When it comes to the
Combining solutions built in-house and sourced from vendors, these banks find they can not only improve the client experience, but manage growth in lending without adding more staff or overburdening internal resources.
Most important, a more efficient commercial lending process reduces cost and improves a bank’s efficiency ratio, making it more appealing to investors.
“Customers today demand immediate answers and easy access to data, so as bankers, we must be able to respond to these preferences,” said Jason Shields, vice president and loan operations manager of Gulf Coast Bank & Trust in New Orleans.
“I think now with the way technology is, it’s made a venue where banks like us can compete,” he said.
Because of sheer costs, many
Technology gaps have even impeded loan growth. The $1.6 billion-asset Gulf Coast's total loans grew in recent years, Shields said, but management was afraid it was overburdening employees since most loan processes were manual and paper-based.
"I think now with the way technology is, it's made a venue where banks like us can compete," said Jason Shields, vice president and loan operations manager of Gulf Coast Bank & Trust in New Orleans.
Shields and his team first created a “home-brew” solution to automate much of the loan origination process. “It started us down this path of digitizing,” he said. “Before, it was just dropping paper files on people’s desks.”
He also wanted something to improve customer experience too, since commercial lending is a key component of Gulf Coast's business. So this year the bank invested in cloud-based lending technology from nCino, which itself was
Clients can now get quicker loans decisions and are able to file digital loan applications. Lenders now have their own dashboards that show information customized to their clients and sales pipelines. There’s also a social network aspect where loan officers can converse and assign tasks to assistants.
“No one needs to be in the same place at the same time anymore,” Shields said.
Technology that streamlines the client and employee experience is important for community banks to compete in commercial lending, said Frank Sorrentino, CEO of ConnectOne Bank in Englewood Cliffs, N.J.
“You want to remove the friction, decrease the amount of time to process information and make quick decisions on credit," Sorrentino said. "And you don’t want to keep asking the client for the same information at multiple different points in the process.”
It’s something community banks are starting to think about; this year Boston-based
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Flush with cash, many commercial firms are also opting to pay down debt rather than take on new loans, and those seeking financing aren’t always turning to banks to meet their needs.
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As banks press for deregulation, the debate over whether high bank capital standards are inhibiting loan growth has taken center stage.
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Improving back-office processes is often more valuable than customer-facing innovations, said Bob Meara, a senior analyst with Celent’s banking group.
“At the moment most banks are focused on user experience as if that’s the holy grail; yes it is important, but I really respect the banks that are saying, ‘Hey it’s not just about user experience, but let’s reinvent how we operate end-to-end’ and fixing the back office,” he said.
Digital workflows also boost employee morale, noted Sorrentino. “If someone comes in and starts their job and you hand them green-ruled paper and a pencil, they might start to think about what kind of job they’ve taken.”
There’s the benefit of an improved efficiency ratio for a bank as well, he added. “It can allow us to raise capital more effectively.”
Gulf Coast’s Shields noted community banks that digitize their processes are able to take on loans that previously would not have been profitable for them.
“Deals of a certain size didn’t make any money if we had to get humans involved,” he said. “Now with automating certain tasks, there’s not as many areas for humans to intervene.”
