Automation: Friend or Foe?
Written by: Heather Papows, Loan Servicing & Secondary Market Consultant
In today’s world, most of us could not imagine living without the modern advances made by the use of technology and automation. It’s no different in the lending world; so many of our processes are reliant on automation- whether you realize it or not. Do you use an LOS to process loan applications? Automation. How about onboarding to the core? Automation. Even if you don’t use an interface, your core has automation by way of applying product defaults, generating daily reports, the posting of general ledger entries, and more. Initially, the use of automation was a way to remove the duplication of efforts and speed up a tired process. But now, we rely on it so much that often we forget to understand the mechanics of how it all works.
In a loan servicing operation, the process of managing an investor portfolio is a great example of this. The system advances and recovers funds, reports activity, sums your delinquent or prepaid totals, and calculates amounts to remit on your behalf. The core produces reports full of information and data to be used. All of this helps ensure a clean and balanced portfolio. But how much of those actions going on behind the scenes do we truly understand? Could we break this process down and replicate it manually if we had to? When something is wrong, do we know how to analyze pieces of it to find the missing link?
Many of you probably have never had to dig into it so deeply, if the operation was set up correctly from the start. The automation works- and the proof is in the cleanliness of your reconciliations and audits– so why do I need to understand it?
Well, for starters, when an issue does present itself, it’s better to be prepared than be left scrambling for help, unsure of where to turn, and unclear on what is what. Or, what if there is an issue that has yet to find its way to the surface? Wouldn’t you prefer to fix it before it’s too far gone? When you copy a process and make assumptions without fully understanding the depths of it, it leaves you with that unsettled feeling; where you question if things are right or wrong. One way to avoid catastrophes resulting from assumptions is to conduct your own reviews and scrubs. Test your automation and practice looking at things in new ways. You may find what you’ve been following was not always the best approach.
Breaking old habits of simply replicating a process really challenges your brain. It can be hard to take that next step, especially in an operation like servicing where even when volume is down, responsibilities never stop. It does take skill and knowledge to use automation and know where to source your information. But to bring yourself or your staff to that next level, where they understand how it works, recognize when something isn’t right, and are able to review or reset settings to enhance or update a faulted process, is the epitome of a success story that you definitely want to be a part of.
For more information on how SCA can assist with reviewing and testing your automation, and creating tools and job aids to support your team in this process, please contact Bill Dolan, Director, at WDolan@scapartnering.com or by phone at (617) 694-2617.
