Lending fraud is a growing trend, and one that is costing both large and small financial institutions. Everyone from the local credit union to large banks is feeling the sting. Small and mid-sized business fraud has increased almost 7 percent since 2020, and costs related to fraud are highest for companies in fintech.
Folded into this escalation, however, is one truth: lenders who take a multilayered approach to lending that involves digital solutions actually experience fewer instances of fraud.
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Digital Tools: Lending Fraud and The Solution
This may seem counterintuitive. The digitization of the lending process offers more opportunities for fraudsters to “play” the system. In fact, the hastened shift toward digitization and online operations that happened in response to the pandemic created many opportunities for fraudsters.
However, a quality automated lending solution streamlines the process, reduces human error and identifies inconsistencies in applications, all of which work together to reduce fraud in lending.
Consider this, as well— smart fintech’s understand that resistance to automation often stems from security concerns. Because of this, the most performant solutions always take a comprehensive approach to these concerns.
Automation for Better Lending Fraud Detection
FlashSpread automates spreading during the lending process, and was built with bank-level data security in mind – meaning that it uses the same approach you would expect at the most reliable institutions. FlashSpread also automatically converts the tax documents submitted by applicants during the loan approval process, converting them into digital financial statements. This quick and efficient process does two things: saves time and allows multiple stakeholders involved in the lending process to instantly view loan data through a single pane of glass.
In regard to time, consider just how much labor goes into manual entry and processing during the spreading process. It’s not hard to imagine scenarios in which loan officers overburdened with manual processes might let things slide when it comes to traditional credit discipline practices.
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Imagine a different scenario, one driven by automation— a responsible loan officer would be better positioned to engage in the foundational practices that ensure application and loan integrity.
Better Data Through a Single Pane of Glass
Not only do lenders have more time to ensure the quality and legitimacy of applicants, they have better data by which to do that.
This consistent and accessible data across a financial institution is not just convenient, but also essential to quality fraud detection and reduction. In a 2018 survey conducted by iSMG Information Security, an inability to collaborate on cohesive data across a financial institution is one of the top barriers to improving fraud prevention efforts. In other words, that ‘single pane of glass’ on application data is providing a key element in successful fraud detection.
FlashSpread can quickly identify inconsistencies in an application, even identifying CPA errors in many cases. Inconsistencies such as these can serve as essential and early red flags that identify fraud before it goes too far.
Creating a Multilayered Approach to Digitization
One critical feature in any quality solution used in lending today is that it can “play well with others.” With easy integrations and APIs, today’s automation solutions can work together to create a multipronged approach to fraud detection. Outsmarting those intent on perpetrating fraud in lending requires having the right tools layered in a way that streamlines internal processes at your financial institution. Advanced spreading and identity authentication solutions combined and layered to deliver a 360-degree view on application data is the best approach. Digital solutions, including FlashSpread, will ameliorate this pain point for financial institutions of all sizes and stripes.