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CU Insight | Lending and Credit Automation: Before and After

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CU Insight

By Mary Ellen Biery, Abrigo
August 29, 2019

Slow lending decisions and frustrating loan application processes are among borrowers’ biggest gripes with traditional financial institutions vs competitors such as online or alternative lenders. Ask the staff of banks and credit unions about the loan application, underwriting, and onboarding processes at their respective institutions, and you’ll likely hear some complaints from them, too.

When commercial bankers making $200,000 a year are driving all over town to pick up supporting documents just to get the completed loan application moving forward instead of calling on prospects, inefficiencies of a manual application system are personally frustrating. When commercial credit analysts earning $25 or more an hour are performing data entry for every tax return of a business entity tied to a loan application, the underwriting process is taking too long and requiring too many hours of labor by skilled workers for repetitive tasks.

“Automating the entire life of a loan – from application, through credit analysis, decisioning, onboarding, and beyond to annual reviews or even loan renewals – can save financial institutions substantial labor hours,” says Abrigo Vice President of Banking Neill LeCorgne. “It’s a generational opportunity to enhance earnings. That’s what 99% of bankers are trying to do. You’re always trying to enhance earnings.”

LeCorgne, the former president of multi-bank holding company who, before that, managed a corporate banking team at a super-regional bank, says technology can transform the business lending process from one that consumes 35 labor hours at a cost of $2,422 to one that takes 16 hours at a cost of just over $1,000. He estimates that a technology lending solution can shorten renewals of small business loans to a process that takes just over 3 hours at a cost of about $300. Typically, financial institutions send loan renewals along an underwriting process that parallels that of a new loan – a highly inefficient path that is also frustrating for the customer, he notes. The time and labor savings leave lenders more time to develop their pipelines and provide credit analysts more time to focus on complex deals – without hiring additional staff.

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To read the full article featuring Abrigo, visit CUInsight, “Lending and Credit Automation: Before and After.”