Process transformation in the mortgage business
The decision to take out a mortgage for a property is a big and important one for the applicant, and the commitment is usually a long-standing one. But also on the part of the lender, of course, some safeguards are necessary before granting a loan. This is reflected, on the one hand, in the amount and types of documents that must be submitted by the applicant. On the other hand, in the weeks of checks of these submitted documents, up to the granting of the loan. In the event of a positive decision, the final disbursement of the loan may well take several months. It is obvious that this can quickly become too lengthy, especially for the younger generations. One reason for the delays is the manual processes involved in capturing and processing a mortgage application, which need to be adapted and optimized. The modern mortgage business is transforming these processes from manual to automated. This allows a mortgage to be applied for more simply and, in terms of customer service, completed more quickly and painlessly.
The list of documents and records required for a mortgage application is long. In addition to the identification documents, a current salary statement and a copy of the last tax return or, in the case of self-employed persons, the balance sheet and income statement for the last two or three years must be submitted. Documents from the pension fund, the pension foundation and the debt collection office are also required. Of course, this is by no means all. When applying for a mortgage, documents such as an excerpt from the land register, floor plans and situation plans (in the case of condominiums, a plan of the condominium unit), building insurance certificate and sales documentation must be submitted for all properties. In the case of a planned new building, all building permits, building plans, cost estimates and a building description are also required. For a single mortgage application, the lender therefore receives a huge amount of documents, which now have to be checked for completeness by the experts according to an existing checklist. The lender must first enter these documents manually and then compare them with the data in the lending system. This process is not only enormously time-consuming, but also prone to errors. Only when all the data in the lending system matches and the lender has checked the risk properly can the application be approved. This process drags on since this mortgage application is not the only one that has to be entered and processed at the same time. A repeated back and forth between lender and borrower is anything but a rarity due to the complexity and volume of documents to be submitted. It is obvious that this represents a pain point for both sides.
The solution to this pain point in the mortgage business lies in process transformation, namely in the transformation away from manual and towards automated processes such as data capture and subsequent processing. While the list of documents to be submitted by the applicant remains the same, the capture and processing changes significantly, and with it the speed to the hopefully positive decision of the loan approval. For example, documents can be sent in advance by the applicant to a web portal, where they are directly checked for completeness and validity. This and the automation of data capture is done with an intelligent, AI-based OCR (Optical Character Recognition), which automatically reads all relevant data from the submitted documents. Essential, of course, is the verification of the ID or passport and the comparison with the documents at hand, especially the tax return and the wage statement. The OCR software automatically captures the data from both the ID or passport and the various document types, and so these can also be automatically checked for consistency. If the extracted data does not match or if, for example, a relevant document is missing, the system issues an alarm message and the data can be checked manually or the missing documents can be submitted. In contrast to the previous manual data entry and processing, this increases security and compliance due to error minimization, while also improving effectiveness and accuracy.
So the entire mortgage application process is changing in a significant way. Thanks to intelligent, AI-based OCR, customers can be offered a service that is more secure, faster and therefore more borrower-centric. At the same time, experts in the mortgage business can finally move away from manual, tedious and low-value-added work and turn their attention to the applicant’s personal concerns in a holistic consultation. Without additional time resources, capacity is increased, resulting in a greater number of mortgage applications processed and thus in higher profits.
We are at your disposal for a non-binding high-level exchange about your processes and ideas for transformations and try to contribute valuable impulses on our part so that you can maximize the chances for your project’s success as well as its impact.