Business lenders are taking three and a half hours to process each loan without open banking technology, research claims.
Analysis by open banking provider Yolt Technology Services, found that 6,258 loans are processed by small – and medium-sized enterprise (SME) lenders each year, meaning they spend 21,903 working hours just on working through applications.
A survey by YTS found the average SME lender will invest £530,053 into loan processing, accounting for staff time and administration costs.
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From initial application to payment, this takes an average of 16 days, largely due to bottlenecks caused by applicants as they assemble the necessary proof to complete the process, YTS said.
YTS claims that open banking can reduce the time to “mere minutes” as it removes much of the manual process because account and credit information can be viewed digitally.
“Both lenders and applicants want a frictionless process from application to decision to payment, however the current system that requires the manual intervention by both parties is both inefficient and frustrating.” Jack Tenwick, head of UK sales for YTS, said.
“Through the power of open banking, relevant data is automatically uploaded and processed, saving time for both parties and reducing the risk of decisions made in errors.
“For lender businesses, this means that not only can they offer a superior customer experience but that their own capacity for growth is greatly increased.”