7 Ways Automation Improves the Bank Lending Process

James Walter and Corey Ross are the founders of Seattle-based BBC Easy, a provider of cloud-based automated loan management software for financial institutions and their borrowers. For more information, please visit www.bbceasy.com.

In today’s competitive C&I lending market, banks are looking for ways to offer services more quickly and cheaply as well as improve their profit margins. By using automation tools, banks can improve business process efficiencies and offer more loans and better customer service to small businesses in need of capital. Financial institutions are increasingly turning to customer-facing software programs to automate the lending process. If a small business owner has ever used popular apps like Xpense Tracker or Evernote, the same intuitive interfaces are now available specifically for commercial accounts.

Automating the lending process can improve bank performance and profits in the following ways:

1. Removes paper from the process: The paperwork of the loan process requires loan officers and business bankers spend hours, and sometimes days, manually entering all the financial information of their business customers. Borrowers also have to submit regular financial reports, sometimes on a weekly basis, depending on the terms of the loan.
2. Reduces the cost of loan processing: Automating the loan process reduces the cost of loan officer and business banker time inputting financial information and the cost of training and hiring up needed to service loans. For the borrower, utilizing software that integrates with the most popular accounting programs saves time and money.
3. Reduces processing time: Many times businesses receive loans based on monthly inventory and accounts receivables. A bank can wait anywhere from 45-60 days for information from the business at which point their information is no longer applicable and he or she must resubmit their information. By automating the lending process, the credit loan approval process is reduced to a few minutes as all necessary calculations are performed through the online software.
4. Improves accuracy: Automating the loan process reduces errors by both the borrower and the bank and reduces false or inaccurate calculations and analysis.
5. Optimizes all operations: Most banks have already automated personal banking services, and by automating core banking services such as business loans, all business lines in the bank are fully optimized providing both banker and business owner with more timely and more accurate information. Additionally, the borrower has access to credit information just as an individual can review checking account details online. With outdated systems, borrowers were unable to track and analyze past loans and credit line information.
6. Improves management visibility of the loan process: By making management aware of the strategic and mission critical nature of data management in ensuring business loans are processed in the most cost effective and efficient manner, management can better understand how data management can improving profit margins, risk management and customer service.
7. Improves customer service: When there are quick and easy ways to facilitate business loans, there is more time for banks to build strong, personal relationships with their business customers that can translate into greater business as well as personal banking revenues.