Automating Loan Process Keeps Small Banks Competitive

Community banks and credit unions are not only facing continued competition from big-name banks with generous marketing budgets but also from online lending companies. These lending providers are securing an ever-increasing share of the market with their streamlined application processes and ability to offer a decision and access to the funds within minutes rather than days.

Timeliness is a Crucial Factor

Currently, time frames of between 36 and 48 hours to underwrite a typical loan aren’t unheard of. Regardless if the loan value is worth $100,000 or $10 million, the time of processing a loan from start to finish remains the same. According to Dave Seleski, CEO of Stonegate Bank in South Florida, banks could lose up to $600 each year on a $100,000 loan because of the time and resources needed to determine if it’s worth funding.

The Repercussions of the Current Application Process

These long approval and underwriting times are causing many customers of community banks and credit unions to look elsewhere — especially online lenders — when they need a quick infusion of cash. Many small banks might be surprised to learn, as Eastern Bank of Boston was, that a significant number of their small-business clients turned to online lenders as a method of getting the funds they need quickly. When the bank’s chief development officer, Dan O’Malley, took a comprehensive look at the institution’s transaction records, he discovered that about five percent of its customers were making regular payments to various online lenders. The reason the customers gave to bank officials for turning to sources other than their regular hometown bank? They needed quick infusions of cash and they didn’t think that the bank could deliver that to them.

Automation is the Answer

By partnering with software companies that provide solutions to automate processes and streamline lending, smaller banks and credit unions can compete more easily with both online lending companies and those larger banks that are better known. A dynamic platform that utilizes a state-of-the-art workflow model for consumer lending, such as the CLOUDecision MarketPlace Lending (MPL) Consumer Finance Lending System, delivers the fast decisioning solutions that today’s busy small-business owners and banks need.

Deliver Timeliness With Automation

In under five minutes, an applicant can fill out the application while the system automatically gathers the applicable credit and financial information — all without the need for human interaction. Using a built-in matrix of score cards, the CLOUDecision MPL Platform provides the mechanism to approve, deny or make exceptions to loan applications in under four seconds. Discover how the CLOUDecision MPL Platform provides the resources your lending institution needs to stay competitive with a free live demo.