How many spreadsheets does it take to process a new construction loan? Far too many. The old adage “if it ain’t broke, don’t fix it” comes to mind, but sometimes we don’t know something is broken until it’s fixed. As with everything in the modern world, processes are digitizing, especially for banks in a competitive market. Banks across the country are beginning to feel the strain of the inefficient “old way” of processing and maintaining loans and many are beginning to realize that a boost in efficiency would benefit the bank in multiple ways.
Borrower Experience
Keeping and maintaining great borrowers is one of the best ways to ensure your survival and profitability. As more and more financial institutions are getting acquired or changing hands, offering an exceptional borrower experience is becoming a top priority. What do borrowers want? Less hassle and what they want when they want from any device they prefer. Mobility and automation cut down on borrower effort and leave them with a pleasant experience rather than a headache. To ensure borrowers return to your bank it is key to focus on their experience.
Risk Management
The more real-time information your bank can have, the more protection you can provide to the bank and our shareholders. Having a digital system at your fingertips with text alerts and detailed audit trails can keep your staff better informed and protected than the manual, spreadsheet-based process. Real-time reporting and overfunding alerts help institutions identify and mitigate risk quickly before it becomes a problem.
Increase Draw Interest
Who couldn’t benefit from a decrease in cycle time? An increase in draw interest? If you could decrease cycle time and increase draw interest while increasing staff capacity, wouldn’t you? Banks are turning to technology to accomplish all of these goals. The more efficient your staff is, the more loans they can manage safely and comfortably, and that gain is passed on to the bank’s bottom line. Each day we save in the process is a big boost to draw interest. In these rate environments that are more important than ever.
Conclusion
The great digital change has finally made its way to banks of every size. It is no longer a “big bank” privilege. It is the responsibility of every bank. Even banks that are not intent on hyper-growth are realizing that to stay competitive and retain quality borrowers, they need to adapt and adopt new technologies. The good news is that technology solutions are getting easier and easier to implement. Gone are the days of the months-long implementation process. Today’s systems are mobile and cloud-based, meaning they can be accessed from anywhere, with no downloads and installations necessary. As technology advances these efficient systems will become a part of our everyday lives, in more corners and more sectors than ever. Consolidation and the threat from disruptive fintech lenders are here to stay. We owe it to our shareholders to build modern, borrower-friendly efficient processes.
- Matt Johnner, president of BankLabs and board member of Encore Bank.
