'Three Pillars' of STP
The emergence of three main pieces of technology -- workflow tools, automated underwriting/rules engines and imaging solutions -- is helping to expand STP capabilities beyond the front end, however. "These are the three pillars of getting to STP in lending," says First Horizon's King. But, "In any automated environment there might be some loose threads that aren't being taken into account. So you also need the necessary safeguards, like fraud-detection technology."
For Pittsburgh-based PNC Consumer Services ($94.9 billion in assets), these technologies have enabled the bank to extend automation to both the front and back ends of the lending process. "We've invested in decision rules engines that are attached to each loan," explains Jim DeFoggia, president, PNC Consumer Services. "They're assigned a behavioral score to help make decisions on how to service the loan. We're leveraging imaging technology, too. There will always be a certain amount of paper but it's a matter of how efficiently you handle the data when it comes to you."
Benchmark's O'Connor says decisioning/business intelligence tools in particular make it easier for lenders to follow a loan over its life cycle. "The nice thing about having the credit process on a platform system is that all the data is soft," he says. "So you can more easily compare what the customer looks like over time." Ultimately, O'Connor adds, banks can use this information in aggregate to create profiles of particular kinds of customer segments so they can better determine whether to lend to such people in the future. "Much of this is still very paper based for some organizations," he observes. "But others have become electronic."
Still, no matter how much automation technology the industry adopts, it is important for lenders to keep in mind that "there will always be a piece where they have to go to customers and collect a document," asserts Piyush Tantia, a director with New York-based Mercer Oliver Wyman. "You can't really automate all of this unless government agencies make documents more available electronically." Tantia is quick to note, however, that aside from the document-gathering dilemma, the lending process indeed is becoming quite automated today.