In brief
- Dealing with borrowers struggling to make their loan payments have traditionally been time-consuming and frustrating
- Automation, AI and advanced technologies are having a positive impact on the borrower experience through communication channels, personalized solutions and streamlined processes
- Internal processes can be optimized by automation, freeing up valuable resources to deal directly with borrowers when they need it most
- EarlyResolution’s use of automation offers an encouraging step forward
Whether it’s mortgages, auto loans, or other consumer loans, borrowers who are struggling financially are faced with the burdensome process of trying to get assistance from their loan servicer. Loan servicing is playing catchup to other parts of banking, trying to utilize modern tools and approaches to solve time-consuming, resource-intensive, manual processes. These processes impact customers negatively, resulting in a poor experience for those that are going through difficult times.
Thankfully, the landscape is slowly improving as the industry begins to explore and deploy automation in the default management process. Technologies, such as artificial intelligence (AI), Robotic Process Automation (RPA), and chatbots are rapidly finding their way into the traditionally cumbersome and heavily manual space. AI is starting to make an impact in the loan servicing area as many processes, such as predictive customer analysis, loss mitigation processing, and loan upkeep are areas which are repeatable, manual, and require multiple technologies interacting to be successful.
Let's explore how automation can transform customer engagement and solve the traditional challenges faced in managing defaults.
The traditional challenge:
If you’re a borrower who is struggling to make loan payments, getting help from your loan servicer is often a difficult and frustrating task.
When a borrower reports a default, it triggers a complex series of interactions between them and the loan servicer. These interactions typically entail numerous phone calls, paperwork exchanges, and internal processing to reach a viable solution such as a repayment plan, forbearance, or loan modification. The process is plagued with inefficiencies, long timelines, and frustration for both borrowers and loan servicers.
Loan servicers grapple with managing high call volumes, legacy technology footprints, and labor-intensive processes involving stringent regulatory risks throughout. When the number of borrowers seeking assistance grows, as happened during the COVID-19 pandemic, these challenges are compounded, further straining an already stressed process.
The role of automation:
Luckily for borrowers, automation is emerging as a transformative force in loan servicing. With a focus on enhancing the borrower experience and streamlining operations, automation will revolutionize the way borrowers engage with their servicer when facing difficult times. By seamlessly integrating with online banking sites and providing a user-friendly interface, EarlyResolution’s Borrower Portal empowers borrowers, increases contact rates, reduces cycle times and optimizes efficiency. Consequently, automating various aspects of the process, from initial outreach, loss mitigation processing, to final resolution, loan servicers can alleviate the burden on the borrowers and improve the overall experience.
One area of the industry seeing leaps and bounds is in the predictive analytics space. The ability to detect that a stressed borrower may be about to default is beginning to take shape. Evaluating the loan portfolio for a spike in credit usage, a job loss, or delinquencies of other loans allows the loan servicer precious forewarning, allowing them to proactively contact the borrower early before the situation spirals out of control. The industry can utilize emerging AI models to proactively evaluate hundreds of scenarios to get borrowers assistance fast. As these models mature, loan servicers will have much better visibility into the borrower’s situation, a far cry from the reactive paradigm that exists today.
Enhanced communication:
One of the key facets of automation in EarlyResolution is its ability to provide more efficient and effective engagement. Through automated communication channels such as emails, text messages, chatbots, and alerts borrowers can receive timely updates, reminders, and personalized recommendations, keeping them informed and engaged throughout the entire process. An example is the status tracker embedded in the EarlyResolution Borrower Portal, allowing borrowers to see exactly where they are in the default process and upload critical documentation, all in a mobile optimized application. Involving them in this proactive approach reduces the stress and uncertainty associated with loan challenges, fostering a more positive borrower experience.
Personalized solutions:
Borrowers’ unique circumstances can be catered to in the EarlyResolution Borrower Portal. The ability to analyze large volumes of data to offer personalized, compliant solutions tailored to each individual is critical to assisting each borrower uniquely. By leveraging decisioning analytics and algorithms, servicers can assess a borrower's financial situation, loan history, and hundreds of other characteristics to tailor assistance options accordingly. This not only increases the likelihood of successful outcomes, but also builds trust and goodwill with borrowers.
Streamlined processes and the impact on the borrower experience:
Automation opportunities also exist in the loss mitigation space, where high volumes of repetitive tasks are abundant. From document collection and verification to decisioning quality control checks, automation accelerates timelines, enabling loan servicers to handle larger volumes of cases more efficiently. Aside from reducing operational costs, it also frees up resources to provide personalized financial advice and focused support to borrowers.
To summarize, the automation currently deployed in EarlyResolution is transforming how borrowers are being served by their loan servicers. By automating customer engagement and streamlining internal processes, loan servicers can navigate loan default challenges confidently, delivering exceptional service and support to borrowers across various loan types. The rapidly changing landscape of automation, while utilizing AI is improving the borrower experience, resulting in a smoother, less stressful journey.
If you’d like to discuss any of your organization’s business and technical pain points or arrange a live onsite demonstration of the benefits of automation in EarlyResolution, please get in touch with one of our experts.
Hunter Stair
As product lead for the global Luxoft lending product suite, Hunter blends market and business trends with technology innovation to help both servicers and investors better manage their borrowers. He has over 20 years’ hybrid experience in consulting, product management, sales and technical development.
