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Lenders’ Obstacles: Many Manual Processes Despite Digital Pushes

Mary Ellen Biery
May 14, 2021
Read Time: 0 min

Data Entry, Documents Vex Busy Lenders in 2021

If your institution adopted more digital processes this year, you're not alone. But many lenders continue to rely on manual processes 


You might also like this webinar on the findings of Abrigo's 2021 Business Lending Process Survey.


Efficiency Emphasis, Too

Stepping up automation

If there was a gold medal for financial services, lenders have earned it in 2020 and 2021.

The Paycheck Protection Program’s (PPP) rollout and associated changes, then the next tranche of PPP, and the next, and now forgiveness (not to mention bankers’ work with some existing business borrowers to modify loans under government programs), have kept staff at banks and credit unions swamped for more than a year. These factors, most likely, have also kept most lenders deep inside their loan origination systems more intensely than at any other time in their history.

As has been widely reported, many financial institutions took the opportunity during the COVID-19 pandemic to digitalize some or many of their financial institution’s processes and services, including lending.

Abrigo’s 2021 Business Lending Process Survey, too, found that most respondents (53%) accelerated digital transformation plans as stay-at-home orders and other social distancing measures forced workers and customers alike out of branches or lending centers.

Largest lenders led digital push

Digital transformation varied somewhat by the size of the financial institution in Abrigo’s survey. Seventy-seven percent of institutions topping $10 billion in assets accelerated digital transformation plans as a result of the pandemic. That compares with:

  • 46% of respondents from institutions with $3 billion-$10 billion in assets
  • 50% from institutions with $500 million-$3 billion in assets
  • 52% from institutions with less than $500 million in assets

COVID-19 and related events also led many banks and credit unions to refocus on efficiency. Nearly half of respondents in Abrigo’s survey said their institution renewed an emphasis on finding efficiencies as a result of the pandemic.

And just as the larger institutions more frequently reported accelerated digital plans than did smaller institutions, a larger share reported a renewed efficiency emphasis than the share among smaller banks and credit unions.

However, despite digital pushes and efficiency focuses, lenders across the board in Abrigo’s survey reported their financial institutions use manual lending processes that add costs, create delays, and make their staff work harder than they must. Some of the same processes are also known for hurting lenders’ ability to drive loan growth, manage credit risk, and satisfy customers or members.


See how automation made lending easier and faster for one financial institution.

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Rekeying Blues

Repetitive data entry is top lending obstacle.

One example of processes that add costs, create delays, and make staff work too hard is repetitive data entry. Indeed, entering the same data multiple times or in multiple places was most frequently named as the largest obstacle to respondents or their institution in the commercial lending process. Thirty-five percent of those surveyed identified repeated data entry as the largest lending obstacle.

What’s the magnitude of repetitive data entry in business lending? Nearly two-thirds of respondents said their financial institution re-enters the same data point for a loan in another field or system up to five times. A quarter of respondents reported entering the data at least six times. In a similar survey by Abrigo in 2020, 20% of respondents said they entered data at least six times.

In addition, only 1 of every 3 respondents in Abrigo’s survey this year said their institution currently offers the ability to apply online for a commercial loan. Lenders with online applications are often able to port the borrower data across the origination platform, resulting in less repeat data entry. The good news is that a higher share of survey participants this year said they offer online business loan applications than did last year, when only 20% offered them. However, this year there were still 13% of respondents who said their institution doesn’t offer or plan to offer online loan applications in the future.

2021 Abrigo Business Lending Process Survey


Manual credit memo = more time

Another process typically tied to repeated data entry is the credit memo – unless it is automated.

Only 7% of financial institutions in Abrigo’s survey reported using an automated solution to generate the credit memo. Instead, nearly half said their institutions enter this critical information manually. Another 42% reported using a combination of manual and automated methods.

Manual credit memos were most prevalent among the largest institutions in Abrigo’s survey this year. Two-thirds of respondents from institutions with assets over $10 billion reported entering credit memo information manually, and the other third reported using a combination of automated and manual systems.

When a credit analyst must manually input consolidated borrower information, financial ratios, any global cash flow analysis, the assigned risk rating, proposed loan pricing, and terms of the proposed loan to create a credit memo the loan committee can review, they are often inputting data from disjointed systems over and over. Even using institution-created templates might not eliminate the need to cut-and-paste data, review for errors, and rewrite certain sections, depending on the template and loan. This time spent on administrative tasks throughout the life of the loan ultimately reduces the time an analyst can spend analyzing a business loan. Another potential consequence could be a longer processing time for business loans.


'Speed and consistency make or break a deal'

“Process automation is incredibly important in today's lending environment,” said Brandon Quinones, Abrigo’s Director of Client Education. “Speed and consistency will make or break a deal, so putting a system in place to drive that automation—enabling financial institutions to spend less time on redundant data entry or requests and more time on value-add activities—is something industry leaders recognize as no longer just an option for their business.”

Forty percent of bankers said it takes their institution between 9 and 24 hours to underwrite a loan. While 22% said their institutions could complete underwriting in less than a business day, another 19% reported a 25- to 40-hour window, and 7% said underwriting can take more than 40 hours.

2021 Abrigo Business Lending Process Survey -turnaround time

Including all processes, 46% of respondents said their financial institutions take at least five weeks to close a commercial loan. That figure includes many institutions (16% of respondents) requiring eight weeks or more.

Of course, banks or credit unions that focus on commercial real estate loans, which often require appraisals and entail more intense scrutiny than a small line of credit, tend to have longer turnarounds. However, the long wait time for a credit decision is historically the chief complaint among borrowers using small banks and credit unions for financing. And with the economic outlook improving, lenders looking to grow the business loan portfolio in the quarters ahead with credit-worthy borrowers will face tight competition for them.

One-Third Cite Issue

Document collection also a pain point.

Another ongoing obstacle to the lending process, according to survey respondents, is being able to collect required documents. A third said gathering business loan documents efficiently and consistently is the largest obstacle in their institution’s commercial lending process. This was also the most frequently identified top lending obstacle from respondents in Abrigo’s 2020 survey.

Asked about their biggest headache related to loan ticklers, the documents required for every loan file, 65% of respondents said it is tracking and following up on missing items. Only 17% of respondents said their institution uses automation for ticklers. 

Abrigo 2021 Business Lending Process Survey-lending challenges

In addition to gauging the current state of digitization and automation within financial institutions’ business lending processes, the Abrigo survey also assessed how banks and credit unions are approaching other areas of business lending, including pricing loans, assigning credit risk, and growing their portfolio. The results from the 2021 Business Lending Process Survey highlight the importance of institutions finding ways to overcome inefficiencies and inconsistencies in order to scale loan growth and manage risk.

Some processes clearly vary by institution size. For example, the highest share of respondents from institutions with more than $500 million in assets said they set prices on loans based on internal profit measures, such as return on assets or return on equity. But among lenders with less than $500 million in assets, the top loan pricing method was setting prices based on lender discretion and negotiation with the client.

Abrigo surveyed nearly 250 lenders, credit analysts, chief credit officers, chief risk officers, and other professionals involved in lending and credit risk at banks and credit unions in an online survey between Feb. 18 and March 23, 2021.

Learn more about Abrigo's 2021 Business Lending Process Survey and how to address challenges.

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About the Author

Mary Ellen Biery

Senior Strategist & Content Manager
Mary Ellen Biery is Senior Strategist & Content Manager at Abrigo, where she works with advisors and other experts to develop whitepapers, original research, and other resources that help financial institutions drive growth and manage risk. A former equities reporter for Dow Jones Newswires whose work has been published in

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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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