Community banks face competition from large national and regional banks, credit unions, as well as FinTechs and online lenders. In the face of so many competitors, what can banks do to attract more commercial loans and build their lending business? A strategic place to start is commercial loan automation.
Three parts of the commercial lending process you should automate first
1. Loan Pipeline Management
Why? You may be missing opportunities and duplicating efforts because you don’t have a snapshot of all the deals and their status in your loan origination process – from application to underwriting, approval, and closing.
How does loan origination automation create a competitive edge? As you often need to act fast to close more deals, you should consider software that offers policy-driven pipeline management that allows rapid digital approval.
2. Credit Administration
Why? Because manual workflows can lead to a lack of coordination between departments, with critical credit action changes such as risk ratings and charge-offs getting lost in a black hole.
How does loan automation create a competitive edge? Collaboration is increased across the bank. Multiple departments can easily view statuses, and more importantly, there is a simple online audit trail showing bankers and regulators that the bank is complying with its credit policy.
3. Portfolio Management
Why? With a daily snapshot of your entire portfolio, the bank’s leadership team can monitor key metrics and drill-down on specific loans.
How does loan automation create a competitive edge? This helps ensure that day-to-day activities are aligned with commercial lending strategy, and that portfolio risk is highlighted at all levels.
Commercial loan automation software gives community banks a competitive advantage
Community bank lenders face multiple obstacles that automation can address. These include streamlining an otherwise long, manual loan origination process; reducing the effort it takes to qualify a borrower and structure a credit; and, once a loan is underwritten – monitoring, servicing, and reporting on the portfolio. Automation can also help reduce the cost of manual labor, minimize errors from multiple handoffs, and connect the potentially siloed systems of related departments such as underwriting, compliance, operations, and credit administration.
Features community banks should look for in a commercial loan automation system
– Integrate seamlessly with your existing document management system with one-click access to all account and customer related documents
– Offer “self service” reporting, making it easy for all users to quickly ask questions and get answers without consulting IT or writing complex queries
– Automatically discover customer and loan relationships by analyzing information from your bank’s core system, allowing you to see the complete picture and adjust if needed.
– Visualize customer relationships in an online interactive diagram. Relationships can then be modified or augmented in lockstep with customer changes.
Benefits of an automated loan management system
The move to loan origination automation provides an opportunity to evaluate and streamline your institution’s loan process and workflows. As Forbes noted in a recent article, “Banks need to transform their processes, not just make existing practices digital, said Shanker Ramamurthy, global managing partner for banking & financial markets at IBM Consulting.”1
Simply put, loan automation software helps community bankers work more efficiently and effectively. By leveraging connected systems, consistent workflows, and easier access to data for managing, monitoring, and reporting, your community bank will be better prepared for increased competition, new regulatory requirements, and higher customer expectations for credit solutions and service.
How to get started with automating your commercial loan processes
In a recent report, the IBM Institute for Business Value identified key success factors in increasing a bank’s competitiveness. “Engage ecosystems of partners to fuel faster innovation and efficiency” was one of six best practices. The report went on to note, “Only 26% of overall survey respondents indicate that an ecosystem of partners always actively participates in products and services innovation.”2 To accelerate your progress, an experienced software vendor can help you efficiently deploy loan automation software that meets your unique needs.
If you liked this article, consider: Streamlining Your Commercial Loan Pipeline.
Sources: 1,2 Banks Need Digital Business Transformation To Thrive (Survive?), Forbes, October 31, 2022
