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4 Reasons Your Loan Process Is Costing You Valuable Business

Kristin Zell
Mar 29, 2024

As net interest margin compression tops the list of concerns for banks and credit union CEOs this year, it’s time to take a hard look at your current loan processes. We constantly hear deep frustration from lenders about drowning in paperwork, a lack of visibility and inconsistency , and the problems associated with disparate systems cobbled together to push loan applications through their pipeline.

Here are four reasons why community and regional financial institutions are struggling with how to balance high interest rates and loan profitability.

  • Reason #1: The lending process, (especially in the commercial market) has historically been inefficient and extremely siloed from both a personnel and technology standpoint.
  • Reason #2: Manual processes, non-connected systems, and the need for multiple teams (such as lenders, credit analysts, and loan operations) create challenges for borrowers and financial institutions.
  • Reason #3: Often, lenders must handle both commercial and consumer lending requests using multiple systems and different processes. While digital technology has been available for consumer lending for some time, commercial lending processes are moving rapidly in that direction as borrower needs have evolved.
  • Reason #4: Microsoft® Excel was created in 1985 and while it has had upgrades, it is not even close to accurate or stable enough for true underwriting capabilities.

Manual processes just can’t keep up with the demands of borrowers accustomed to a digital world. You need to deliver an experience that allows you to attract more loan applicants, originate more profitable loans, and speed up your processes to provide better service at a lower cost. 

A single-platform technology model can provide efficiencies that give your borrowers quick access to more types of transactions and also improve consistency and visibility for your staff. Here are some key advantages that will help you not only increase your production bandwidth, but allow you to focus on what’s most important: your customers and members!

Loan Process & System Consolidation

When current loan processes are outdated, systems are disjointed and documents are stored in a plethora of locations, it's most likely costing you market share. Integrating these various systems into a single platform helps streamline the loan approval process and centralize all the data needed to close a loan, quickly and efficiently.  

Reduced Lending Process Costs & Increased Margin Return

By consolidating and streamlining commercial lending processes, you reduce the total cost of lending and overhead. Wrapping auto-decisioning tools around loan applications reduce underwriting time – providing greater margin on smaller loans and allowing your team to focus their time on larger, more complicated applications.

Reduced Paper & Rekeying Errors

Data entry is the biggest “bottleneck” in the commercial lending process. On average, a single point of data is rekeyed six to 10 times! Integration reduces the time spent re-keying data errors, providing a better lender experience and, most importantly, a better borrower experience with faster access to capital. Data mining and reporting become far more efficient as data and documents are easily pushed and pulled to your core.

Increased Capacity for Additional Business

By reducing the number of solutions used in the loan process and leveraging technology, banks and credit unions can realize additional capacity to generate new business and expand market share. In turn, your team can focus on relationships rather than clerical work.

A Smoother Experience for All

Time kills deals; and today’s borrowers expect a seamless, Amazon-like digital banking customer experience on the device of their choice. An intuitive online application and secure portal for uploading necessary documents for the loan process gives your customers the choice of in-person or online interaction. More effective workflow and pipeline tools improve visibility into the lending process as it moves through the institution, creating efficiency and transparency for your team – resulting in a better experience for your customers and members.

Don’t make borrowers or staff pay the price for using time-consuming, complicated lending processes. A single simplified, all-digital lending platform supports the entire lending lifecycle, and makes each phase of the borrower’s journey seamless and enjoyable. You can deliver more volume, reduce clutter, and streamline workflows to increase your profits.

Jack Henry™ is here to help. Contact us to get in touch with a lending expert.

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