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Streamlining the Credit Memo Process with AI

In the finance space, generative artificial intelligence (GenAI) has become a key player in changing the way commercial lenders do business. In particular, generative AI has the promise to automate critical aspects of the underwriting process – a process that has been historically wrought with time-consuming, manual tasks. A critical step in underwriting, the credit memo process is now streamlined with GenAI, for faster, more powerful credit decisioning.

Cumbersome Credit Memos Slow Decision-making

A credit memorandum (credit memo), also known as a credit write-up or credit summary, serves as a comprehensive document outlining the details of a loan application: the borrower’s financial history, creditworthiness, purpose of the loan, risk assessment and other relevant factors. Commercial lenders use this information to make decisions about whether to approve or deny a loan, as well as determine the terms and conditions of the loan.

The credit memo process requires a considerable amount of time and several steps. The amount of steps opens the door for delays and manual errors. And when it comes to lending, there is no wiggle room for error, as the credit memo lays out a summary with risks and considerations of a finance deal critical to making credit decisions. The accuracy of the credit memo ensures the accuracy of the loan as well. Plus, a properly prepared credit memo helps lenders comply with regulatory requirements, reducing the risk of regulatory penalties or legal issues.

Generative AI Helps Lenders Overcome Credit Memo Challenges

Decipher Credit’s new GenAI tool helps generate credit memos faster to eliminate the tedious manual work of underwriters having to input a slew of information into the document after painstaking analysis. Our GenAI tool instantly populates company information, analysis of financial statements, and analysis of accounts receivable to provide instant insight on borrowers for the underwriting team. With the click of a button, you can auto-generate several critical pieces of information:

  • The borrower’s company history – Get a snapshot of the company’s background, growth, key players, when it was founded and revenue figures (if publicly available).
  • Financial statements comments – Gain instant analysis of a borrower’s balance sheet and profit and loss, as well as accounts receivable and payables. Underwriters spend hours on this step manually analyzing financials and accounts receivable information to submit the credit memo to the credit committee.

Credit memos are very time-consuming for underwriters. They can spend days filling them out. GenAI significantly cuts down on the time required to complete certain steps, and gives the underwriter important insights they can use to speed up the loan processing time. Having access to key insights on the financials also helps lenders reduce chances of risk. In the fast-paced world of finance, turning days of work into mere minutes is a true game-changer.

Decipher Credit was designed to automate manual processes, increase accuracy and save time for both lenders and borrowers. To learn more about how our automated loan origination software facilitates lenders’ day-to-day operations—plus to stay up-to-date on industry trends—check out the rest of our blog.