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auto loan underwriting workflow

The concept of workflow has been around for decades. The assembly line instituted by Henry Ford was the shining example of efficient workflow in its day, echoing Frederick Taylor’s research on industrial efficiency. That heritage of reducing wasted effort is part of the robotics that manage significant portions of auto assembly.   

The business world’s approach to workflows have evolved as well. Reusable interoffice envelopes (insert document, wind string around cardboard button, cross off last recipient’s name, add next recipient’s name…) gave way to email with attachments. Today’s state-of-the art  workflow systems support business-specific requirements at the enterprise level.

Whether factory or office, the transformative factor in workflow evolution is digitization: Physical records become digital; automation replaces manual actions, and data-driven decisions replace some previously processed by hand. The greater the digitization of content, information, and process, the greater the benefit.

Just as workflows and automation have improved auto manufacturing, recent fintech advances now deliver similar improvements for lenders. Nowhere is this more apparent than in the auto loan underwriting workflow of the lending cycle. Efficient workflows accelerate processing while reducing costs. They also enable process and decision consistency, which is an asset in an industry increasingly governed by regulations.

Digital Auto Loan Underwriting Workflow: More Powerful Than Ever

It’s likely that your current auto loan underwriting process has some elements of workflow. However, recent technology advances are worth a look. Let’s examine several key characteristics of digital auto loan underwriting workflows and what they can do for you.

Cloud Scalability Easily Matches Workflow Demands

Modern loan origination software hosted in the cloud provides far better processing capacity than legacy lending software. Cloud providers like Amazon Web Services (AWS) invest in processor, storage, and communications infrastructure to ensure optimum performance and availability. As processing demands change with lending cycles, auto loan underwriting workflows running on cloud efficiently handle the heaviest volumes.

Decision Rules Drive Workflow And Eliminate Manual Steps  

Auto loan underwriting workflows let you replace manual tasks with automation. Configurable (by business users) decision rules relieve underwriters of tedious, repetitive decisions. Rules automatically and consistently evaluate applicant information to determine applicant creditworthiness. Decisions are automated, with little to no underwriter intervention. By replacing manual underwriting tasks with decision rules you can:

  • Automatically assign applications to specific underwriting queues based on dealer, geography, status, “watch lists”, or other criteria to categorize and prioritize applications;
  • Establish different rules for premier dealers versus standard dealers;
  • Auto-approve applications in seconds, enabling a near-instantaneous response to qualified applicants;
  • Auto-decline applicants who fall outside of policy guides. Workflows manage the adverse action notifications, wasting no time on unqualified applicants; and
  • Establish override criteria and underwriter authorization to bring consistency to override decisions.

Automated decisions are the backbone of workflow. They bring speed and consistency to decisions, enable lenders to respond quickly, and give underwriters more time to focus on capturing deals that require their experience and expertise.

Data Sources Support Better Quality Decisions

Fintech takes advantage of the cloud’s ability to provide access to a wide range of data sources when integrated into workflow improve underwriting efficiency and decision quality. Configuration (not programming) makes it easy to integrate these into an underwriting workflow and automatically access these resources when required.

Alternative credit data is just that—consumer information captured from many different digital transactions and made securely available to lenders as a service. Payment records for water, gas, electric and cell service, income statements, and employment and rental records are alternative indicators of an applicant’s financial position.

Alternative credit data works with traditional credit bureau data to provide a more detailed assessment of creditworthiness, especially when an applicant has a thin credit file. As part of the underwriting workflow, alternative credit data sources are automatically accessed and retrieved. Decision rules evaluate the data according to the policies you’ve established and guide the next steps of the workflow.

Data sources can help lenders minimize the risk of fraud by using services to validate applicant identity. Depending upon the rules configured, a failure to validate can initiate an auto-decline response. Alternatively, an underwriter could initiate a review of applicant information to determine eligibility.  

Analytics Provides Insight Into Auto Underwriting

Modern loan origination software that provides rich, configurable workflows also generates performance data about the underwriting process. Workflows are great at improving process speed and decision quality by themselves, but there’s always room for improvement. Process analysis can be used to continually improve auto underwriting workflow efficiency. Using the wealth of performance data generated by workflows a lender can:

  • Identify any bottlenecks in the current underwriting process;
  • Determine the average time spent in key steps of the underwriting process;
  • Identify the most/least productive underwriters and find out why;
  • Determine what percentage of applications were auto-decisioned;
  • Identify the top N reasons given last quarter for adverse action notifications; and
  • Evaluate underwriting process trends by day, week, month, quarter, or year.

Any lender investing in a modern loan origination solution that offers the latest workflow capabilities should make sure the system has fully integrated analytics. Analytics let lenders keep getting better.

Additional Capabilities of Auto Underwriting Workflow

Here are a few more capabilities that contribute to process consistency and efficiency, and better quality decisions:

  • Mobile applications securely capture applicant information anywhere, including digitizing documents and automatically initiating the underwriting workflow
  • Tasks are executed in a specific sequence before issuing adverse action notifications
  • Notifications with borrower-specific details are generated automatically and sent via email, text, or printed letter
  • Notifications are also retained as digital records
  • Workflow steps, with the help of decision rules, ensure lenders comply with Regulation Z and ECOA Regulation B
  • Workflow steps also ensure stipulations are met and required documents are digitally captured and reviewed prior to loan approval

Given the volume of loan applications, any one of these capabilities can cut underwriting review and decisioning time. To be successful in a very competitive market, lenders must employ the latest fintech capabilities that enable digital auto loan underwriting workflows.

Getting Started

defi SOLUTIONS is one of the Top 50 Most Promising Fintech Providers for 2018 by CIO Review Magazine. Our cloud-based loan origination and analytics solutions help achieve greater underwriting efficiency and decision consistency. We’d welcome the chance to discuss your lending needs. Contact us today or register for a demo.


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