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Automated Underwriting Systems

Digital Transformation Through Automated Underwriting Systems

Automated underwriting software solutions process different types of loans and can also be configured to generate a payment schedule. These complex platforms help financial organizations to automate the processing of loans, mortgages, insurance policies, and even credit cards.

Automated Mortgage Processing

The mortgage industry is one of the slowest to kickstart digital transformation, and established lenders are experiencing challenges in streamlining underwriting from the underwriting process because of a lack of automation.

Expediting loan application processes for future homeowners is a focus for both incumbent companies and tech-savvy startups looking to capture market share.

Manually Underwriting Mortgages

The manual processing of mortgages is both time-consuming and labor-intensive. The lending company needs to examine in great detail an applicant’s credit report, employment status, income, assets, liabilities, and savings by hand.

Then, the human underwriter makes sure that all of the information is accurately documented before moving forward and reaching a decision regarding whether to approve the loan.

What is an Automated Underwriting Tool?

Automated underwriting software is able to process an application in seconds and instantly generate a decision. 

Automation in underwriting optimizes the first phase of the underwriting process by producing instant decisions that very often require several weeks or even months to complete manually. 

For very complicated applications that require human judgment, automated underwriting platforms can flag and refer cases to human underwriters to complete the verification process.

How Does Automation Work?

The underwriter enters the applicant’s personal data into the underwriting tool, such as income, assets owned, debts, employment, and location.

The underwriting tool then outputs a decision to approve the application, refer it to a human underwriter, or just outright reject it.

Benefits of Automation in Underwriting

Companies that have advanced with the help of technology utilize automation systems to significantly reduce processing times, spot any inconsistencies and issues, and boost the customer experience.

Below is an overview of some of the most important advantages of automated underwriting systems.

1. Data Validation

The underwriting tools verify the data found on various forms and documents.

The automation system can also be set up to spot missing supporting documents, such as tax returns, or identify issues that require clarification.

2. Fraud Prevention

Fighting against fraud is an enormous problem when manually processing mortgages, which is why lenders are adopting automation.

Automated underwriting platforms examine various financial measurements and customer data necessary to reduce fraudulent applications.

3. Error-Proof

Automated underwriting systems employ pre-defined rules to greenlight applications, which makes them practically infallible.

4. Rules Engines Enhance Underwriting


Image source: https://deciphercredit.com/

Many insurance and financial institutions have begun connecting business rules engines to their automated underwriting systems. This is due to the fact that most legacy underwriting systems are hard-coded and inflexible. A business rules engine is a pluggable piece of software that runs conditional “if-then” statements known as business rules. 

Business rules are able to express conditions under which applications can be approved.

Subject-matter experts without any technical expertise are able to make changes in underwriting criteria with a few clicks and without having to wait weeks or even months for the IT department to make the necessary changes to the software solution.

Hue Douglas is the Chief Editor of Zumboly and a former Journalist. With a Bachelor of Arts in Communications from Seattle University, he writes mainly about technology, health, and business fields since he finds them engaging and fulfilling. Through writing many articles and gaining experience, he has evolved into a storyteller who shares his knowledge through these articles.