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Does your bank communicate effectively with loan customers?

Sageworks
November 1, 2014
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Being an effective communicator is something that many people struggle with every day. Irish playwright George Bernard Shaw once said that, “the single biggest problem in communication is the illusion that it has taken place.” Upon reading that, there are likely many people nodding their heads. But communication is not only an individual challenge. Businesses and organizations also need to be effective communicators, too. That may sound painfully obvious, but it’s a concept that businesses and organizations of all shapes and sizes can struggle with.

Banks need to communicate with their customers effectively 365 days a year – in their marketing messages, useful information on their websites, or in a face to face interaction with their tellers. One area in which many banks lack the resources to communicate as effectively as they might like is within the loan administration process. Inconsistent and informal communication among lenders and their loan customers is an area that is identified as weak for many institutions. All banks would like to say they can identify problem loans quickly, but this is a challenge for many. Most simply, many banks lack the manpower to manually flag loan issues at an early stage.

For many institutions, loan administration systems exist as a series of disconnected spreadsheets. Over the course of several years, with more data added, that spreadsheet can become cumbersome to decipher and be filled with errors. Additionally, the loan documentation associated with each spreadsheet may be stored in a physical filing cabinet – possibly not even at the same branch where the spreadsheet is housed. Consider a community bank that manages 150 loans per year. Said bank may only have one staff member dedicated to managing loan administration and its communications. That one staffer can easily become buried in paperwork, and unable to weed through it in order to see a potential bad loan.

 

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An automated loan administration solution can help to free up that community bank’s resources, not to mention the loan administrator’s time, which can allow them to dedicate more effort to manage the overall health of their loan portfolio. A Sageworks survey conducted earlier this year noted that approximately 68 percent of banks polled saw improved efficiency since implementing an automated loan administration solution.

Proactive communication notably benefits the customer, too. Reaching the client earlier about potential problems – identifying and then communicating covenant expectations, for example – allows bankers to be more transparent, and customers to be better informed. An informed customer is likely a happier one. Happy customers tell friends and colleagues about their positive experience. Those friends and colleagues run to that bank for a great banking experience, too. Happy customers equal a happy bank.

 
About the Author

Sageworks

Raleigh, N.C.-based Sageworks, a leading provider of lending, credit risk, and portfolio risk software that enables banks and credit unions to efficiently grow and improve the borrower experience, was founded in 1998. Using its platform, Sageworks analyzed over 11.5 million loans, aggregated the corresponding loan data, and created the largest

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About Abrigo

Abrigo enables U.S. financial institutions to support their communities through technology that fights financial crime, grows loans and deposits, and optimizes risk. Abrigo's platform centralizes the institution's data, creates a digital user experience, ensures compliance, and delivers efficiency for scale and profitable growth.

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