Digital Underwriting: The Key to Gaining a Competitive Edge in Business Lending

Khushboo Gajwani

Khushboo Gajwani

September 18, 2023


Over the last three years, banks have been forced to rethink their business lending strategies. The driving force is not solely advanced technology, but rather the pressing need to meet customer expectations and embrace digital-first lending strategies.

In the wake of this transformation, a multitude of financial institutions embarked on the path towards digital maturity. For many, the initial focus was on enriching the borrower experience, often overlooking the optimization of back-office processes, leaving them still reliant on manual methods. 

Manual underwriting comes with its own set of limitations. While these methods can be favored due to their familiarity, they bear multiple drawbacks. Legacy underwriting processes can stretch up to days, a timeline that can be a formidable barrier for small businesses seeking prompt financial assistance. Moreover, the expenses associated with manual underwriting, including labor costs and the potential for rework, significantly impact operational budgets. 

Challenges of Manual Underwriting

Error-Prone Processes That Hinder Growth
While there might be a preference for familiar processes, there is also a heightened vulnerability to errors and oversights. The time consuming nature of manual data entry often leads to a longer time to close, resulting in customer dissatisfaction and limiting the ability to attract new borrowers. Additionally, the focus on labor-intensive underwriting processes detracts from the institution's capacity to explore its growth potential, eliminating their ability to scale loan volume and expand into new geographies. 

Resource Constraints from Hiring Challenges 
The challenges of manual underwriting are compounded by the difficulties banks face in hiring skilled underwriters due to the ongoing ‘War for Talent. As the shortage of qualified personnel persists, banks and credit unions, especially those operating on legacy processes, are experiencing efficiency deficits that hinder productivity, scalability, and long-term profitability. 

With persisting challenges from manual underwriting, many lenders are looking to technology to help solve the efficiency gap and create a competitive advantage in the business segment. 

How Digital Underwriting Solutions are Creating a Competitive Advantage for Business Lenders

Drive Efficiency without Compromising Accuracy 
In today’s competitive lending landscape, borrowers are demanding faster decisions on their loan applications. Many are even willing to pay a premium for expedited processing. In this video, Dollar Bank's SVP of Commercial Banking Dave Weber, highlights how business borrowers willingly embrace higher interest rates in exchange for convenience.
By leveraging AI and automation, underwriting is significantly accelerated, without compromising accuracy. These efficiency gains ensure that borrowers receive timely decisions, meeting their expectations for prompt service without sacrificing the integrity of the required analyses.

Empower Your Workforce for Growth 
With the power of automated underwriting tools like Numerated, back-office staff can now embrace more strategic roles. Freed from mundane and repetitive tasks, underwriters can dedicate more time delving deeply into complex borrower profiles and meticulous risk assessments. 

But, the benefits don’t stop there. Automated underwriting has unlocked a new dimension of scalability for business lenders. With the burden of time-consuming processes significantly lifted, back office staff can now process a substantially higher volume of loans than before. This enhanced efficiency not only means increased capacity to serve their existing borrowers but also lays the foundation for venturing into new markets and untapped territories.  

Expedite Your Underwriting Processes with Numerated 

As lenders continue to adopt new technology to drive efficiency across the small business segment, those leveraging Numerated are seeing value from their investments faster. With the power of Digital Underwriting, lenders can process massive amounts of data in minutes, significantly reducing work in the underwriting process by up to 90 percent. 

Designed with a focus on simplicity, the solution ensures that users can easily navigate the tool and utilize its capabilities. Numerated customers benefit from fast implementations and streamlined training processes, resulting in entire underwriting teams fully trained on the platform in only 10 days

Want to learn more about Digital Underwriting? Watch a live demo of the solution, here, or contact us today to speak with an expert.  

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