How Loan Lifecycle Document Management Software Can Improve Operational Efficiency and Audit Compliance

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As a project manager within the banking industry, I’ve noticed an understandable hesitancy on the part of small and medium-sized banks to invest in document management software. Because banks are highly regulated and resources can be scarce, compliance-related projects often receive priority. In my years as an expert in this field, I’ve been asked many times, “is document management software worth it?”

I’ve encountered four common triggers that prompt banks to finally realize the answer is a resounding “yes.” These triggers can be categorized into the following: lack of space, decentralization, costly manual processes, and audit response issues.

How to eliminate the need for more storage space in banking

Because of both the required retention period and due to procedural needs, banks often need to keep loan documentation on hand. A bank with a growing base of active customers will find itself allocating increasingly more space for physical document storage, which will become more expensive over time.

All of this can present huge costs in storage, scanning, retrieval, and labor.

When there is a reliable way to both store and retrieve documents electronically through loan lifecycle management software, physical files can be stored offsite when needed and everything can be accessed through a centralized repository.

How banks can centralize their document management

Bank branches and departments often rely on decentralized repositories, such as different software systems, shared folders, and filing cabinets. Without an established process in place for storage and retrieval, this decentralization becomes even worse. This also creates a reliance on tacit knowledge over time, which makes collective procedural and storage knowledge worse when attrition occurs.

These issues are solved once banks decide to implement a loan document management solution. Users will agree upon a loan document structure, customized to the needs of the bank. Standard operating procedures for the storage and retrieval of documents are established. This includes regulating what documents should be uploaded, by whom they should be uploaded, when they should be uploaded, and in what format they should be uploaded.

This structure creates a secure central repository that is built to maximize daily operational efficiency and satisfy the needs of auditors and regulators.

How banks can reduce manual processes in document management

Because of the antiquated systems of some banks, manual processes can be more tedious, causing more time and money wasted. Banks may employ shared folders to store supporting documents, which causes reliance on manual inputs by staff, thus increasing both the staff time required for data entry as well as the risk of data entry errors. There is a limited amount of searchable metadata that can be attributed to the loan file folders when entered this way. Therefore, it becomes more difficult for users to search for documents across criteria.

Loan Lifecycle Document Management Software can process a data file from a system of record and automatically tag metadata within the files, allowing quicker retrieval processes through specific search criteria in order to find the documents they need. The quality checking is minimal as the data will result from the bank’s own core banking system, functioning as a single source of truth.

How banks can resolve audit compliance issues with document management software

It’s possible for banks to face longer dragged-out audits or examinations because of inconsistencies or missing documents. If an organization doesn’t have a central, structured system in place, it means there is no clear way to pull an inventory of what documents are missing and what documents are present. Required documents are not always structured in the same way, so there will either be inconsistencies in the submission or a significant effort to restructure documents to uniformity.

It requires more time and more money to package what should be viewable to external parties in addition to what should be viewable to internal parties for daily operations.

The establishment of a secure cloud-based data management system implements consistently structured documents and organized procedures to ensure audit readiness. During an audit, regulators will only interact with one portal and one login to see all the documents they need and only the documents they need.

GRM Information Management’s VisualVault is an excellent solution for Loan Document Management

The strength of GRM’s VisualVault solution lies in its flexibility to accommodate the electronic and storage retrieval needs of the different units within a bank. The intuitive nature of its document structures, which is reminiscent of the File Explorer used in most banks’ network shared folders, allows document management policies that arise out of the implementation to become understandable and enforceable.

The solution’s ability to ingest data files from the bank’s system of record reduces the need for manual data entry and expedites searches. All of the factors above, in turn, are what enable the solution to increase the bank’s audit readiness.

If you’re part of a bank that’s struggling to keep its documents organized or comply with audit requests, read more about loan document cycle management or contact us.
Post was edited by Ryan Hatfield

Patricia Jafar - banking
Patricia Jafar is a software project manager based in Los Angeles. She has over five years of experience in banking and seven years of experience in software implementations. She has worked in the United States, the United Kingdom, and Indonesia.


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