Supercharge Your Loan Process with an Automated Business Rule Engine

Business processes are getting more complex every day. You’ve got business decisions to make with data flying in from all directions, and pressure to move fast while staying compliant and consistent. The solution is an automated business rule engine, also known as a BRE, to help in decision management.

With the growing adoption of digital workflows in loan approvals, the use of an automated business rule engine has become important for business needs. This helps to streamline the operations of financial institutions and stay competitive in the financial sector. However, many organizations still struggle with understanding what BRE is and its regulatory requirements.

Automated business rule engines are a game-changer for modern lending businesses and their stakeholders. Business analysts can start using an automated business rule engine for complex decision-making without needing to code a single line.

An automated business rule engine can save your time, boost accuracy, and give your team more control over business logic than ever before. BREs are increasingly being adopted by financial institutions and Fintechs for decision automation, reducing risk, and improving agility. MarketsandMarkets reports the global Business Rules Management System (BRMS) market will grow from $1.0 billion in 2020 to $1.8 billion by 2025, at an 11.8% CAGR.

In this blog, we will explain automated business rule engines and their purpose. We will also discuss how an automated business rule engine works and how it helps with customers.

What is an Automated Business Rules Engine (BRE)?

Business rules are statements that will guide the proper functions of your business. They basically define what, where, when, why, and how something must be done within an organization. This ensures that rules are followed without any ambiguity. An automated business rules engine is an application that manages decision processes using pre-defined decision logic to determine outcomes. Business users can adjust these to allow quicker rule changes in response to evolving business or regulatory needs.

Using an automated business rules engine helps with automated and precise decision-making. This enables lending businesses that use complex logic to identify outcomes, thereby optimizing efficiency and scalability. This decision logic should be based on specific scenarios and parameters to support effective risk assessment and adaptability.

How does an Automated Business Rules Engine Work?

• The business rules engine receives input data from various sources, including an existing system databases, user input, and sensor data, to streamline operations.
• It processes the input data according to a set of pre-defined rules. These rules are typically stored in a ruleset, a collection of rules that the rules engine uses to make decisions.
• The business rules engine executes the rules in the ruleset in a predetermined order. The rule execution order can be based on the priority of the rules, the dependencies between the rules, or other factors used in the banking industry.
• Based on the input data and the rules that have been executed, the automated business rule engine produces an output. This output can be a decision, a recommendation, a course of action, or a result.

Automated business rule engines are used in business process automation, customer service, fraud detection, and data analysis. They are often used in conjunction with other software systems, such as databases, machine learning algorithms, and visualization tools. This enhances the decision-making processes’ ability to handle complex decisions.

How Automated Business Rule Engines Improve Customer Experience

The adoption of automated business rule engines in the financial services industry has transformed the way customers start their loan services journey. Below, we have discussed how a BRE improves the customer experience at every step of the loan lifecycle.

Instant Application Processing

A major factor that impacts customer satisfaction is the speed of decision-making. With the help of an automated business rule engine, the process of moving a loan application from submission to approval becomes faster. The BRE instantly reviews eligibility, credit scoring data, income, and compliance requirements by applying pre-set rules. Unlike traditional systems that need application code modifications, this setup saves development time. All this makes the user experience smooth and stress-free by reducing the loan approval time.

For example, when a customer submits a digital loan application, the BRE automatically validates their information through REST API integrations. It also runs credit scoring checks against risk matrices using decision trees. Finally, the BRE uses decision tables to evaluate their eligibility for various loan products, and all this happens in seconds. Modern no-code and low-code platforms ensure that complex rule logic can be used without requiring extensive technical expertise, thereby enhancing ease of use. BREs also improve operational efficiency, and with the help of audit trails, the customers get clear responses and know exactly what to expect next.

Consistency and Transparency

Different branches apply various rules and regulations, which can be confusing to customers, leading them to leave the process midway. But an automated BRE processes the same application against a uniform set of criteria and logic to remove any variances. An open-source solution provides transparency to both the lenders and the borrowers about the lending process.

The user-friendly interface of an automated BRE has interactive dashboards and notifications to help customers track their loan applications. Instead of uncertainty, borrowers are kept informed, which helps reduce anxiety and boosts overall customer satisfaction.

Personalized Experience

One of the greatest advantages of automated business rule engines is the ability to deliver personalized experiences. It segments customers by financial profiles, risk levels, and other factors, and offers loan products that match their specific needs.

AI-powered BREs also examine behavior and transaction patterns to recommend loan amounts or repayment schedules that suit the customers’ needs. API connectivity and real-time data analysis help create such personalization that makes a customer journey feel uniquely relevant and valuable.

Reliability in Underwriting

A fully manual loan process is prone to human error. It can happen due to an incorrect data entry, misinterpretation of policy guidelines, or simple oversight. This leads to delays or costly mistakes, affecting both the customer and the lender. Automated BREs reduce such risks with rule-based processing for consistent underwriting decisions.

This reliability boosts customer confidence, making customers believe in the lender’s professionalism and commitment to fair outcomes. A lower error rate also means a smoother experience for applicants with fewer disputes or rejections.

Better Support System

A better customer experience isn’t only about a better loan processing experience. It extends to the support and service provided before and after a transaction. With an automated BRE, financial institutions can set up proactive communication rules. It helps alert customers to upcoming payments or policy changes. Automated notifications and reminders keep borrowers from missing deadlines.

Automated BREs also facilitate fast and contextual responses to customer queries through CRM integration. For instance, if a borrower contacts support about repayment options, the system can instantly give personalized advice. The result is not just faster problem resolutions, but more relevant and meaningful support.

Compliance and Risk Management

Regulatory compliance is an important aspect of finance that affects every customer. Automated business rule engines make sure that rules remain up-to-date with changing laws. It instantly applies new policies or alerts when necessary. This protects customers from invalid products or out-of-date offers. Also, the financial institution gets to protect itself from unexpected penalties.

Additionally, automated fraud detection rules flag suspicious applications and make sure the lending process is safe and secure. BREs reinforce trust between customers and financial institutions by handling risk reliably and transparently.

Adaptability for Continuous Improvement

Automated BREs are highly adaptable to market changes, evolving customer needs, and frequently updated regulations. This allows new rules, product offerings, or support procedures to be deployed without major technical changes. 

Financial institutions can analyze customer feedback and system data to refine BRE rules and provide better service over time. Whether expanding to new markets, updating credit scoring, or launching new products, automation helps lenders to implement changes that matter most to their customers quickly.

Conclusion

Customer experience in the banking ecosystem is just as important as competitive pricing and risk management. Automated business rule engines provide banks with the reliability, timeliness, and versatility necessary to satisfy, or even go beyond, the growing customer demands through the application of advanced process automation and underwriting capabilities. Through the simplification of loan procedures, service customization via CRM integration, and the provision of fair and open results along with comprehensive audit trails, BRE has been redefined as a lender department that provides the best user experience.

Financial institutions that continue to install open-source and proprietary solutions in their technology stacks will reap the benefits from those who have firsthand experience with the decision to adopt an automated business rule engine and implement a no-code platform. Such organizations will establish a new standard for digital lending excellence, creating conditions for clients to make informed choices based on their specific requirements.

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FAQs about Automated Business Rule Engines 

• What are the core tools of the business rule engine?

  A business rule engine is a suite of services and components that apply advanced logic and automate complex decision-making. The engine contains three core tools: expression sets, decision matrices, and decision tables.

• What is the purpose of a business rule engine?

  A business rules engine automates complex processes, by transforming manual workflows into efficient and automated responsive systems. Setting rules puts goals into action within a business’s applications, turning them into decisions and outcomes.

• Why is it useful to automate business practices?

  Since automating processes accelerates your internal operations, it’s easy to save time and money on the resources needed to complete those processes. Also, you can re-task those employees previously assigned to manual efforts to more important matters.

• What is the use case of BRMS?

  A BRMS has a set of features that allow it to capture, store, manage, and execute business rules. It is used to define and control how business processes are executed, including tasks such as data validation, calculations, decision-making, and other related activities.

• What is the purpose of a business rule?

  Business rules describe the operations, definitions, and constraints that apply to an organization. Business rules can apply to people, processes, corporate behavior, and computing systems in an organization. They are put in place to help the organization achieve its goals.