Inefficient document collection, redundant data entry, and client service expectations are some of the challenges existing in the Commercial Lending Industry.
FREMONT, CA: The pressures of adapting to remote work during pandemic restrictions have accelerated digital transformation across industries and around the world. Forty-five percent of businesses reported reprioritizing digital transformation in their strategies in 2020, and 91 percent have ongoing digital initiatives. A mere 27 percent of banks committed to new digital modernization schemes in 2023, which stands out as an exception to these trends.
Although the institutional gears grind slowly in the financial services world, temporary pandemic adaptations have made a permanent impact on how customers evaluate business performance, leading to 32 percent greater expectations for responsiveness and empathy. Lending institutions that adopt new digital processes to improve efficiency and meet customer expectations will have a significant edge over the competition as customers continue to use digital technologies to expand their access to services and express their preferences.
Some of the challenges that exist in the commercial lending industry are:
Processes for collecting documents that are inefficient: In the document collection phase of loan applications, most commercial lenders still use hard paper copies and email attachments. Currently, only a third of lenders allow clients to submit documents electronically.
Downtime quickly accumulates when clients have to deliver hard copies or wait for loan officers to find and respond to emails when they have to deliver bank statements, notarizations, and profit and loss statements. As a result, waiting for documentation consumes up to 40 percent of the commercial lending sales cycle.
Document collection bottlenecks kill much potential productivity and contribute to client dissatisfaction.
Manual data entry and collection are redundant: Commercial lending still relies heavily on manual data entry. Several studies estimate that loan officers spend 30-40 percent of their time on automatable redundant data entry tasks, often manually entering the same information into multiple systems. Most of these redundancies are caused by unintegrated systems that require many of the same entry fields, such as credit analysis, underwriting, loan booking, and portfolio management.
The process of eliminating data entry redundancies requires a two-pronged approach. In order to create shared visibility for client information, organizations need to integrate software systems and services. As a second step, they should identify steps in their processes that can be automated, further reducing time lost to manual inefficiencies.
Client service expectations are evolving: Customers in almost any industry prefer digital engagement and omnichannel communication over face-to-face meetings. Companies that respond to customer preferences and enhance their digital communications and self-service options experience an average 15-20 percent increase in customer satisfaction, a 20-40 percent reduction in operational costs, and a measurable increase in the likelihood that customers will recommend their services to others.
In order to maintain high standards of customer satisfaction in the future, loan officers will need to develop the same skills in other channels of communication, despite the fact that in-person charm and charisma have traditionally built their success and personal brand.
