Tue, Feb 28, 2023: Two persistent problems in securing commercial loan documents

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Unlocking ROI: Harnessing AI for Streamlined Loan Applications and Onboarding

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Optimizing operational efficiency and curbing costs is paramount for lenders in the dynamic landscape of commercial lending. The emergence of artificial intelligence (AI) presents a transformative opportunity to revolutionize the loan application and onboarding processes. By leveraging AI technologies for document collection, review, and cross-checking, banks can achieve remarkable gains in efficiency while reducing operational costs. 

Enhancing Efficiency through AI Document Management:

Traditional commercial loan applications entail a laborious manual process of collecting and scrutinizing a plethora of documents, demanding extensive time, knowledgeable personnel, and resources. However, with AI-powered document collection systems, banks can automate the retrieval and organization of pertinent documents, expediting the application process significantly. Based on data from the industry, it costs an average of $12,000-$15,000 to book a loan, while application and onboarding expenses comprise $3,000-$5,000 per loan. Not to mention the additional costs of servicing the loan annually, estimated to be between $1,000-$2,000. Financial institutions can reduce these costs, minimize errors, and enhance operational efficiency by implementing AI solutions.

Streamlining Document Review and Cross-Checking:

AI holds immense potential to streamline document review and cross-checking, critical steps in loan origination. Financial institutions can automate document analysis by employing AI, Machine Learning, and Natural Language Processing to assess completeness, accuracy, and compliance with regulatory standards. AI-driven systems can significantly reduce expenses associated with manual review and cross-verification while enhancing accuracy and mitigating the risk of fraud.

Reducing Operational Costs:

Adopting AI-powered document management systems translates into substantial cost savings for financial institutions. By automating document collection, review, and cross-checking processes, banks can allocate fewer resources to these labor-intensive tasks, freeing up staff to focus on higher-value activities. With reduced reliance on manual labor, operational costs related to loan origination, such as staffing, training, and supervision, can be significantly minimized. Moreover, AI-driven systems process documents at an accelerated pace, shortening decision-making timeframes and enhancing customer satisfaction.

Calculating ROI:

Assessing the potential ROI of implementing AI in the loan application and onboarding processes relies upon only a few factors:

  • # of commercial loan applications per year 
  • The average cost of each loan application and onboarding process ($5,000)
  • # of commercial loans in the portfolio
  • The average cost of servicing each loan ($2,000)

Example calculation for a $500M Community Bank

  • 50 commercial loan applications per year
  • $3,000 application and onboarding costs per loan

Total Cost for Loan Applications and Onboarding: 50 * $3,000 = $150,000

  • 200 commercial loans in the portfolio
  • $1,000 average cost of servicing each loan

Total Cost for Servicing Loans: 200 * $1,000 - $200,000

Total Cost of Applications, Onboarding, and Servicing Loans: $150,000 + $200,000 = $350,000

These include the costs could be reduced by 50% by integrating AI technologies. By analyzing the reduction in manual labor costs, faster loan processing times, and enhanced accuracy in document review, financial institutions can estimate the ROI of their AI implementation.


Embracing AI technologies for document collection, review, and cross-checking in loan applications and onboarding offers immense benefits to financial institutions. By leveraging increased efficiency and reduced operational costs, banks can achieve higher productivity, improved customer experiences, and stronger risk management. While initial investments are necessary, the potential return on investment, driven by cost savings, accelerated loan processing, and heightened accuracy, make AI implementation a compelling choice for forward-thinking financial institutions seeking a competitive edge in the market.

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