Olamide Famuwagun

When someone applies for a loan, it usually involves a lot of steps like filling out forms, checking details, and then finally getting the money. 

This can be slow and sometimes things go wrong because it’s all done manually.

Well, there’s a better way!  

Automated loan disbursement is here to slash the wait time.

Imagine getting the money you need fast, with fewer errors and a smoother process.  Technology steps in to handle the heavy lifting, so you can ditch the loan blues and get on with your plans.  

Sounds pretty sweet, right?

Let’s dive into how automated loan disbursement makes getting the funds you need a breeze!

The Problem with Manual Disbursement

Below are some of the problems involved in using manual disbursement: 

Time Delays

With manual disbursement, everything takes longer because it’s done by people, not machines. 

For instance, writing checks or setting up wire transfers can take days. Every step needs to be checked and approved by someone, which adds more waiting time.

Errors and Delays from Manual Data Entry

People have to type in all the information by hand, like how much money they need and their bank details. 

It’s easy to make mistakes, like typing wrong numbers or mixing up accounts. When errors happen, everything stops until they’re fixed, leading to more delays.

Security Risks

Manual processes often involve a lot of paper and human handling, which can increase the risk of losing important documents or leaking private information. 

If someone accidentally shares your details, it could lead to problems like identity theft or fraud.

These vulnerabilities can be a concern for both lenders and borrowers. Thankfully, advancements in financial technology have led to secure online platforms like Loanspot, which utilize high-tech security measures like encryption and secure identification to safeguard sensitive data throughout the loan process.

Speaking of disbursement, check out my guide on How Fintech is Revolutionizing Loan Disbursement and Collection

Benefits of Automated Disbursement

Speed

Automated loan disbursement systems significantly reduce processing time, allowing lenders to disburse funds faster to borrowers. 

This translates to quicker access to capital,  a benefit Loanspot prioritizes by leveraging automation in its marketplace model. 

If you’re a borrower in need of fast and efficient loan processing, consider exploring platforms like Loanspot.

Accuracy

A lot of mistakes are avoided with automation because it uses set rules and data checking. 

Computers don’t get tired or mix up numbers like people do, so fewer mistakes could happen when handling loans. The facts will be more accurate, and the whole process will be more solid.

Efficiency

Lenders can save a lot of time and money with automatic methods. 

From applying to getting the money, these methods make the whole process easier by cutting down on the amount of paperwork and work that needs to be done by hand. 

This means that lenders can handle more loans with fewer resources, which greatly reduces the costs of doing business.

Security

Automatic distribution can also be safer. To keep private data safe, digital systems can use high-tech security measures like encryption and secure identification. 

This makes sure that users’ personal and financial information is safe and lowers the chance of data breaches. 

How Loan Disbursement Automation Works

Loan disbursement automation transforms the traditional loan process, making it quicker, more accurate, and more secure. Here’s how it works:

Integration with Electronic Payment Platforms (ACH Transfers)

Automated loan disbursement systems are integrated with electronic payment platforms, like Automated Clearing House (ACH) transfers. 

This means once the loan is approved, the funds can be transferred directly to the borrower’s account electronically, reducing the need for physical checks and speeding up the access to funds.

Real-Time Verification of Borrower Information

These systems include real-time verification features that check the borrower’s information instantly. For example, they can automatically verify the borrower’s credit score, employment details, and financial history as part of the loan approval process. 

This instant verification speeds up the decision-making process and reduces the risk of errors.

Fraud Prevention Measures

Automated systems are equipped with advanced analytics and pattern recognition tools to detect unusual activities that could indicate fraud. 

For example, they can identify inconsistencies in application data or unusual transaction patterns that may suggest fraudulent activities. By doing so, these systems help minimize the risk of financial fraud and protect both the lender and the borrower.

In addition, automated loan disbursement systems offer numerous advantages, including the ability to manage the entire loan process from application to disbursement efficiently. 

They streamline operations by integrating with other financial and accounting tools, managing documents electronically, and providing comprehensive reporting and analytics capabilities

Lastly, they support the digital signing of loan documents and ensure compliance with relevant regulations and laws, enhancing the overall security and efficiency of the loan disbursement process.

Loan Disbursement Automation

There are a few important steps and things to think about when setting up an automatic loan distribution system. They include:

Assessment and Planning

To begin, look at how you currently pay out loans and figure out what parts could be automated. This means knowing how your work gets done, how many loans you have, and any problem areas, like delays or mistakes.

Cost

Setting up an automatic system costs money because you have to buy software, tools, and maybe even train staff. 

Think about both the cost of setting up and the cost of running the business. To make sure that the technology will save money in the long run, it’s important to look at the return on investment (ROI).

Concerns about Security

Since loan payment involves private financial information, safety is very important. Make sure that the automatic system has strong data protection features, like security, safe data storage, and access controls, to stop people from getting in without permission and stealing data.

Choosing the Right Automation Provider

It is very important to choose a trusted automation provider. Look for companies that have worked with banks before and can offer strong, safe, and expandable options. 

The service company should have good customer service and follow all financial rules.

Integration and Testing

The new system should work well with your current CRM, banking, and other systems that are similar. Before going live, all parts must be thoroughly tested to make sure they all work together quickly and effectively.

Training and Setup

Teach your employees how to use the new system correctly. To do this, they need to know how to use the automatic system to process loans, fix common problems, and deal with security measures.

Monitoring and Evaluation

As soon as the system is up and running, it should be constantly checked to make sure it’s doing what it’s supposed to do. Be ready to make changes based on comments and how the business needs change. 

Just before you go…

My experience in the financial world has given me an understanding that people believe the wrong things about their finances.

Here’s your solution to change that, check out my guide on debunking financial myths.

Conclusion

Automating the process of loan payment is a big step for banks that want to improve their service and business efficiency. Moving from human to automatic systems solves important problems like long working times, mistakes made by hand, and security holes. 

Lenders can offer faster, more reliable, and safer services by connecting to electronic payment systems like ACH transfers, verifying client information in real-time, and putting in place strong scam prevention measures. 

A visionary Nigerian leader, Abasiama Idaresit, is making waves as an exceptional leader in the tech industry. His company, originally Wild Fusion, has evolved into the powerhouse Wild Fusion Holdings. 

This entity spans Digital Marketing, Licensed Agency Banking, Fintech Infrastructure, and Digital Services, with operations in Nigeria, Ghana, and Kenya. Idaresit’s knack for surpassing benchmarks in the tech landscape of Africa is noteworthy.

Wild Fusion Holdings, under Idaresit’s guidance, has seen exponential growth from its beginnings as a digital marketing firm. 

Idaresit, a London School of Economics alumnus, shared insights on the company’s growth trajectory, stating, “Our ethos and organizational culture has been instrumental to our success and the expansion of our client portfolio. Quality Service and Products, Value to Customers, and Excellence are very key components of our DNA. These values are sector, geography, and market agnostic. We have retained a number of our clients for over ten years in Nigeria and Ghana. We have thrived and will continue to thrive despite facing significant challenges.”

The CEO highlighted Wild Fusion Nigeria’s vital role in Wild Fusion Holdings and detailed the extensive services offered across its locations, including Digital Strategy, SEO, and Content Marketing.

“We also have a licensed Agency Banking Subsidiary and Lending Infrastructure Company as our subsidiaries. These two fintechs are also key subsidiaries driving technology penetration across Africa. Excellence is a key cultural attribute of Wild Fusion and this we have embedded in our services and products including our training programs that have a particular module ‘Business Ethics’ with a strong emphasis on Excellence. Acculturating new hires and existing employees is very critical to delivering excellence,” he explained.

Facing business challenges head-on, Idaresit perceives them as catalysts for growth. He shared insights into the specific hurdles in Nigeria’s business environment, from stakeholder interactions to FX liquidity challenges.

The CEO said, “In a bid to find solutions to the highlighted challenges as a company, we modified our working hours making it a lot easier and flexible for our employees to work remotely. This we have seen has reduced the cost of commuting which was quite burdensome and improved our talent retention efforts. With our FX liabilities, we have been able to negotiate flexible payment terms and relied on our international operations to insulate or ring-fenced our Nigerian operation from the FX headwinds. These headwinds aren’t peculiar to Nigeria alone, the Ghanaian Cedis has had its fair share of FX fluctuation challenges. Having a diversified Holdco in product, services and geographical spread also helps in mitigating some of these risks or challenges.”

The tech guru envisions Wild Fusion Holdings continuing to fortify its commitment to Africa and technology, aiming for significant stakeholder returns.

With plans to raise funds for further consolidation and expansion, he is optimistic about setting global benchmarks in the African Technology sector, demonstrating his resilience and long-term success amidst challenges.