While community financial institutions are recognizing the value of digital transformation, the results gleaned from the survey show that there is significant room for improvement for more efficiency, automation, and reduction in manual processes. Among the findings:
- 46% 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.
- Entering the same data repeatedly was cited as the largest obstacle in the commercial lending process by 35%. 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, and one in four reported entering the data at least six times.
- 33% said gathering documents efficiently and consistently is the largest obstacle in their institution’s commercial lending process. This was also the most frequently identified top obstacle from respondents in Abrigo’s 2020 survey.
- Asked about their biggest headache related to 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.
“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.”
In addition to gauging the current state of digitalization 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.
“Financial institutions over the last year have faced unprecedented challenges trying to get capital to their communities – from ramping up for the Paycheck Protection Program to monitoring credit risks,” said Jay Blandford, President of Abrigo. “Our survey shows the day-to-day obstacles many community financial institutions deal with daily. Technology has made it easier for many of their borrowers to apply, but many lenders are still using a largely manual process for business loans.”
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. To learn more about Abrigo’s 2021 Business Lending Process Survey, download the infographic, “The 2021 Business Lending Process Survey." For the complete data set and results, please reach out to firstname.lastname@example.org.
About the survey
Abrigo asked 23 questions in an online survey from Feb. 18-March 23, 2021, to help financial institutions benchmark many of their commercial or business lending processes. The survey was made available to Abrigo customers and noncustomers, who were offered the chance to see survey results once completed and a chance to win a limited number of Starbucks gift cards. The sample, while not necessarily representative of the entire universe of U.S. financial institutions, provides a detailed look at challenges faced by a large number of lending and credit professionals.
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