Discovering Time for Processes that Can’t be Automated

Today, professionals across all industries are feeling a sense of urgency to complete projects, serve customers, or check off tasks from the to-do list. After all, time is money. For financial professionals, this mantra holds especially true. Banks and credit unions must not only find ways to meet regulatory requirements efficiently from a time and cost perspective; they must also quickly meet changing customer expectations in order to retain and grow those relationships.

In Abrigo’s newest eBook, Agile Bankers: How Community Banks are Addressing Disruption, Risk and Growth, James Anthony, CEO of Martha’s Vineyard Bank, says that technology is driving transformation within the banking industry. He believes community financial institutions can utilize technology to save time and increase efficiency in certain functions so that employees have more time to provide the cornerstones of community banking: building relationships and making informed, local credit decisions.

“We are not trying to automate in order to replace people with technology,” Anthony says in the Agile Bankers eBook. “It’s about empowering and arming the people we have with technology so that we can get the noise of the day to day out of the way and they can focus on the more impactful things that human minds are good at addressing – those things you can’t automate.”

One of the major benefits of doing business with community banks is the personalized customer service and access to relationship banking that’s rarely found at larger financial institutions. However, some bankers face common roadblocks during the lending process. These include:

• gathering materials from the prospect in a timely and efficient manner
• tracking and managing documents throughout the approval process
• ensuring consistency from one lender to another during credit analysis.

The delays to a decision caused by these issues only increase the chance that the prospect will take their business elsewhere, and the inefficiencies only increase the cost to the lender.

In the past, some community financial institutions shied away from tapping technology due to affordability concerns. Today, however, savvy community financial institutions are capitalizing on their ability to purchase financial software on a per user basis and achieve advantages of scale that allow them to provide superior customer service and the modern conveniences that banking customers have come to expect. Here are a few ways that processes can be streamlined and financial professionals can be less distracted by mundane tasks.

Loan Applications – Stop chasing down prospects.

For banks and credit unions, processing applications should be the simplest part of the lending process. However, time and time again highly compensated lenders must chase down paper documentation from potential borrowers – and in some cases, guarantors or business partners. Following up or meeting with each prospect can be a time-consuming task, particularly when a single loan officer could be handling up to 75 relationships at one time and especially if those meetings prove to be inefficient because the client doesn’t end up having all of the required paperwork. According to a study on meeting productivity by the Harvard Business Review, 65 percent of those surveyed stated meetings keep them from completing their own work, and 71 percent say that meetings are unproductive and inefficient.

Furthermore, when traveling to meet with prospective borrowers, travel expense reimbursements can add up for banks and credit unions. Within an easy-to-use loan application portal, prospects can upload tax returns, asset account information and supplemental documentation at their own convenience – rather than meeting with loan officers during the daytime, when many applicants are busy running their businesses.

Loan Administration – Gain rapport with your clients

When you do a Google search for “credit decision complaints” what do you see? The search results page typically renders a long list of complaints regarding fair-lending complaints or local reviews regarding credit decision times and customer service. No financial institution – large or small – wants to be on the receiving end of negative feedback by prospects or customers, especially when access to those reviews are widely available. Most prospects – particularly young prospects – are hitting the search box before visiting your institution, and the demand for digital product offerings is increasing. According to McKinsey & Company, banking habits have continued to revolve around the use of digital banking tools. Fifty-six percent of bank customers would be willing to purchase banking products digitally, despite just 13 percent saying they have done so.

Abrigo has found that loan underwriting software can reduce the administrative workload by up to 35 percent through automation of client correspondence and steady tracking of documents, covenants and loan exceptions.

Loan Decisioning – Focus on the loans with the biggest upside

Loan decisioning affects financial institutions on multiple fronts – influencing how regulators judge underwriting as well as playing a key role in customer satisfaction and whether or not community financial institutions will win the loan to begin with, according the New York Federal Reserve. The 2016 Federal Reserve survey found that 45 percent of respondents complained of long waits for a credit decision. So what’s the hold up?

According to Neill LeCorgne, Abrigo Vice President of Banking and former President and COO of Regent Bank, several community institutions are not properly segmenting loans within the portfolio. He says loan applications can be streamlined by classifying loans based on the probability it will be approved – or loan pathing. Loans that have a low chance of approval or have a high chance of approval can be streamlined to a speedy yes or no using underwriting software. This loan pathing process saves time for credit analysts to focus on the loans that will maximize earnings and lenders to focus on booking more loans.

LeCorgne says, “When a loan is not bankable in its present state, an institution should make a speedy decision, respond to the borrower and move on.” In an upcoming whitepaper set to be released this month, LeCorgne details the benefits of loan pathing using financial software for community financial institutions.

For community banks and credit unions willing to take the leap toward technology, the lending process can be simplified and streamlined, effectively silencing the noise that most bankers must deal with at the workplace. The only question is, is your institution ready for its set of earplugs?