Strategies, Best Practices and Thought Leadership

Be the GOAT and Other Acronyms That Apply to Your Lending Workflow

Marie Curie. Mahatma Gandhi. Mother Teresa. The Beatles. Jerry Rice. 

While lending workflows don’t typically inspire generations like these GOATs (Greatest of All Time), the digital transformation of your lending process can help you exceed your customers’ expectations. Below are a few quick tips for your bank or credit union to bring its digital lending practices up to speed.  

IRL- In Real Life 

In our ever-evolving world of banking, clients need decisions and fast. They also want decisions on their terms, at home watching Netflix completing the application for their loan online from their tablet at 8pm. If you remember back to our blog in December, the younger generations aren’t going to branches anymore. That means more digital transformations for financial institutions and more convenience for your clients to meet them where they are. Heck, I say put them to work! Have them complete that loan application online, flow that data into your loan origination system (LOS) and BOOM! Commercial lenders can make a decision based off of the third-party data already provided and the information from the loan application. None of your lenders even had to lift a finger. Talk about savings, removing that from the list of tasks you are paying your team to complete, speeding up the underwriting process, not to mention the reduction in risk with the flow of data in the lending platform. Workflow automation with origination software is key to upgrading your lending process. 

ICYMI- In Case You Missed It  

Each institution has limits and regulators want us to follow them within the lending solution. Why make rules (credit policy) if you are going to continuously break them? Not to mention ensuring the policy is being applied consistently. Utilizing loan servicing technologies allows you to be even more transformative with your processes in the commercial lending business. Consistency, reduction of risk and eliminating the rekeying of loan data creates a more efficient business lending process, meaning more benefits for your financial institutions.  

Take for example, the loan your client or prospect applied for online. The data flowed and moved for you with the workflow automation, the business rules engine in the loan origination system reviewed key factors of that borrower according to your credit policy and made a decision. Great! Now what? We close the loan and it’s boarded onto the core. Now how do we monitor that loan we decisioned? Easy…no more excel spreadsheets or waiting for a report to generate from the core. That data is at your fingertips and can be sliced and diced in a way that makes it easy for you to monitor. Not to mention that all important review with regulators that want to know how you manage your process. Make technology work for you!  

FOMO- Fear of Missing Out  

You might be asking “But what about those that had a score below our threshold and may have mitigating factors? And what about the personal touch and relationship with our clients?” With automation does not come a loss of personal touch or white glove service.  This is where grey area strategy comes in to play. Hopefully you have historical data of loans you have approved along with the decision factors utilized. In this data you would find you have a group of grey area loans and perhaps some trends that fell below some of your guidelines. Grey area strategy (which is built into the solution) allows for that personal touch. Utilizing those mitigating factors: high liquidity, low loan to value, substantial net worth or the presence of collateral that would be abundance of caution. On the contrary, automation can lead to the instant gratification expectations our clients are demanding. They can receive an answer on their loan request, or we can send them their loan docs for electronic signatures that they can sign as they wait for their 2-hour delivery from Whole Foods on Amazon prime.  

NBD- No Big Deal  

You don’t want to use this strategy for all deals.  While most adhere to the 80/20 rule- solve for 80% of the loan requests in your portfolio, what about the 20% that makes up 80% of your total portfolio size? There are probably larger more complex loans that you have in your head, and you might be saying to yourself, “No way that can a solution understand the nuances of a deal like this” and you are probably right. Credit decisions based off of bureaus and business rules are meant for loans under a certain threshold that you, the banker, would consider a “normal” loan.  Our powerful rules engine in our suite of products allows for segmentation of the portfolio, creating different workflows for different loan sizes and types as well as the corresponding requirements. We help you have a phased strategy approach, utilizing our Subject Matter Experts on our team to help drive a more efficient and competitive business. Not to mention giving you the ability to address those smaller loans faster, so that your underwriting team can do what they are best at, working larger and more complex loans.  

Be fast, efficient, consistent and still deliver for your customer and their expectations regardless of the type of loan request. BE THE GOAT in small business, consumer, and commercial loan origination!   

 

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Topics: Market Trends, Small Business Lending

Jennifer Foraker

Written by

As a Solutions Consultant at Baker Hill, Jennifer collaborates with the sales team and clients to give knowledgeable insights into Baker Hill NextGen® products. With 18 years in the banking industry responsible for both consumer and small business processes for banks of all sizes and previously serving as a Loan Operations Manager, Jennifer’s areas of expertise include small business loans, SBA lending, construction loans, operations management, regulatory documentation and portfolio management.

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