Lenders could cut processing times on borrowing applications by up to 85% if they adopted Open Banking technology, as well as reducing costs and human errors, according to research by provider Yolt Technology Services (YTS). It calculated that over the course of a year, the average lender will invest £530,053 into loan processing, accounting for staff time and administration costs.
A survey of over 100 senior executives in lender businesses and loan companies found they were processing an average of 6,258 loans a year, with each single loan taking 3.5 hours for the business to process. From initial application to payment, this takes an average of 16 days, largely due to bottlenecks caused by applicants as they assemble the necessary proof to complete the process.
However, the adoption of Open Banking technology could significantly reduce these stressors on the efficiency of lenders. Manual processes requiring applicants to provide information such as complex, unstructured income and expenditure data are no longer necessary, which could see the current wait-time evolve into a process of mere minutes.
At the same time, Open Banking allows lenders to cut out manual verifications, reduce costs and offer an instant credit decision with fewer human errors. With these innovations, lenders can save approximately 18,000 work-hours annually.
Jack Tenwick, head of UK sales, YTS, said: “Both lenders and applicants want a frictionless process from application to decision to payment, however the current system that requires the manual intervention by both parties is both inefficient and frustrating. Through the power of open banking, relevant data is automatically uploaded and processed, saving time for both parties and reducing the risk of decisions made in error.
“For lender businesses, this means that not only can they offer a superior customer experience but that their own capacity for growth is greatly increased. As we anticipate a greater number of businesses looking to invest in potential growth as we emerge from Covid, this will allow lenders to meet that demand and remain competitive.”
