The Loan Pipeline Problem
Increasingly, commercial banks are looking for ways to streamline their commercial loan pipeline. Over the past few years, we’ve met with dozens of banks that struggle with the best way to move from inefficient legacy processes to more modern, automated processes. As we have talked with banks, a common theme has emerged: they continue to use outdated, paper–driven, committee-oriented processes. Creating the loan package itself is not problematic—most banks have well-defined templates that are fairly easy to create and do a good job of summarizing the deal. Furthermore, the approval decision is not a particular challenge, as these decisions are based on years of experience from seasoned commercial credit managers and executives, coupled with recently updated bank policies governing credit risk.
The problem we see is the inability to process a higher volume of deals in an efficient manner. Too many deals enter the pipeline from multiple sources, resulting in logjams and poor overall communication. Loan officers don’t know where their deal is and when they can expect to get a decision. In many cases, unless the paper file is on their desk, credit officers can’t easily see the history of who submitted the deal and who is next in line to approve. Executive management does not have a simple, real time view of the overall pipeline that includes historical performance results. Add PPP loans or the complexities of a merger to the equation and commercial banks have a real problem.
Traditional Loan Origination Solutions
Loan origination systems have existed for years, and there are many sophisticated software packages available to help automate underwriting, documentation, and loan boarding processes. Unfortunately, many of these systems can be complicated, expensive (we’re looking at you, nCino), difficult-to-use, and take years to implement. The problem is not in the software—the real problem is process adoption. Change is hard, and when complicated systems are introduced, fatigue sets in quickly. People tend to fall back on their old ways, especially if those people have been in the business for 20-30 years or more. After spending hundreds of thousands (or millions) of dollars, many banks find themselves right back where they started. To be clear, we do not mean to imply that automated loan origination solutions should be ignored. But in today’s lending environment, commercial banks are looking for an immediate impact to the bottom line.
Loan Pipeline Management—A Simplified Approach
At BankPoint, we believe in a simpler approach to the loan pipeline problem. Rather than trying to automate the entire commercial loan origination process, we recommend using a simple, effective online tracking and approval process that includes the following capabilities:
- Online, real time tracking and reporting of the loan pipeline
- Electronic approval and history with built-in notifications
- Dynamic approval routing based on bank policy (asset type, deal size, number of policy exceptions, etc.)
- Easy storage and retrieval of all underwriting documents
- Simplified, real time reporting including pipeline status, progress reporting, declined/withdrawn reasons, expired pipeline loans, and history
- Seamless integration with Salesforce and other popular CRM systems
Our customers have experienced immediate, measurable outcomes using this approach with the BankPoint Enterprise Bank Management System. Most importantly, they’re able to transform their manual, Excel-based pipeline into an automated process quickly, usually within 60-90 days.
Interested in learning more about how you can streamline your commercial loan pipeline process? Contact us at firstname.lastname@example.org.