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Tossing the Paper to Compete for Borrowers

Forrest Menanno
Jul 29, 2021

When was the last time you pulled out a paper roadmap to navigate to your destination? Or the last time you went into an insurance agent’s office for a quote on a policy? Can you even remember? Neither can I! These days, we go online with our computer or smartphone to get instant directions, advice, and pricing whenever we like. Technology has permanently altered what we as consumers want and expect from those we choose to do business with.

With that in mind, I want you to think about your current loan process.To realistically compete today, a bank or credit union must offer real-time service and decisions for existing and prospective borrowers. Anything less risks seeing them go elsewhere. According to the Federal Reserve Bank’s mobile financial services survey, 71% of bank customers regularly use online banking and 43% of customers use mobile banking regularly. With over two-thirds of customers using banking digitally, failure to have an online application at your organization means missing out on a large revenue stream. With the world getting more digital by the day and fewer people walking into branches, banks and credit unions must offer their services remotely to maintain and grow their customer base. Online applications for consumer and commercial loans allow you to meet the needs and expectations of remote accountholders.

Revelations from the Pandemic

The need for online services was keenly felt in 2020, when bank and credit union branches had limited hours or were closed altogether due to the pandemic. Business had to continue, so how did customers apply for loans under those circumstances? With online applications, that’s how! If you’re still working with a manual workflow, ask yourself: how much business was lost when lenders were not able to meet with a client or prospect wanting to apply for a loan? If they did manage to meet, how much efficiency was lost because a paper application had to be mailed to the borrower (or emailed, downloaded, manually completed, and somehow returned)? No doubt, those manual processes ate precious time, slowed underwriting, extended decisions, and frustrated everyone involved.

Providing an online application on your organization’s website gives borrowers the ability to start the loan process anytime, anywhere. And it lets the collected information flow right into your loan origination system, cutting turnaround time, increasing efficiency, and improving the customer experience.

But what about the other quarter of accountholders who still come into the branch? Online applications improve their experience, too! Now, while meeting with a borrower face to face, your lenders can quickly enter their information into the online application, bypassing the need for staff to reenter data supplied from paper forms (and adding a nice high-service touch).

The Speed Factor

Is an online application all you need to stay relevant? It’s a good start, but in a world where fintech competitors are providing instant loan decisions, a digital application alone is not enough. But, combine auto decisioning with an online application and you can meet those the expectations for fast answers.

When borrowers are loan shopping online, they want to know now if they qualify for the loan. If they’re forced to wait, they’ll quickly find another organization that can give them a decision in real time, costing you revenue and a potential depositor. Imagine having a decision matrix set to your bank’s or credit union’s standards per loan product, in a secure hosted environment, that can return a quick decision based on credit score or debt to income. Next, you could gather all the financials and other borrower information you may require through an online customer portal that attaches to the loan file automatically. No more waiting on the mail, no more sending and receiving dozens of emails with attachments to upload, download, and decipher. Wouldn’t that be amazing?

Toss the Paper

Financial institutions that prospered during the pandemic have already discovered this. Now, isn’t it time to toss the paper and go digital?

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