It’s ok, you can admit it.
You don’t devote too many resources to regularly updating your commercial lending tools and technology.
Lots of lenders, especially community banks and credit unions, have a lending process that “works well enough.”
That’s where the truth gets uncomfortable: “well enough” can mean closing deals slower than you’d like, or even worse, having no idea of how much time and money you waste per application.
There’s no shame in facing this reality.
Commercial lending is a difficult discipline to master, and technology has radically changed borrower expectations.
The good news is that that same technology comes in the form of powerful lending software as well, which can help you streamline processes and grow your lending business.
This article will explore 9 signs that your commercial lending operation is due for a tech overhaul.
1. Application Volume Is Up, but Funding Speed Is Down
Good news! Your latest marketing campaign for your commercial lending business worked. You have more web traffic and phone calls than you’ve had in months.
Bad news! Applications are piling up like autumn leaves in a gutter, and everything’s moving slowly.
A sluggish lending process hasn’t been a problem in the past, but now it’s a big one.
Data moves too slowly between systems, and there’s too much physical paper and data entry. From application, to underwriting, to the actual fund disbursement, documents are all over the place, and your team goes back and forth looking for missing information.
Your team spends their time doing everything but the actual lending decisions that will close the deal and disburse the funds.
If only you had an automated lending platform that could streamline your underwriting process, then your team could uphold your lending standards and make decisions quickly… if only.
2. Managing Your Data Feels Like Herding Cats
Over the years, you’ve added digital systems as you’ve needed them: one at a time, without worrying about how well they talk to each other.
This is the natural path of digitization, but it creates silos that prevent transparency and portability.
A centralized data hub would make all the difference when it comes to analyzing your data, strategic planning, and timely decision-making.
Plus, people want visibility into different aspects of the data, so you need a system that can see all the data and generate meaningful reports without ad hoc analysis.
3. Your “Cybersecurity” Isn’t Exactly Secure
One of the major disadvantages of piecemeal digitization is the security risk. Each vendor has their own standards, and continuity is difficult to achieve.
And not only between organizations: many times, outdated lending processes rely on sharing sensitive files that are stored in individual hard drives. Keeping and moving those files around in an insecure environment involves great risk.
The stakes are incredibly high for anyone in the commercial lending business. Few things will erode your reputation as quickly or thoroughly as a security breach. That’s aside from the expense of mitigation, resolution, and customer outreach.
If you have concerns about the cyber integrity of your lending tech stack, then it’s time to take a hard look at the problems and plan how to implement a better security system.
Continuous improvement and penetration testing are absolute must-haves.
4. Fragmented Communication That Leads to Poor Service
Again, when using multiple, discrete systems to manage borrower applications and lending, you create points of failure. If the systems don’t “talk” to each other, then your team will struggle to talk to each other.
The borrower receives the worst end of the issue because they have the least visibility. If their application gets stuck in limbo, they have little recourse to free it up.
What your team sees as an unavoidable delay, the borrowers feel as a lack of care and priority. Clear communication can alleviate this pain.
The solution for this communication breakdown is a unified SaaS lending platform that offers total visibility into the application status for every stakeholder, borrowers included.
5. Repetitive, Manual Tasks Drag Everyone Down
Busy work is the bane of every lending officer’s working life. Call it paper-pushing or digital drudgery, but the hard truth is that these painful tasks sap motivation and waste time.
By digitizing paperwork and automating workflows, you can allow technology and people to focus on their domains of excellence.
An automated lending platform can easily perform repetitive, detail-oriented tasks, including building checklists for your processes. Free people up to excel at connecting with other humans, creatively solving problems, and delivering top-notch service.
Software-powered, human collaboration is a remarkable thing. You’ll experience fewer emails, less data entry, less time chasing documents, and less human error. That’s the real power of lending automation.
6. Borrowers Aren’t in Love With the Lending Process
In a recent report, fintechOS cited a statistic from the World Bank: “before COVID-19, lenders took an average of 90 days to provide capital to SMBs—with 57% of all SMB credit applications abandoned due to the difficulty of the process.”
Although this is a global metric, the sentiment holds for the U.S. domestic market.
Businesses that need financing aren’t happy with the application and lending experience offered by most institutions. What can you do to reduce application abandonment and increase satisfaction?
Speed to close is essential. You should also simplify the document collection process. Observe a real-world borrower as they complete the application from start to finish. Look for the friction in that process.
The same technology improvements that create efficiency for your team, can also help the borrower experience as well.
7. What Cutting Edge Features?
Borrowers aren’t experts in lending software, which is why most lenders get away with antiquated systems and clunky user experience (UX) design.
However, when a borrower discovers a new feature, such as easily importing bank history or verifying identity, it makes a big impression.
You won’t receive detailed letters from customers telling you that your application tool is poor and that they’re choosing a lender with better tech. Those customers will just leave.
Conversely, if a borrower loves the experience of working with you, they’re more likely to come back to you with their future lending needs.
Don’t get fooled by smoke and mirrors from technology vendors. Look for UX experts who can leverage intelligence from their client base to deliver proven design and feature improvements.
8. Vendor Support Is Sagging
In banking, core software providers get a lot of hate because of the low priority they seem to place on innovation and client-driven software development.
This shouldn’t be the standard of excellence in any industry. Lending is no exception.
Regular updates for features and SBA compliance workflows are essential to help your operation run smoothly and in the examiners’ good graces.
Even better than that, you should be able to request specific upgrades or changes for your organization and see them deployed before the Chicago Cubs win another World Series.
9. You Haven’t Gone Shopping in a While
Organizational inertia is a painful reality.
For leaders wearing multiple hats (i.e., all leaders), the idea of comparing software vendors and features is a living nightmare. It’s so much easier to grind out the daily business of commercial lending with outdated technology than to open yourself to how good it could be.
You don’t want to fall down some pushy sales funnel or enroll your board of directors in a new initiative if you don’t believe it will be worth it.
It’s worth it.
Evaluating new lending software vendors is work, but it also shakes up the status quo with fresh ideas and opportunities. You won’t find new growth and success with the same tech, vendors, and strategies you tried last year.
The right partnership will make all the difference.
SPARK: A Better Lending Experience Is Within Reach
How many of these points resonated for you?
Maybe you agree with one or two but think your organization is doing better than most. You might be right.
But that doesn’t remove the question you should constantly be asking yourself and your team: how good could things get?
The answer is: much better.
We built SPARK to make SBA and commercial lending a breeze, for big and small teams alike. We’ve designed it to help borrowers and lenders have a delightful experience from start to close and beyond.
When you’re ready to believe there’s a better SaaS lending platform for your team, we’ll be waiting to show it to you. Schedule a demo today.
