Many lenders still rely on paper loan files that get passed from loan officer to underwriter, underwriter to closing agent, and so on, during the origination process. But collaborative electronic document systems are gaining some momentum among larger lenders as a long-term efficiency and among smaller lenders as a means of improving service levels.
Risks of a paper process include losing documents, security concerns, added expense from paper costs and other considerations, Sanjeev Malaney, CEO of collaborative document services provider Capsilon, confirmed in a recent interview.
The continuing use of paper and exposure to such risks is still “huge,” he said.
“Our prospects, the first thing we ask them is ‘Are you paperless?' and the answer always is ‘Yes, we're paperless.' And the next question is, ‘Do you have a paper folder?' and the answer is ‘Of course we have a paper folder.'
“The thought process to being paperless is generally, ‘Well, I do a lot of work in my loan origination system and I receive lots of communication on e-mail,'” Malaney said. A so-called end-to-end process “whereby, if you went into a shop, you could actually see no paper folders being used through the workflow process,” remains less common but can happen, Malaney said.
Companies can transition from a situation where there are literally paper folders and printers everywhere to operations where there is “no paper, no printers and everything's happening electronically.”
That being said, “There are hundreds and hundreds and probably thousands of companies that haven't made it yet,” he added.
Malaney said it is resistance to change that continues to deter many companies more than any disagreement about the business value of the change.
“We've found and discovered you could speak to a business manager about eliminating paper, saving costs and about compliance and they absolutely get those things. They're all valid. But they recognize there's a significant amount of inertia to overcome, to move from paper to electronic process, as there is with any business process change,” he said.
The real business driver for adopting electronic solutions “is to provide much smoother customer interaction and significantly improve operational efficiency,” according to Malaney.
He cited as an example its value in improving customer interactions involving third-party originators selling their loans to investors.
Some electronic document management improvements can be relatively simple, he said. Working off dual monitors, for example, can help in situations address fatigue that occurs where workers have several applications open and they are constantly switching back and forth, as well as to better absorb the information from loan origination systems. With monitors in the low three figures and the addition of just one other monitor that should be accommodated by existing desk space, Malaney said there generally is “no resistance” to this in cases where users have moved away from a paper-oriented system.
The catalyst for that broader change away from paper, toward electronic documents, is generally not driven from an internal or a back office process.
“That said, if you go into the larger organizations most are driven by internal operational efficiencies,” and some of those do have a long-term view that they have go to deal with the paper issue and are planning to do so.
The service value has to be compelling for smaller organizations, he said. This might be in term of the speed at which one can find a particular file or security, he said.
