Automating B2B Loan underwriting

Within the B2B lending landscape, the traditional methods of manual underwriting have been a longstanding hindrance to expanding operations and impeding progress. The drawbacks, expenses, and intricacies associated with this approach have prompted the industry to seek out new and inventive solutions. This piece examines the difficulties presented by manual underwriting, the potential benefits of decision automation, and actionable measures for implementing efficient underwriting practices.

The Challenge of Manual Underwriting in B2B Lending

For decades, B2B lenders have grappled with standardizing risk assessment for businesses. The unique traits of each business and its substantial financial support needs make the manual underwriting process a paper-intensive, resource-draining endeavor. This approach proves time-consuming and impractical for scaling operations, leading to challenges in serving small and medium-sized enterprises (SMEs). Manual reviews can also introduce inconsistencies and lack transparency in decision-making processes, adversely affecting the product offering and application timeframes.

Furthermore, the limited scope of manual underwriting restricts lenders from utilizing data-driven insights to inform risk assessment. This can result in higher default rates and loss ratios, hindering profitability and growth. With the advancement of automation software and abundant data, B2B lenders have an opportunity to revolutionize their underwriting processes. Industry leaders are already capitalizing on automation technologies to streamline operations successfully

Benefits of Decision Automation in B2B Lending

By implementing automated processes in your underwriting, you can greatly reduce the time and resources needed for decision-making. This allows for an increased capacity to make a larger number of decisions.

By pairing human review with data-driven automation, you can notably enhance the precision and reliability of your risk assessment abilities.

Utilizing automation streamlines your application process, expedites offer timelines, and offers more competitive pricing for your borrowers.

These factors not only reduce your operational costs but can also be the catalyst to improving conversion rates and growing revenue by serving customers you may have previously turned away.

How to increase the automation of your underwriting decisions

To harness the benefits of decision automation, lenders are turning to modern decisioning solutions like LendInfra. Here are strategic steps to gradually increase automation levels in underwriting decisions:

1. Start with small Improvements

Automating certain steps in a manual underwriting process can greatly benefit some individuals. Implementing a user-friendly tool that streamlines credit policy display and data collection can greatly enhance the efficiency, precision, and uniformity of decision-making.

2. Progress to Automated Risk Assessment and Decisions

Gradually move toward automating more critical aspects of underwriting, such as risk assessment and pricing. Begin by automating pre-screening processes and then extend automation to broader risk evaluation, always maintaining a human review for final decision approval.

3. Leverage Data to Drive Automation Strategy

Incorporate high-quality data sources, such as open banking transactions and accounting data, to power risk assessments and enable accurate underwriting decisions. Utilize innovative data providers that offer a comprehensive view of a borrower's financial situation to fine-tune automated decisions and optimize the automation strategy.

The fastest way to improve your decision automation

Lendinfra offers a flexible and scalable decision-making solution that enables B2B lenders to automate underwriting decisions. Our platform leverages data from different sources, including open banking, accounting software and other financial data providers, to power robust risk assessments and enable accurate decisions.