What We Learned From Covid About the Need for Lending Technology

Over the last 18 months I’ve been speaking with executive leadership at community banks across the country nearly every day. In preparation for each discussion, I routinely visit the bank’s website ahead of time to see what products they offer and what strategies the bank appears to be most focused on executing.

I continue to be surprised by how few of these banks offer the ability for their customers to simply apply online for a loan. Some offer this for mortgages, but what about other consumer loan types or commercial loans?

The Covid-19 pandemic presented a clear and immediate case for digital applications. Applicants could no longer visit a branch and needed to apply for loans from the safety of their homes. Even if the pandemic had not happened, the question still remains: How can community banks deliver on their mission of best serving their customers and communities if they’re not able to offer the digital experience customers increasingly demand, and that the national banks already offer?

Why aren’t community banks acting on this more quickly? One recent conversation I had gave me some deeper insights. I won’t name names, but one community bank CEO told me they spent the last two years implementing their loan origination platform. And they still don’t have the digital application online. Two years! It’s no surprise so many bank executives find digital transformation daunting, with examples like this.

It doesn’t have to be that hard. With the right partner and product, an iterative approach can yield quick wins at a lower cost, without all the inherent risks of a large-scale IT project. Rather than take a “whole hog” approach, you can start with your digital application and a simple version of the borrower portal so that your applicants can apply and securely upload documents. This requires very little initial involvement from your lending team, so they can focus on their jobs while you get started.

Over time, as your team begins using the system and getting comfortable, you can expand the platform capabilities in alignment with your organizational objectives. For example, auto-generating loan documents and routing them for e-signature is easy as a “fast-follow”. This helps to standardize your processes, gives you better insight into your loan pipeline, and saves your employees a ton of time. Later on, you can add more sophisticated underwriting capabilities, score-carding, and more.

So, as often as I hear from bank executives, “Digitizing our loan process is something we’re thinking about, probably something we’ll look more closely into in 2023” I need to ask the question: if you could free up 20% of your lending team’s time, what are the possibilities?