How Lenders can Increase Compliance and Reduce Fraud

How Lenders can Increase Compliance and Reduce Fraud Informed

The lending industry is confronted with regulatory and compliance issues and their potential impact on an enterprise. Organizations are seeking to reduce fraud and adapt to the current dynamic environment of fraudulent activity. Proactively addressing lending regulations with modern document processing infrastructure provides effective monitoring and review controls. These facilitate risk reducing actions that securely achieve business goals while reducing operational inefficiencies.

Slow, manual loan origination processes burden Financial Institutions (FIs) with increased time, risk and costs. It generate as lot of work that’s hard to manage while ensuring compliant and auditable entry. Lenders governed by regulator entities must maintain standardization across compliance and security entities. This leads Operations Teams to automate and standardize credit and funding processes, ensuring adherence to compliance and audit regulations.

Intelligent Document Processing

Intelligent Document Processing (IDP) eliminates human errors and helps pass data compliance standards. Here’s a long definition of Intelligent Document Processing from CM Consultants. “Software using AI/Machine Learning to efficiently process documents, extract relevant information, and then feed the output into available business applications.”

Processing a loan the same way by manually reviewing documents simply can’t be as efficient. Automation provides accuracy, reduces bias, and opens doors to more borrowers with better consumer financial outcomes.

AI-driven document processing helps organize, categorize, measure, and predict reputational, financial, regulatory, and operational risks. It provides benchmarks and expert advice to the business about regulatory obligations and compliance policies.

For example, partnering with third-party partners, Informed.IQ utilizes AI to enhance an organization’s compliance policy within the same API call. This automatically reduces the operational inefficiencies of manual verification of aftermarket forms.

In financial services, understanding your data aids anti-money laundering (AML) efforts and trade finance risks. CFPB focuses on underwriting and credit biases; however recent regulations place an additional focus on aftermarket products such as GAP waivers and their consumer benefits. The bottom line is that what you don’t know can negatively impact your business.

Fraud goes hand in hand with compliance. A great fraud product streamlines the business. Our fraud detection informs the lender – with 99% accuracy – when it sees a fraudulent pay stub, savings billions in lender and dealer fraud losses. Collaborating with consortiums, analyzing millions of documents and providing a feedback loop to our lenders enhances our fraud prevention.

How Lenders can Increase Compliance and Reduce Fraud Informed

Success means identifying fraud prior to funding. This is measured by capturing fraud up front and preventing the fraud from ever landing on the lender’s books. Recognizing a good customer is a critical piece to ensuring capture rates increase.

Now you can reduce friction and improve the customer experience while enhancing your operations and protecting your bottom-line. Rely less on humans and address your policies systematically across the organization. Your bonus is an audit trail.

Document fraud is an overlooked crime because it is very time-consuming to manually review all documents. Indeed, it is difficult to prosecute on a one-time basis in a quickly changing fraud environment. Automation is the key piece to this puzzle. According to Point Predictive’s insights, “50% of lenders don’t have a fraud team and 40% of lenders don’t track fraud.” To stay ahead of these fraudsters, technology is imperative – analysts cannot learn all forms of fraud as quickly as AI/ML automated processes that have the access and ability to benefit from consortiums and documentary databases.

As you work to automate your lending processes, look for a technology partner that is willing to go the extra mile and form strong strategic alliances for long-term success, which includes focusing on compliance and fraud.

An IDP streamlines regulatory reporting, reduces risk, eliminates human errors from manual data entry, enables search for updating/removing customer information upon request, can be used for KYC or AML initiatives to reduce fraud and suspicious activity, and decreases audit times from weeks down to hours.

author avatar
Jessica Gonzalez Director of Lending Strategies
With more than 15 years’ experience in the financial services industry, including tenures at Santander Consumer USA and Visa, Jessica Gonzalez is now the Director of Lending Strategies at Informed.IQ.

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