Automation is the need of the hour—and the gateway to the future.
The global lending market is expected to reach a staggering $8,871.2 billion in 2025 and $11,604.7 billion in 2030, according to the “Lending Global Markets Report 2021: COVID-19 Impact and Recovery to 2030.” Even though the COVID-19 pandemic did bring the world to a standstill in many respects, we also witnessed a double-digit percentage growth in lending as companies felt the desperate need to restructure and rebuild their business operations in the face of the pandemic.
In this highly competitive, fast-paced world, no matter the nature and size of the business, every entrepreneur must find ways to outdo the competition, improve their services, and increase their profits. The customer, of course, is key to achieving all of these goals. A happy customer is a repeat customer, which means higher profits. For this, your marketing needs to be sound. Your internal employees—the team that helps you grow your business—are also critical. How well are they functioning with each other? How can you make their jobs more seamless and productive? Finally, your business operations and processes must be efficient.
Technology ties all three of these integral aspects of your business together. Technology upgrades are the need of the hour; they are the only way to stay ahead of the competition and provide your customers with prompt and hassle-free services. It is the answer to supercharging your business and accelerating hypergrowth, instead of taking it one small step at a time.
Three Categories of Automation Tools to Consider
Using technology to fast-track business growth means automating processes and systems that would require a chunk of time and other valuable resources you can likely put to better use elsewhere in your business.
Automation boils requests and activities down to a single command: “When this happens, do that.” For example, “When you get a query from a website visitor, inform the sales team through text.”
So, let’s take a look at how you can leverage the power of technology for your private real estate lending business with these three categories of tools.
1. Workflow Automation Processing Tools
An if-this-then-that tool helps you systemize repetitive operations between two apps or more, without needing any coding. This type of tool takes inputs and stimuli from one app and commands another app to perform the required action, eliminating the need for human interaction. These types of tools are also described as “translators” between apps, helping entrepreneurs and managers increase the level of employee productivity by automating repetitive tasks such as customer queries and follow-ups, lead management, and so on.
In a private real estate lending business, workflow automation processing tools can help your team save considerable time and effort by automating various kinds of activities (e.g., frequently recurring tasks, moving information from one app to another, tasks that require physical labor but not much mental effort, etc.). Every process—from making new appointments and reminding employees to fill out their time sheets to basic project management and creating email databases—can be automated.
2. Customer Relationship Management Tools (CRM)
Home prices are shooting through the roof, with 19% growth reported in 2021 compared to 2020. That growth makes the mortgage industry one of the most competitive in the market. And it’s why CRM for client management is a necessity for private real estate lenders. A mortgage CRM can help lenders with various procedures, both internal and client-related, such as automating marketing efforts, centralizing client communication, realtor follow-up, and so on.
When identifying the best CRM for your needs, look for a cloud-based solution and one that is developed by both salespeople and engineers. This will enable you to automate functions using sales software, email software, and integrations with hundreds of tools and services.
Some notable features you’ll want are real-time updates and access to documents on the customer portal, customized dashboards, reports and pipelines, round-the-clock chat, and email support. Most important, look for the ability to integrate into your loan origination system via an OpenAPI.
3. Loan Origination System
The loan origination process consists of five stages:
- Customer management
- Credit analysis
- Credit decisioning
- Monitoring covenants
- Portfolio risk management
The primary goal of any private lender is to make a profit. Secondary goals include risk management and creating value for stakeholders. To achieve these goals, private lenders must take a number of crucial steps, each of which consume a lot of time and effort.
By automating these steps completely, you can ensure the process is uniformly conducted, errors are minimized, and the turnaround time for each application is reduced. This is where a loan origination system (LOS) comes into the picture.
There are a variety of LOS options to choose from. What you’re looking for is a web-based, end-to-end loan origination system that can boost productivity and reduce errors by a huge margin. Compliant with all regulatory bodies, your LOS will enable you to streamline and originate a loan from practically any location through any source with an internet connection.
Your LOS is a hub that connects lenders, brokers, borrowers, and service providers for efficient and compliant loan generation. It aims to improve real-time collaboration between parties and thus reduce the total time of operations. An LOS gets bonus points for unique features like in-built CRM tools, loan tracking, compliance checking, document archiving, real-time updates, custom workflows, lead and campaign management, and service level agreements.
3 Keys to Automating Your Private Lending Business
Although automation and digitization reduce manual efforts and save time, the biggest advantage they bring to the table is enabling scale and increasing profitability. Lenders who have adopted digital lending have seen a more than 50% increase, by reducing the time from 20 days to 10 minutes.
Moreover, a McKinsey analysis stated that by digitizing their lending processes, SME lenders with balance sheets of over $250 billion could clock approximately $230 million in annual profits.
However, the transformation is not the same for all lenders in the market.
Before you jump into automating operations in your private real estate lending business, let’s look at a few keys to keep in mind during the digitization process.
1. Automation is not an umbrella.
Although the terms “automation” and “digitization” are used as an umbrella with regards to automated cost-saving operations and SoPs, the best way to make the most of these tools is to understand they function differently depending on the nature of your lending business. Varied by industry, segment and products, each kind of lending business presents its own set of requirements and weaknesses that need to be addressed with automation.
A private lender may target different groups—such as DSCR loans, new construction loans, or fix-and-flip loans—all of which differ significantly in many aspects. Understanding your business and its specific requirements before you begin automating it should be your goal, rather than trying to fit your business into generic, pre-molded tools.
2. Keep it simple.
While automating various aspects of your business, remember not to overly complicate it. Doing so will inevitably lead to “scope creep,” a term used by software development teams for a project that constantly adjusts its features and functions.
As an owner or business manager of a private real estate lending company, it is not you, but your employees and clients who will be making the most of this automation. The end goal is to bring in more clients and profits by freeing up time, reducing manual effort, and streamlining operations. It is important to keep the automation simple and to the point.
A wide range of automation tools are available, offering many unique features. Don’t be swayed by their fanciness. Choose only the ones that make sense for your business and do not confuse the end user. The latter will only encourage them to leave your website for a simpler, more intuitive platform.
3. Train your team.
First, take some time to learn about the tools you’ve chosen to automate your private lending business. Once you have a basic understanding of how these tools work, test them out before handing out the memo to your internal team. Keep an eye out for potential roadblocks so you can remedy them before your employees are involved.
Most importantly, train your team. Do not push them into the market before they’ve had a chance to figure out the new systems themselves. It may take some time for everyone to get used to the automation, and it may lead to some internal changes or even conflicts. Your team is being asked to shift to a completely different style of working and may be resistant to change. Provide the necessary training materials, literature, and other resources they will need to become familiar with the new processes, spend some time onboarding them systematically, and give them time to get on the same page as the rest of their team.
The bottom line is that automation is the need of the hour—and the gateway to the future. It goes beyond simply saving time and money. It can help private real estate lenders take their business to the next level. Employees enjoy streamlined, efficient processes and clients appreciate a fuss-free, intuitive, quick lending process.
Remember, it’s not only about how good the tools are but also about how well you use them to your advantage. Even the best tool in the market can be a bust if it does not add the right value to your business.
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