If ever there was a case to be made for increased digitization of the lending process, the recent COVID-19 directives asking everyone to stay home have made a pretty compelling argument.
Even while everyone is keeping their social distance, many important financial transactions must continue. Most people still need immediate access to their institution’s products and services, and that includes loans. Regardless of whether they can visit a local branch, consumers still expect responsive and seamless service.
Such service has been easier to deliver for community financial institutions that were already on the leading edge of digital transformation. But, now, increased digitization is an expectation for everyone. Here are three contactless lending technologies any FI can start using now to make life easier for their borrowers – and lending teams – alike.
Remote online notarization (RON): When all parties can’t be in the same room, RON enables a document to be notarized electronically using audio-video technology. Documents are shared electronically, and both the signing and notary processes occur face-to-face in a virtual environment.
Rules around ID validation vary by state, but RON rules always include specific measures that ensure validation is done properly. In most cases, the borrowers’ ID is validated through a Knowledge-Based Authentication (KBA) method.
eSignature: Both federal and state laws allowing the use of electronic signatures have been in effect for some time, though they have not been commonly used by many community lenders. Signing electronically or clicking to sign is as legally valid as a handwritten signature, sometimes referred to as a “wet signature.” An eSignature transaction is completed on an electronic device, such as a tablet (think: DocuSign).
eRecording: When a lender has closed a real estate loan, a deed of trust or mortgage document has to be recorded. Rather than snail mail the documents to the county recorder and wait four to seven days (likely longer during the COVID-19 response) for it to be recorded, why not digitize that part of the transaction, too? The LenderClose platform has eRecording technology built in, meaning lending documents are submitted and recorded securely and electronically in minutes instead of days.
Until now, lending industry processes hadn’t changed meaningfully since the 1930s. It’s about time. Just think how different our lives have become over the last 90 years (or even since the beginning of this year!).
The pace of change is accelerating, and now, we’ve been awakened to another new reality. Change is not always incremental. The COVID-19 pandemic forced near-immediate transitions to new ways of doing business, and there’s no telling when something like this will happen again. Financial institutions that implement these three technologies – especially while looking for other ways to progress – will be much better positioned for whatever comes next.