit is continually growing.…

Low Loan Uptake: Borrowing Process Too Complex for Customers

Low loan uptake is a pressing issue for most financial institutions. When not many of your customers are taking loans, they are simply saying that you are making it too hard for them to get a loan, you are being too strict about who gets the money, and the process is too complex.   Money only comes when you give out loans and charge interest on them. According to the latest FinAcces report, the demand for credit is continually growing.…
Low Loan uptake

Low Loan Uptake: Borrowing Process Too Complex for Customers

Low loan uptake is a pressing issue for most financial institutions. When not many of your customers are taking loans, they are simply saying that you are making it too…
Low Loan uptake
Low loan uptake is a pressing issue for most financial institutions. When not many of your customers are taking loans, they are simply saying that you are making it too hard for them to get a loan, you are being too strict about who gets the money, and the process is too complex.   Money only comes when you give out loans and charge interest on them. According to the latest FinAcces report, the demand for credit is continually growing.…

Low Loan Uptake: Borrowing Process Too Complex for Customers

Low Loan uptake
Low loan uptake is a pressing issue for most financial institutions. When not many of your customers are taking loans, they are simply saying that you are making it too…
Low loan uptake is a pressing issue for most financial institutions. When not many of your customers are taking loans, they are simply saying that you are making it too…

Low Loan Uptake: Borrowing Process Too Complex for Customers

Low loan uptake is a pressing issue for most financial institutions. When not many of your customers are taking loans, they are simply saying that you are making it too…
Low Loan uptake
Low loan uptake is a pressing issue for most financial institutions. When not many of your customers are taking loans, they are simply saying that you are making it too hard for them to get a loan, you are being too strict about who gets the money, and the process is too complex.   Money only comes when you give out loans and charge interest on them. According to the latest FinAcces report, the demand for credit is continually growing.…
Sending Demand Letters Taht Get Borrowers to Pay

Sending Demand Letters That Get Borrowers to Pay

Sending demand letters is an effective way of getting borrowers to pay an overdue loan. As a financial institution, even with the best customers who promptly repay their loans, there can be times when they miss payments, default on a loan, violate loan terms, or ignore collection calls.   This begs the question of why send demand letters   Before answering that question, it’s good to note that sending a demand letter is among the first steps in the debt…

Sending Demand Letters That Get Borrowers to Pay

Sending demand letters is an effective way of getting borrowers to pay an overdue loan. As a financial institution, even with the best customers who promptly repay their loans, there can be times when they miss payments, default on a loan, violate loan terms, or ignore collection calls.   This begs the question of why send demand letters   Before answering that question, it’s good to note that sending a demand letter is among the first steps in the debt…
Sending Demand Letters Taht Get Borrowers to Pay

Sending Demand Letters That Get Borrowers to Pay

Sending demand letters is an effective way of getting borrowers to pay an overdue loan. As a financial institution, even with the best customers who promptly repay their loans, there…
Sending Demand Letters Taht Get Borrowers to Pay
Sending demand letters is an effective way of getting borrowers to pay an overdue loan. As a financial institution, even with the best customers who promptly repay their loans, there can be times when they miss payments, default on a loan, violate loan terms, or ignore collection calls.   This begs the question of why send demand letters   Before answering that question, it’s good to note that sending a demand letter is among the first steps in the debt…

Sending Demand Letters That Get Borrowers to Pay

Sending Demand Letters Taht Get Borrowers to Pay
Sending demand letters is an effective way of getting borrowers to pay an overdue loan. As a financial institution, even with the best customers who promptly repay their loans, there…
Sending demand letters is an effective way of getting borrowers to pay an overdue loan. As a financial institution, even with the best customers who promptly repay their loans, there…

Sending Demand Letters That Get Borrowers to Pay

Sending demand letters is an effective way of getting borrowers to pay an overdue loan. As a financial institution, even with the best customers who promptly repay their loans, there…
Sending Demand Letters Taht Get Borrowers to Pay
Sending demand letters is an effective way of getting borrowers to pay an overdue loan. As a financial institution, even with the best customers who promptly repay their loans, there can be times when they miss payments, default on a loan, violate loan terms, or ignore collection calls.   This begs the question of why send demand letters   Before answering that question, it’s good to note that sending a demand letter is among the first steps in the debt…
Risk-Based Pricing is Continually Rewriting the Lending Narrative

Risk-Based Pricing is Continually Rewriting the Lending Narrative

Over the last several months, it seems risk-based pricing has been a hot topic in the Kenyan banking industry. In January 2024, the Central Bank of Kenya (CBK) announced a new bank lending rate of 15.20%, an increase from 14.63% in December 2023. This change in the lending narrative is one amongst many, with implications for both borrowers and lenders. What’s The Lending Environment Like?     Let’s begin with this assertion in mind;   In the future, all lending…

Risk-Based Pricing is Continually Rewriting the Lending Narrative

Over the last several months, it seems risk-based pricing has been a hot topic in the Kenyan banking industry. In January 2024, the Central Bank of Kenya (CBK) announced a new bank lending rate of 15.20%, an increase from 14.63% in December 2023. This change in the lending narrative is one amongst many, with implications for both borrowers and lenders. What’s The Lending Environment Like?     Let’s begin with this assertion in mind;   In the future, all lending…
Risk-Based Pricing is Continually Rewriting the Lending Narrative

Risk-Based Pricing is Continually Rewriting the Lending Narrative

Over the last several months, it seems risk-based pricing has been a hot topic in the Kenyan banking industry. In January 2024, the Central Bank of Kenya (CBK) announced a…
Risk-Based Pricing is Continually Rewriting the Lending Narrative
Over the last several months, it seems risk-based pricing has been a hot topic in the Kenyan banking industry. In January 2024, the Central Bank of Kenya (CBK) announced a new bank lending rate of 15.20%, an increase from 14.63% in December 2023. This change in the lending narrative is one amongst many, with implications for both borrowers and lenders. What’s The Lending Environment Like?     Let’s begin with this assertion in mind;   In the future, all lending…

Risk-Based Pricing is Continually Rewriting the Lending Narrative

Risk-Based Pricing is Continually Rewriting the Lending Narrative
Over the last several months, it seems risk-based pricing has been a hot topic in the Kenyan banking industry. In January 2024, the Central Bank of Kenya (CBK) announced a…
Over the last several months, it seems risk-based pricing has been a hot topic in the Kenyan banking industry. In January 2024, the Central Bank of Kenya (CBK) announced a…

Risk-Based Pricing is Continually Rewriting the Lending Narrative

Over the last several months, it seems risk-based pricing has been a hot topic in the Kenyan banking industry. In January 2024, the Central Bank of Kenya (CBK) announced a…
Risk-Based Pricing is Continually Rewriting the Lending Narrative
Over the last several months, it seems risk-based pricing has been a hot topic in the Kenyan banking industry. In January 2024, the Central Bank of Kenya (CBK) announced a new bank lending rate of 15.20%, an increase from 14.63% in December 2023. This change in the lending narrative is one amongst many, with implications for both borrowers and lenders. What’s The Lending Environment Like?     Let’s begin with this assertion in mind;   In the future, all lending…
Why Saccos Need a Sacco Mnagement System

Why Saccos Need A Sacco Management System

Have you ever thought of what could make your Sacco operations smoother, quicker, and easier? Running a Sacco without a proper management system is like trying to operate blindly. Sacco staff have to dig through piles of files and spreadsheets to find member information. It’s tiresome, confusing, time-consuming, and error-prone, right? So, why Saccos need a Sacco Management System? Read on… A Sacco management system comes with many benefits, all tailored to make it easy and quick for the Sacco…

Why Saccos Need A Sacco Management System

Have you ever thought of what could make your Sacco operations smoother, quicker, and easier? Running a Sacco without a proper management system is like trying to operate blindly. Sacco staff have to dig through piles of files and spreadsheets to find member information. It’s tiresome, confusing, time-consuming, and error-prone, right? So, why Saccos need a Sacco Management System? Read on… A Sacco management system comes with many benefits, all tailored to make it easy and quick for the Sacco…
Why Saccos Need a Sacco Mnagement System

Why Saccos Need A Sacco Management System

Have you ever thought of what could make your Sacco operations smoother, quicker, and easier? Running a Sacco without a proper management system is like trying to operate blindly. Sacco…
Why Saccos Need a Sacco Mnagement System
Have you ever thought of what could make your Sacco operations smoother, quicker, and easier? Running a Sacco without a proper management system is like trying to operate blindly. Sacco staff have to dig through piles of files and spreadsheets to find member information. It’s tiresome, confusing, time-consuming, and error-prone, right? So, why Saccos need a Sacco Management System? Read on… A Sacco management system comes with many benefits, all tailored to make it easy and quick for the Sacco…

Why Saccos Need A Sacco Management System

Why Saccos Need a Sacco Mnagement System
Have you ever thought of what could make your Sacco operations smoother, quicker, and easier? Running a Sacco without a proper management system is like trying to operate blindly. Sacco…
Have you ever thought of what could make your Sacco operations smoother, quicker, and easier? Running a Sacco without a proper management system is like trying to operate blindly. Sacco…

Why Saccos Need A Sacco Management System

Have you ever thought of what could make your Sacco operations smoother, quicker, and easier? Running a Sacco without a proper management system is like trying to operate blindly. Sacco…
Why Saccos Need a Sacco Mnagement System
Have you ever thought of what could make your Sacco operations smoother, quicker, and easier? Running a Sacco without a proper management system is like trying to operate blindly. Sacco staff have to dig through piles of files and spreadsheets to find member information. It’s tiresome, confusing, time-consuming, and error-prone, right? So, why Saccos need a Sacco Management System? Read on… A Sacco management system comes with many benefits, all tailored to make it easy and quick for the Sacco…
No Comments

Leave a Comment

Email
Please enter a valid email address.
Comment *
Fill out this field

Related Posts

Contact Us

Get in Touch
Today.

Engage with us now and take the first step towards transformative solutions.
Cal Us On +254-20-263 2768

Saachi Plaza, Ground Floor – C2Argwings Kodhek Rd, Kilimani, Nairobi, Kenya

    Menu