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In the highly competitive banking sector, enhancing operational efficiency is paramount to maintaining profitability and customer satisfaction. The commercial loan process, from origination to servicing and ongoing management, involves numerous complex and labor-intensive tasks. These tasks can be significantly streamlined through automation, leading to faster turnaround times, reduced operational costs, improved accuracy, and enhanced customer experiences. In this blog, we’ll explore how automation generally, and specific features within AXIS by AIO Logic, can benefit banks engaged in commercial lending.

Automation in Loan Origination: Speed and Accuracy

Loan origination is the starting point of the commercial lending process. It involves collecting and analyzing financial data, evaluating creditworthiness, and making loan decisions. Traditionally, this process requires substantial manual effort, including data entry, document verification, and credit analysis. Automation can transform this phase by introducing the following enhancements:

1. Data Collection and Integration

Automated systems can seamlessly integrate with internal and external data sources to collect and validate financial information. This includes pulling data from credit bureaus, financial statements, and even real-time market information. By automating data collection, banks can reduce the time spent on manual input and minimize the risk of errors.

In terms of data collection and integration, AXIS by AIO Logic has unmatched functionality compared to other platforms on the market. Starting with data ingestion, AXIS enables automated ingestion, structuring, and centralization of unstructured source data, reducing entry costs and errors. Additionally, AXIS’s AI can analyze a wide range of data points (e.g., financial statements, transaction history, market data) to provide more accurate and dynamic underwriting.

2. Credit Scoring and Decisioning

Advanced algorithms and machine learning models can assess credit risk more accurately and rapidly than traditional manual methods. These models can analyze vast amounts of data to provide real-time credit scoring, enabling banks to make quicker and more informed lending decisions. This reduces the loan processing time and enhances the accuracy of risk assessments.

Powerful financial spreading and analytics functionality is another crucial aspect of AXIS’s origination automation. Users have the option of spreading financial statements through AXIS’s spreading interface, upload, or integration with borrower accounting systems. Once financials are spread into AXIS, the platform automatically performs vertical, horizontal, and trend analysis in order to calculate 42 financial ratios and score borrower financial health.

3. Document Management

Automation tools can handle the digitization and management of documents, ensuring that all necessary paperwork is in order and easily accessible. In many cases, automation can even read documents and identify relevant data. This not only speeds up the origination process but also reduces the chances of document-related delays and errors.

In AXIS by AIO Logic, we’ve included several document management features to assist in the origination process and beyond. Unlike traditional OCR technology, our Document AI reads entire documents (e.g., financial statements, AR Agings, etc.) and translates the information into structured fields, allowing for more accurate data extraction and utilization. Additionally, AXIS automatically labels, parses, and organizes documents when they are uploaded through the customer portal, or by the lender, eliminating the need for manual document tracking.

Automation in Loan Servicing: Efficiency and Compliance

Loan servicing involves managing the day-to-day aspects of a loan after it has been originated. This includes processing payments, managing customer inquiries, ensuring compliance with regulatory requirements, and handling any issues that arise during the loan term. Automation in loan servicing can lead to significant improvements in efficiency and customer satisfaction through the following:

1. Payment Processing

Automated payment processing systems can handle a large volume of transactions quickly and accurately. They can also provide customers with multiple payment options, such as ACH transfers, credit card payments, or automated deductions, enhancing convenience for both the bank and its clients. Integrations with accounting systems can also add another level of automation, saving accounting staff valuable time and effort.

In addition to automated payment processing through integration with Stripe or numerous other platforms, AXIS also automatically updates payment schedules and balance tracking upon the completion of a payment. Additionally, users can set up account integrations with fully configurable workflows which automatically create journal entries upon the occurrence of triggering events (e.g., received payment, loan funded, etc.).

2. Compliance Monitoring

Regulatory compliance is a critical aspect of loan servicing. Automated systems can monitor loans for compliance with relevant laws and regulations, generating alerts if any issues arise. This helps banks stay ahead of regulatory requirements and avoid costly fines or legal challenges. The generation of compliance certificates can also be automated with some platforms, including AXIS by AIO Logic.

Compliance is a crucial aspect of commercial lending, especially for banks. The AI within AXIS can ensure that business processes comply with regulatory requirements by continuously monitoring activities and generating compliance reports. AXIS also enables compliance certificate submission through the customer portal, with borrowers able to electronically sign the certificate. AXIS then automatically tests the submission to the covenant threshold and triggers alerts if any covenant fails.

3. Risk Management

Automated risk management tools can continuously monitor loan portfolios for signs of potential default or other risks. By analyzing trends and patterns in real-time, these systems can alert banks to emerging issues, allowing for proactive management and mitigation strategies. This can be a crucial advantage over competitors without this capability.

When building AXIS by AIO Logic, we included very powerful risk management functionality in the platform. AXIS’s AI can identify unusual patterns and behaviors that may indicate fraud or other risks, enabling institutions to respond quickly to potential threats. Additionally, AXIS’s AI can predict potential risks and vulnerabilities in business processes, allowing organizations to mitigate them proactively.

Automation in Loan Management: Streamlining and Optimization

Loan management is the ongoing oversight of a bank’s loan portfolio, involving tasks such as portfolio analysis, reporting, and optimization. Automation can significantly enhance loan management by providing the following benefits:

1. Portfolio Analysis

Automated systems can perform detailed portfolio analyses, identifying trends, assessing performance, and highlighting areas of concern. This enables banks to make data-driven decisions regarding their loan portfolios, optimizing for profitability and risk. This in-depth analysis can be nearly invaluable, especially for banks with large portfolios that cannot easily be manually analyzed.

AXIS by AIO Logic offers a robust suite of automated portfolio reporting and analytics, providing users with the capability to perform powerful analysis. AXIS automates portfolio stratification, allowing users to stratify based on standard attributes (e.g. state, industry) as well dynamically by any captured data point. Additionally, AXIS includes automated portfolio concentration testing, where users can define testing metrics and thresholds and AXIS automatically triggers notifications if a threshold is breached or trending towards breach.

2. Reporting and Analytics

Automation can streamline the reporting process by automatically generating reports and analytics based on real-time data. This not only saves time but also ensures that decision-makers have access to up-to-date information, facilitating more informed strategic planning.

AXIS offers 61 reports and dashboards standard, out of the box. Each table in AXIS includes a user-facing report that allows users to search, filter, and download data from that table. In addition to standard reports, custom reports can be built for any data that is contained in AXIS.

3. Loan Restructuring and Modification

In cases where loans need to be restructured or modified, automation can help by quickly assessing the implications of different scenarios and suggesting optimal solutions. This accelerates the decision-making process and ensures that adjustments are made in a timely manner.

To this point, AXIS features a Decision Support functionality, which empowers employees and increases productivity by providing relevant insights and enhancing decision-making capabilities through next-best-action guidance. Additionally, AXIS’s AI provides real-time insights intro operational performance, enabling institutions to monitor key metrics and KPIs continuously.

The Broader Impact of Automation

The benefits of automation in commercial loan origination, servicing, and management extend beyond operational efficiency. By reducing the time and resources required to manage these processes, banks can lower their operating costs and improve their bottom line. Furthermore, automation can lead to better customer experiences by reducing wait times, improving service accuracy, and offering more flexible options for borrowers.

Moreover, automation enables banks to scale their operations more easily. As the volume of commercial loans increases, automated systems can handle the additional workload without the need for proportional increases in staff or resources, allowing banks to grow more efficiently.

Conclusion

Automation is a game-changer in the commercial loan process, offering substantial improvements in origination, servicing, and management. By embracing automation, banks can achieve greater operational efficiency, reduce costs, enhance customer satisfaction, and better manage risk. As the financial landscape continues to evolve, the integration of advanced automation technologies will be key to staying competitive and meeting the demands of a rapidly changing market. If your firm is interested in implementing automation technologies to achieve benefits outlined in this blog, please contact us today to schedule an intro call and learn more about all that AXIS has to offer!