Underwriting Automation: Revolutionize CRE Lending

In commercial real estate (CRE), underwriting is the foundation for risk assessment, profit calculation, and lending decisions. As new technology continues to disrupt industries, underwriting in both CRE and insurance companies is undergoing a major transformation through automation. 

This article will explore how underwriting and process automation are changing CRE lending by simplifying workflows, making decisions with real-time data, and optimizing profit through better customer experiences. 

We’ll examine the technologies, such as artificial intelligence (AI) and machine learning (ML), driving this change and how Blooma uses them to speed up and improve accuracy. 

What is Underwriting Automation?

Underwriting automation is a major shift in the CRE lending space. It automates the traditional underwriting process through technology. At its heart, automated underwriting systems use AI and ML to speed up and improve the evaluation of loan applications and portfolios.

Not to be confused with automated insurance underwriting, underwriting in CRE involves assessing the risk of loan applications, a task that has historically been manual and done by human underwriters. 

This involves gathering extensive financial data, conducting risk assessments, and making underwriting decisions based on established criteria.

Automated underwriting systems streamline this process by automating repetitive tasks like data entry, verification, and analysis. By using real-time data sources and complex algorithms, these systems speed up and improve underwriting decisions while ensuring customer satisfaction. 

For example, Blooma integrates with leading data providers end-to-end, so lenders have access to the most up-to-date and accurate information available, reducing reliance on old or incomplete data.

One of the big benefits of underwriting automation is its seamless integration with existing underwriting workflows. Rather than replacing human underwriters, these systems support their expertise by eliminating time-consuming data processing and allowing them to focus on complex analysis, decision-making, and the customer journey. 

Plus, by reducing human error in manual tasks and ensuring compliance with regulations, underwriting automation makes the decision-making process more reliable and transparent.

The Need for Automation in CRE Underwriting

Traditional and manual underwriting processes have long been plagued with problems. To address these inefficiencies, automated underwriting has become the solution to modernize and optimize CRE underwriting.

The challenges include:

• Manual Data Entry: CRE underwriters spend a lot of time manually entering and validating data from multiple sources. This is time-consuming and prone to errors which can impact underwriting decisions.
• Long Decision Times: CRE deals are complex and require thorough analysis and evaluation, which means long decision times. Delays in getting and processing information can impact responsiveness to market and competitive pressures.
• Human Error: Despite human underwriters’ expertise, manual data handling introduces the risk of errors that can compromise underwriting assessments. These errors can result in mispriced loans or missed opportunities for banks.

So, what is the use case for moving to automated systems?

• Speed and Efficiency: Automated underwriting systems reduce processing time by automating data aggregation, verification, and analysis. This allows banks and lenders to fast-track the loan approval process and grab market opportunities.
• Data Integrity and Accuracy: By connecting to real-time data sources and using advanced algorithms, automated systems improve data integrity and completeness. Underwriters have access to up-to-date and complete information to make better decisions.
• Cost Savings: Automating repetitive tasks not only increases operational efficiency but also reduces the overhead costs of manual tasks. Banks can dedicate resources more optimally and focus human expertise on strategic analysis and relationship management rather than administrative tasks.

Blooma: Leading the Charge in Underwriting Automation

Blooma is a game changer in CRE underwriting. It automates tedious tasks and augments human expertise with AI-driven insights. Blooma turns traditional underwriting workflows into dynamic data-driven processes that adapt to market demands in real time.

Here are the top features to know:

1. Automated Document Processing: Blooma automates the extraction and analysis of critical information from various documents, such as financial statements, property records, and legal documents. This reduces manual effort, accelerates the review process, and ensures timely and thorough assessments.
2. Advanced Risk Assessment Models: Using machine learning models, Blooma enhances risk assessment by analyzing large datasets and identifying patterns that human underwriters may miss. This predictive capability allows for more accurate risk profiling and better decision-making.
3. Real-time Analytics: Blooma integrates with leading data providers to deliver real-time market insights and performance metrics. By continuously updating and analyzing data, Blooma equips underwriters with the latest information to optimize portfolio management and mitigate risks proactively.
4. Customizable Workflow Automation: Blooma offers customizable workflows that streamline underwriting processes from initial data collection to final decision-making. Automated task management and notification systems also make sure there’s proper collaboration among team members.

Impact of Underwriting Automation on CRE Transactions

CRE loan applications mean lots of documents and even more data collection. 

Underwriting automation makes that stage easier by automating doc processing and data input. For example, Blooma’s automated system extracts and analyzes financials, property records, and more from documents. That means less manual work and more data for underwriters to review.

Automation is more accurate because algorithms analyze all the data. Machine learning models on platforms like Blooma look at historicals, market trends and borrower profiles to give underwriters insights to make decisions. 

This means less judgment, less human error, and more consistency.

Automation reduces approval time by making workflows faster and bottleneck-free. Tasks that took days or weeks to do can now be done in hours. That’s more efficient and happier customers.

For example, you can request our case studies and see how financial institutions using Blooma have seen processing time reductions. Automating underwriting and getting real-time data updates means lenders can respond faster to market and borrower requests. That’s faster time-to-close and more competitive advantages unlocked.

Integrating Blooma Into Your Underwriting Process

Blooma automates data aggregation, risk, and decision-making with AI and machine learning. 

Before you get started, you need to learn what Blooma does and how it fits with your underwriting goals and workflows.

Technical Setup

1. Look into your current underwriting process and where automation can help. Set up objectives and KPIs for Blooma.
2. Connect Blooma to your existing data and systems. Blooma has APIs to many data providers for real-time data and analytics.
3. Change Blooma’s workflows to match your company’s underwriting rules and risk management guidelines, such as automated tasks, decisions, and notifications.
4. Train underwriters and others on Blooma. IT and end-users should work together to resolve any technical issues.

Organizational Factors

1. Have a change process for Blooma across the company. Tell stakeholders about automation and job changes.
2. Underwriters, analysts, and IT should work together to ensure decision visibility and feedback.
3. Make sure to focus on compliance and security first. 

Monitoring and Tweaking

1. Look at KPIs after integration to see how Blooma has changed underwriting, decision-making, and processing time. Leverage dashboards and reports.
2. Change Blooma’s setup and workflows based on feedback, the market, and technology. Stay informed about updates and features.

Enhancing Risk Management with Automated Tools

Here’s how Blooma improves risk management and uses predictive analytics to predict and optimize.

Precision in Risk Assessment

Blooma uses AI and machine learning to analyze vast amounts of data and produce detailed risk profiles for CRE transactions. By automating data collection and analysis Blooma ensures underwriters have access to accurate and up-to-date information so they can assess risk around borrowers, properties, and market conditions.

Predictive Analytics for Decision Making

One of Blooma’s key benefits is its predictive analytics, which predicts risks and opportunities before they happen. By analyzing historical data, market trends, and borrower behavior, Blooma identifies patterns that human underwriters may miss. This foresight allows financial institutions to adjust underwriting strategies, optimize loan terms, and mitigate risk from market fluctuations.

Operational Efficiency and Compliance

Automated risk management tools like Blooma simplify compliance by ensuring regulatory and internal policy requirements are met. By automating compliance checks and audit trails, Blooma reduces the risk of error and strengthens governance. This operational efficiency allows underwriters to focus on risk assessment and decision-making, not administrative tasks.

How does this all work in practice?

For example, Blooma’s integration with real-time data sources allows lenders to monitor portfolio performance in real-time. By receiving timely updates and alerts on key metrics such as occupancy rates, rental income, and market valuations, underwriters can identify emerging risks and take preemptive action to mitigate them. 

This proactive approach not only protects portfolio stability but also increases risk-adjusted returns for lenders. 

Win-win!

Transform CRE Lending with Blooma’s Automation

Did you know that 85% of companies have boosted their digital transformation with automation?

Now, it’s your turn to get on board with your own underwriting solutions.

When you add Blooma as one of your underwriting platforms, you get real-time data, analytics, and customizable workflows. That means streamlining for faster operations, saying goodbye to manual tasks, and straight-through processing for better decisions and happier customers. 

Are you ready to be a CRE lending leader?

See Blooma in action. Request a demo to see how it works for you.

Future-proof your underwriting with us. Get in touch today!