The Cost of Loan Processing Hiding in Plain Sight

For most credit unions, loan processing is the cornerstone of their operations - with interest income from loans and mortgages making up approximately 72% of total revenue for U.S. credit unions as of 2024 (Source: TrustAge).

And yet that foundational function is crumbling under the weight of a heavily manual process born in the last century and barely modified to meet today’s consumer expectations of nearly instant everything.

From the member perspective, the odds are close to 100% that they’ve never experienced a loan experience that was quick, easily understood, and painless.

And there’s a reason for that.

No matter how great your personnel are, how patient, how focused they are on making sure all the details are nailed down, how they explain the entire loan process and the member’s options…

The reality is that if the back-office workflows, disconnected systems, and manual processes are creating bottlenecks and pain for your staff, there’s only so much they can do to hide the back-breaking effort it takes them to serve members.

This makes loan processing frustrating for members as well as staff, eating into both revenue and member satisfaction, and let’s face it…

A painful loan approval process may be the final straw that has members searching for new Fintech options built for 2025+ and a digital-first experience, no matter how much they’d prefer to be a member of your credit union community otherwise.

If you’re feeling the pain of slow approvals (with members relentlessly calling, emailing, complaining on social media, or showing up in person to find out the status of their loan), compliance and risk management headaches (will it ever end?), and lost opportunities (to big banks, new Fintech options, and more), you’re not alone.

The Problem: Broken Loan Processing Systems are THE NORM

Credit unions pride themselves on personalized member services, and the sense of belonging to a community that’s about more than just being a faceless account stored in a database or pile of paperwork somewhere.

If you’re of a certain age, Norman Rockwell scenes are often what people picture in their relationship with credit unions.

But in the fast-paced world of today, ALL of our expectations have changed, and our patience for waiting weeks or nearly 2 months for a decision on our loan requests just drive us insane.

After all, if we can track anything from whether a delivery pizza was put in the oven 10 minutes ago, and is now one block away, or when our new car is making it’s way straight from the assembly line to being delivered in front of our house, we should know what the status of our loan paperwork is, right? Why do have to settle for an information blackout when we’re trying to buy our first house, or refinance to take advantage of much better rates, or build that addition you’ve been dreaming of for years?

Where’s the tech that truly helps here?

When loan applications pile up, the cracks in the system start to show, member patience goes out the window, staff burn out and quit, you can’t hire the new staff you need to backfill, and the piles of documentation grow day by day as processing time balloons from 30 to 45 days or more, clearly, this isn’t really working well for anyone.

Throwing more people at loan processing only temporarily improves the situation, and purely as a matter of daily survival.

Aren’t having computers and automation supposed to have taken away over the last 30 years of computers in offices?

Human-Centric Automation is the way…

There’s a better way – to both leverage the staff you’re thrilled to have on your team, *and* use a human-centric approach to automation that lightens the load of the vast majority of what is ultimately the dull, repetitive, “busy work” of loan processing.

After all, your staff are busy doing repetitive or tedious work that’s just hard for anyone to stay focused on with the same energy level and attention to detail all day every day, when they’re tied up in:

• Manual data entry chaos: Staff spend hours entering member information into multiple systems, reading from one screen, copying/pasting or retyping on another, increasing the risk of errors and slowing down approvals.
• Compliance complexity: Regulatory requirements like Home Mortgage Disclosure Act (HMDA) reporting or fair lending audits demanding precision, but manual processes that make compliance a constant struggle, as eyes glaze over as the day’s pile of work never ends.
• Member dissatisfaction: Long wait times for loan decisions frustrate members and drive them toward competitors with faster digital solutions, demotivating your staff who have been trying their best to serve members at the standards you hold for them, and that they hold for themselves.

The impact?

An outsized hit on your largest source of revenue due to delayed approvals (and dead silence before approval or denial notices), rising operational costs…

…and a tarnished reputation for the kind of member service you’re aiming for but fail, due to the odds, the tech, the expectations, and the processes making it all but impossible to do the job well, let alone in a scalable, friendly way that keeps staff engaged, energized, and feeling pride in a job well done, with satisfied members.

The Future: Streamlined Loan Processing with Intelligent Automation

Imagine a world where loan applications flow smoothly from submission to approval without unnecessary delays or errors.

Your members no longer stress about what paperwork is left to submit, the workload is easily managed and spread automatically across your team, all of the paperwork and complete checklist of materials is clearly tracked, the member knows exactly what stage of loan processing they’re in without you have to answer daily emails and phone calls from them, and for the first time, your credit union has the reputation of making loans and mortgages easier and faster than anyone around.

It’s been a long evolution over the last 30 years, to finally deploy intelligent automation solutions that go well beyond slightly speeding up manual processing, or old school workflows that are too fragile to process even the simplest loans without constant exceptions pawned off on staff.

The art of what’s possible today comes from using human-centric automation that covers the gaps and sheer volume of work that your staff have been slaving over for years. Combining this with Generative AI, robotic process automation (RPA), and intelligent document processing (IDP) takes a huge volume of the work you may have assumed people “have to do,” and turns your people into superheros through:

• Automated Data Extraction: IDP pulls information directly from applications and supporting documents, eliminating manual entry errors, and taking out the bottlenecks of grinding through data entry day in day out.
• Compliance Made Easy: Agentic AI can examine and verify that every loan decision aligns with regulatory requirements, flagging exceptions for human review based on YOUR rules, not some pre-determined set of rules.
• Faster Approvals: Automating repetitive tasks, freeing up staff to focus on complex cases, reducing turnaround times by up to 70%.

Wake up without the pile (of paperwork)

Imagine coming in on a Monday, seeing that your intelligent automation system has automatically handled most of the paperwork uploaded by your members over the weekend or overnight.

Instead of starting the day weeding through piles of documents (in paper or on screen), your staff can jump straight into some minor follow-up needed to verify details (highlighted by the system, and assigned as clear tasks), and calling members to discuss several options they have for loan payments (days earlier than they expected).

As the day goes by, they’re on to serving another happy member, who’s continuing as a member for years to come, because not only do they feel taken care by great staff as a person and a member, but the overall experience has made them remember why they’re members in the first place. It’s about the people and the relationships!

Your members deserve better than slow approvals, status blackholes and outdated workflows.

With intelligent automation, it’s time to break free from your broken processes and create a future where your credit union thrives.