Experts explain why manual reviews are impossible to scale

From my time at a lender from 2020-2022, I saw first-hand the detailed and methodological nature of customer application reviews. Whether you’re a small or large facility you most likely have a nimble team of reviewers reading and extracting key data points by hand before entering them into a system. 

So what happens if you want to move toward a risk-based pricing model vs. calculating credit availability on an individual basis? You’ll need more applications. Are you softening requirements and opening yourself up for fradulent applications? 

Or what if you’re adding 3x new applications a day and are still relying on your team of 5? Do you add stretch goals or hire more to keep up with volume? When you’re facing newer lenders that are unsustainably growing at all costs, how do you stay competitive?

Together with Fintech Nexus, we had the pleasure of hosting three leading fraud and fintech experts Dustin Eaton, CFE, Veriff’s Sacha Vasilkioti, and Inscribe’s Daragh McMeel for a recent webinar to discuss how automation can be used to not only streamline existing processes, but also decrease risk and enhance growth. 

Keep reading for insights from the discussion, as well as advice on how to embrace the tools, systems, and processes to reduce this common bottleneck. You can always watch the full discussion on-demand here.  

Why manual KYC/KYB and application reviews can’t scale

Consumers demand a fast and frictionless experience

A frictionless customer experience isn’t just an expectation – it’s the key to growth.

For customers who have become accustomed to an instantaneous digital experience in other sectors like retail or food service, tedious wait times on credit approvals can be frustrating enough to send them straight to a competitor.

“We do a lot more things online today,” explains Sacha. “Even my grandparents think it's completely ordinary to log into banking services online. At the same time, even though the process is now fully remote, fintechs need to remain secure and do their due diligence during the account opening and underwriting process.”

“Our data shows that between two and five percent of financial application documents last year were manipulated in some way. And in 2022, that figure is closer to 10 percent,” notes Daragh. “Within the fintech industry, we have to walk a very fine line in terms of supplying the frictionless experience that consumers want and maintaining strong risk controls the business needs.”

For Dustin, some sense of balance can be found in self-service.

"When there is friction within the experience, a lot of consumers have become accustomed to self-healing, or resolving common issues through self-service,” Dustin explains. “If a financial institution isn't providing that ability to self-serve, then they're likely to have a higher drop off or fall out rate for those consumers."

Employees are overburdened by tedious and unnecessary manual processes 

While manual reviews can degrade the customer experience, they also have a huge impact on the employee experience. Tedious tasks not only eat up valuable time, but also chip away at morale — both of which can lead to employee burnout at the very time that companies need people to be engaged and aligned with the growth strategy. 

“Some fintechs have tried to address the surge in applications by throwing people at the problem instead of investing the time and the resources into product engineering or third-party resourcing to truly solve the issue,” explains Dustin. 

Daragh agrees that automating tedious tasks is “absolutely critical,” not just because it helps optimize resources, but because it can provide more complete and accurate results.

 “Arming teams with the best tools and technology frees up time to focus on more strategic and important initiatives,” Daragh explains. “In using these tools, you achieve a higher level of sophistication because a lot of fraud signals are nearly impossible to detect with the human eye.”

Finally, Sacha points out that the reality of today’s working environment is that many people expect to work remotely. This means that processes must be able to be completed anywhere, anytime — which is not usually the case with rigid manual workflows.

“Remote work means that companies need to rethink entire processes to enable people to work from any location while still maintaining a high level of security,” she explains.

How to eliminate the biggest points of friction in onboarding and underwriting workflows

To improve speed and accuracy within the onboarding and underwriting processes, organizations need to pinpoint their biggest points of friction, regardless of where they occur or who they affect. Here our panelists share three common points of friction that can be alleviated through the use of automation and advanced technology. 

1. Clear the application backlog. According to Daragh, the time needed to address outliers within the standard document review process via manual reviews can take 30 minutes or more. Then it creates a backlog of applications that are waiting for review. But fintechs can get through that backlog with AI-enabled tool, which review documents for fraud and extract key data points in seconds. The beauty of automation is that with the right tools and technologies, faster decisions don’t have to equal increased risk.

2.  Make document collection easier for applicants. A common pain point for applicants and organizations alike is a lack of clarity of what documents are needed as part of the risk analysis or account creation process. Using an automation tool can help ensure that applicants are sharing the right documents, in the right format, from the right timeframe so that organizations can make an accurate and informed decision quickly. 

3.  Use AI to avoid bias and reduce subjectivity. When an organization relies on manual reviews, they are introducing bias within the process. "Humans are inherently biased and decisions can be subjective,” explains Sacha. “Machines only know what we teach them; they do what they are trained to do.” With many fintechs sharing Inscribe’s mission to create a more fair and equitable finance ecosystem, it’s important that companies take steps to remove subjectivity and bias – whether conscious or not – from the decision-making process through automation and technology. 

From document verification and collection to credit analysis and fraud detection, manual reviews not only add hours to the process, but also increase risk. For fintechs that rely on them either as a core part of standard operations or to resolve an ever-growing array of use cases, manual processes will also impact the growth strategy – and that’s a fintech fact, all our panelists can agree on.

Want to learn more about how to reduce the use of manual processes through automation? Listen to the recast of our webinar, Manual Reviews Are Killing Your Competitive Edge, on demand today or reach out to one of our experts to learn how Inscribe can help your business.