If you’re a small lender, you already know how crucial data is across the loan origination process.
But old and incomplete underwriting data holds you back: It increases the risk of defaults, and limits your ability to serve the right customer.
And if that’s not enough, many small lenders also overlook key data sets that can improve lending decisions and overall business performance.
Real-time, high-quality underwriting data gives you a precise and current view of loan applicants, so you can make the most informed lending decisions. With the right data sourcing structure in place, you get to expand your book of business, increase on-time payments, increase collection yields, and grow customer loyalty and retention.
In this article, we’ll show how the underwriting process has evolved, what real-time data really means for small lending institutions like yours, and how it drives ROI across the lending lifecycle. We’ll also look at new regulations and how real-time data can help prepare you for it.
Underwriting Automation: Why Real-Time Data Is the Missing Piece
Real-time data is live financial information that reflects a borrower’s current circumstances. It typically includes verified income, active cash flow, recent transaction behavior, and updated account balances.
Unlike with static data sources, you pull this real-time information directly from a borrower’s bank account activity (after they’ve granted you access), giving you a clearer, more dynamic picture of creditworthiness.
If you’re still relying on pay stubs, tax returns, or credit reports for all loan applicants, you may be basing decisions on outdated and incomplete information.
You might also fail to spot red flags like a recent job loss or a sudden spike in expenses, or miss opportunities to approve someone who’s financially stable but doesn’t fit the traditional mold.
Many underwriting automation systems often use the same stale inputs.
They tend to produce fast results though, giving the illusion of high performance. But they don’t necessarily help you make better decisions for the modern borrower. Real-time data fills that gap, providing timely, contextual insights that lead to more confident approvals.
So many loan applicants are now working multiple jobs, freelancing, or shifting between contract roles. Their income isn’t fixed, and their credit files might not reflect their actual financial health.
Real-time data helps you underwrite with far greater precision, based on how consumers are managing money today.
As far as operations go, you spend less time chasing paperwork, scrutinizing edge cases, or doing and redoing verifications. This translates to quicker approvals, improved risk analysis, stronger customer relationships, and better use of your workforce’s time.
The difference is measurable.
Real-time data reduces default rates because you’re working from a complete and current financial picture. It increases approvals while reducing risk, allowing you to serve more borrowers, including people who are underserved by traditional credit systems.
Comprehensive real-time data can position you to grow and access new markets, while actually removing complexity and improving your risk assessment process.
Taking Advantage of the CFPB’s New Open Banking Rule
In October 2024, the Consumer Financial Protection Bureau introduced a groundbreaking open banking rule that lets consumers securely share their financial data with their chosen lenders.
This rule could give your business a huge opportunity to grow, with real-time access to borrower income, cash flow, and transaction history from their financial accounts.
With the proper underwriting data technology, you can ensure you’re up to speed with this new regulation and ready to gather and interpret data that loan applicants grant you access to.
How Real-Time Data Drives Underwriting ROI
Lending software that works with real-time data makes every part of your underwriting workflow more effective.
The outcomes can include faster originations, reduced payment processing fees, and lower operational costs, adding to a more streamlined business primed for optimal performance.
Risk Assessment
Your risk models can only be as strong as the data feeding them.
Limited, static, and siloed data streams put you at a competitive disadvantage. Real-time insights give you a deeper, more precise, and current view of a loan applicant’s financial health and repayment ability.
You can see current income patterns, monitor account activity, and identify red flags that traditional underwriting processes can miss. This ability can be invaluable when working with borrowers with limited credit history or fluctuating earnings.
Ultimately, you’ll spot potential defaults early and adjust risk models accordingly.
Decision-Making
Live data helps your team make smarter, faster decisions. It creates consistency across approvals and enables you to shape lending policies around current financial behavior instead of rigid underwriting rules.
Live data helps your team make better lending decisions and adjust offers to fit the reality of a borrower’s financial life, here and now.
No longer a one-size-fits-all approach, comprehensive live data is the essential business asset that enables you to serve applicants with diverse financial lives, working situations, and needs.
Speed and Accuracy
Manual checks slow you down, cost more, and expose you to human error too.
Real-time data helps your team automate routine verifications and speed up decisioning, while protecting against default risk.
This leads to higher-performance outcomes, including fewer errors, quicker responses, and a smoother path and borrower experience, from application to approval and funding.
Bankuity’s ABV: A Real-Time Solution for Underwriting
Bankuity built Advanced Banking Verification (ABV™) for lenders like you.
It puts real-time financial insight at the center of your underwriting process, so you can move much faster, drastically cut risk, and grow your borrower base sustainably and with confidence.
Leading AI in lending, ABV connects directly to borrowers’ financial activity, providing you with a comprehensive suite of real-time financial data, enhancing decision-making and risk assessment.
Here are just some of the core data insights that ABV empowers you to access for each and every borrower applicant:
- Spending patterns: Detailed insights into borrower expenditures, highlighting trends and identifying potential financial risks.
- Income consistency: Verification of regular income sources and assessment of stability over time.
- Account activity: Monitoring of transaction frequencies, balances, and overall account health.
- Behavioral trends: Analysis of financial behaviors to predict future stability and potential risk factors.
- Real-time transactions: Immediate access to current transaction data for up-to-date financial assessments.
- Alternative financial data: Inclusion of non-traditional income and debt payments that your team might miss with conventional analyses.
Unlike generic data tools, ABV is designed for lending teams.
Conscious of the challenge of integrating new tools into workflows, Bankuity also designed ABV for ease of use and for teams to leverage immediately. There’s no complex onboarding or training involved.
What makes ABV different is its reach.
It supports your team beyond underwriting data, helping at every step of the borrower lifecycle.
During servicing and collections, you’ll be able to spot early signs of financial stress. For customer retention and increased business, you’ll have personalized insights to make the optimal offer for every customer, at the most opportune time.
By reducing manual effort and increasing the accuracy of your decisions, ABV helps you protect margins, serve more borrowers, and deliver the kind of experience that makes your lending business stand above and beyond your competition.
See how ABV turns real-time data into real lending results. Schedule a demo to get started with Bankuity today!
