How Automation is Overcoming The Challenges of Conventional Consumer Money Lending

Even though consumer lending is a simple process, conventionally it involves a number of manual steps that add up and require the customer to spend a lot of time at the bank branch when otherwise, he could have been doing something else profitably. The growing customer demand for speed and convenience is the main reason why competition between conventional lenders or even between traditional banks and new-age lenders is intensifying. To meet this expectation consumer lenders are increasingly turning to automation to provide better customer satisfaction with an improvement in efficiency, speed of transaction, and productivity.

The Typical Challenges Faced in Conventional Manual Lending

The Typical Challenges Faced in Conventional Manual Lending

The need for the customer to visit the branch: Any person wishing to operate his savings bank account or applying for a loan must necessarily visit the bank branch during business hours regardless of how inconvenient it might be. Typically, the customer applying for a loan will first ask what the procedure is from the loan officer, who will hand over the form that has to be laboriously filled up and may even require details or documents that the customer may not have readily available necessitating a second visit. Even if all the details are available, the filling up of the application form and its scrutiny by the loan officer takes up valuable time during which, other customers need to wait. The application form is generally physically carried to the senior officer who has the authority to approve the loan.

On-the-spot approvals are rare and the customer is asked to come again after a few days to find out whether the loan has been sanctioned.

Labor-intensive process: The manual process of filling up the loan application form and submitting it for approval is labor intensive. If the customer, for any reason, is ineligible for the loan, valuable time will have been lost without any productive result. If the customer needs to submit documents that are not with him, he will have to visit again to complete the formalities of the application. While a certain degree of physical interaction may be desirable to deliver more customized services, the lack of automation means that more time is spent in physical verification of documents.

Errors in data entry: Assuming that the customer’s application has met with the loan officer’s approval, the details have to be logged into the bank’s system, the supporting documents have to be either uploaded or the details entered and intimate the persons responsible for the verification as well as underwriting processes about the arrival of a new loan application. The physical process of entering the customer and loan details is fraught with data entry errors that may cause confusion and require reconciliation. If the verification and underwriting processes are being carried out in different locations, the documents will need to move up and down several times while the errors are being corrected adding significantly to the processing time. In the meantime, the additional communication between the customer and the bank creates the potential for further errors and consumption of time.

Time Wasted on Standard Cases

Since the entire process of credit analysis and loan approval is manual it takes a lot of time for it to be complete even when the application is standard and has no special conditions attached. While human judgment is always welcome for complicated applications, it merely amounts to a waste of valuable time when applied to standard loan applications, which for any lender like represents the largest volume of transactions. This means that lenders spend as much time approving the standard cases as they do for the one that requires special attention.

How Automation Is Overcoming Traditional Challenges

How Automation Is Overcoming Traditional Challenges
Borrower convenience: With automated loan processing, the focus is on making this convenient for the borrower and reducing the load on the lender. The process begins with the loan application, where the form in a digital format is available on the website or on the mobile app which can be also submitted electronically along with the uploaded documents. This means that the applicant does not need to visit the bank branch repeatedly to ensure compliance with the application process. The absence of the visits also frees up the loan officer to focus on other important tasks. Web and mobile apps improve the quality of data collection allowing the data to be integrated seamlessly into the bank’s system improving security and reducing the chance of errors. According to, automation ensures that the customer turnaround time is faster with the chances of errors reduced significantly.

Ensure submission of complete applications: The automated system is immediately able to flag missing information so that the borrower can take corrective action and submit only applications that are complete. This ensures that the time spent on the application form scrutiny is less and the process of approval does not get stuck due to incomplete applications.

Efficient and secure management of data: One of the biggest advantages of process automation in lending institutions is that data management becomes more efficient and secure. The data submitted by the customer is uploaded on to the centralized database that authorized personnel only can access and there is no need to duplicate the data at the individual level. This not only ensures the security of confidential information but also the chances of errors. Those in charge of verification and underwriting always have access to the latest information and there is no time lag associated with the manual processing of applications.

Increased productivity: Automation of the lending process helps to increase productivity significantly by eliminating repetitive, cumbersome, and tedious paperwork. The simplified processes, often operating in the background, leave skilled personnel with extra time to devote to the personalization of customer service and adding value to customers.


There is no disputing the fact that automation of the lending process in banks and financial institutions have enabled them to significantly improve their efficiency and productivity while reducing costs of operation. Customers, as well as bank personnel, waste less time in mundane tasks that are more efficiently handled by automated processes while increasing security and reducing the chances of errors.

How Automation is Overcoming The Challenges of Conventional Consumer Money Lending was last modified: by