Throughout the life of a loan, it’s vital to have consistent and timely communication with the borrower and among financial institution team members. However, letters and emails to borrowers sometimes come from loan officers, but sometimes from other staff within the bank or credit union. Similarly, documents may be coming into the institution from many outside parties. Tracking and coordinating communication and documentation is important to make sure critical information is processed quickly. A sound loan administration solution or system will coordinate communication across the financial institution to reduce inefficiency.
Various parties also need access to data and the multitude of documents related to the loan, so it’s important that a loan administration solution or system provide that for these people – whether it’s for loan officers, managers, or external loan-review partners. How long does it take the financial institution to locate and produce documents now? Can people access data and documents wherever the staff are located? An effective loan administration solution creates a more coordinated, connected process for staff to access important documents and data much faster and easier.
Finally, loan documents and the data in them is highly confidential, so loan administration solutions should be designed with data security in mind. Paper-based loan administration systems leave financial institutions exposed to risks associated with physical damage and access to unsecured files.
Emily Larkin, Abrigo’s Chief Information Security Officer, recommends that financial institutions looking for a loan administration solution should seek a shared responsibility model with the hosting vendor that clearly lays out expectations and who is responsible for what. “The appropriate cyber protections and terms should be noted in the contract, and the vendor should highlight their cyber controls and commitment to follow regulations and laws within the contract,” she says.