Optimizing the Commercial Lending Process for Community Banks

Optimizing the Commercial Lending Process for Banks

Commercial lending operations are core to generating revenue for many community banks. Relationship officers are often at the helm of commercial operations as trusted advisors who design solutions to meet a client’s needs – but they need to do so quickly before a competitor comes in with a more attractive offering. Aside from the highly competitive landscape of commercial lending, there’s another issue that impacts revenue generation for commercial lenders: manual processes. Not only is the lack of automation costly for top-performing banks and painful for those on the front lines; lengthy processes between the initial customer meeting and loan booking has the potential to tarnish customer experience.

How community banks can solve these challenges

Technology alone is not transformational. The solution to providing a completely optimized, end-to-end, commercial lending process relies on three main factors: people, process, and technology. While most banks have a highly talented work force, they often struggle to align roles with process. The challenge is not an employee’s understanding of their role, it’s empowering the right subject matter experts (SMEs) – your relationship managers, credit analysts, loan administration officers, and information technology personnel – to work together to create smarter processes.

Technology connects processes together, creating seamless integrations with core systems for loan origination, underwriting and approval, loan document preparation, and loan servicing which includes financial document collection and credit process management. In many organizations, these systems are underutilized and/or underfunded.

Technology is an investment that takes both time and money, as well as continuous oversight to ensure you’re getting the results you need. If your bank tends to ignore technology projects because they disrupt the status quo, you’re missing opportunities for greater connectivity, enhanced process transparency, performance and management reporting, and customer self-service capabilities, which are important for optimizing commercial lending processes. In additional, not spending time and money on tech can actually cost more as time goes by, leaving clients and prospects with a perception that your bank lags behind others. 

Here are three ways to get started.

1. Don’t fear change

Do any of these statements sound familiar?

“We don’t want to shock our employees with too much change at once.” “Let’s focus on the core issues now, and then the rest later.” “We’ll do that in Phase 2, when more budget is available”

The problem with these statements is they focus on adding technology on top of existing processes, without resolving process breakdowns. Project teams return to their “day jobs,” important issues likely have been deferred, manual workarounds put into place, and the final steps or Phase Two may not be formally defined or budgeted. Whether you begin optimizing your commercial lending process using the “big bang” or incremental approach, here are a few items to address before getting started.

1. Define a long-term plan
2. Set clear milestones and success metrics
3. Obtain Executive “buy-in” and budget
4. Build a finance case with anticipated ROI
5. Select a project team
6. Find a consulting partner who understands your business

TrellisPoint can help community banks optimize their commercial lending process

Our mission is to align people, process and technology. Since our inception in 2009, TrellisPoint has focused exclusively on helping our clients get more out of their technology. We specialize in industry leading technologies from Microsoft and leverage decades of experience integrating CRM systems seamlessly to ERP systems, web portals, call centers, data warehouses, and other core platforms to help you align your business processes with technology.

We deliver superior solutions for organizations of all sizes. TrellisPoint provides planning, implementation, configuration, customization, development, training and managed services.  We believe that for your project to be successful, we must not only embrace the technology, but the people and business strategy of your organization.

Once you’ve addressed the check list above, you can begin defining your current process.

Align your processes

Commercial lending processes are often cluttered with non-value added tasks and activities which often cause delays, errors, and duplication of efforts.

The first step is a needs assessment to define the current process, breakdowns, gaps, and redundancies in your current loan process. These sessions help the project team see how their work impacts other’s work queues and creates bottlenecks in the process. Participation in a needs analysis also helps create ownership and a shared vision, which are both helpful when the process is ready to launch to the larger team.

Practical Application

Virtual Loan Assistant is a product that was birthed out of opportunity to innovate the credit review process for community banks. TrellisPoint’s product solves two main challenges of the credit process:

1. Collecting financial documents
2. Increasing credit process transparency across the organization.

Designed exclusively for banks with commercial lending operations, the app increases productivity, improves communication and keep employees in front of clients instead of bogged down with non-value added tasks.

2. Align your team

The most efficiently run banks with commercial lending operations have found a way to keep people, process, and technology moving together. There is no single structure that is better than the other when it comes collectively uniting people to their job function and ultimately new technology, however, there are some attributes that are present in the profitable community banks.

• Mutual Accountability – Are there performance metrics guiding all departments and function – bankers, credit, operations, and IT.
• High Performance – Are team members clear of their role, do they follow the outlined processes, is there alignment to the organization’s vision and objectives?
• Smart Technology – Have you invested in the right infrastructure including technology, training resources, process design, documentation and communication protocols

3. Properly invest in technology

Most banks are functioning without the right systems in place. Customer engagement platforms, like Microsoft Dynamics 365 Sales, create powerful automations that streamline core business processes for banks. In the absence of a CRM system or an outdated one, these processes require significant manpower to run. Some of your most highly compensated resources are spending time managing these processes, such as commercial lenders, portfolio managers, and credit analysts — human capital that could be used improve customer experience and influence business results.

If you’re one of the banks functioning without a customer engagement platform, here are a few of the benefits you may be missing:

• Consolidating data silos from branches, advisors, and back systems to create a unified customer view.
• Improved cross-sell conversions by targeting the right time to offer additional products or promotions.
• Shortened sales cycles and improved forecast accuracy by utilizing automated workflows and repeatable sales processes.
• Higher client support as a result of automated cross-department collaboration, follow-ups, and escalations.
• Account relationships can be handed over seamlessly in the event of lender turnover. Similarly, this information can be very helpful during an acquisition.

Microsoft Dynamics 365 is one of the many customer engagement platforms that TrellisPoint can customize for banks. The system allows you to segment customer data and get a clearer understanding of the client’s financial journey. Integration points with core systems also help bring in data about risk behaviors like poor credit score, late payments, and many others resulting in improved regulatory compliance and increased profitability. Role-based permissions help keep customer data secure.

Find out more:

If you’re among the many banks with or without commercial lending operations who need help with digital transformation and aligning people, process, and technology – we can help! We can guide you through the entire process from start to finish, including discovery, design, implementation, customization, integration, and training.

We offer a 90-day money-back guarantee to help you experience the value delivered by Microsoft Dynamics 365, Virtual Loan Assistant, and any other TrellisPoint solution. Contact us today at 888-719-0248 or sales@trellispoint.com.

Learn more about Microsoft D365