Digitization of Commercial Lending Is No Longer Nice To Have, It's Mandatory

2020 was a year of upsets, challenges, and change. Businesses have had to pivot and evolve in order to accommodate our new normal. The banking industry was no exception.

Every stage of the commercial loan lifecycle has presented major opportunities for digital optimization and growth. And the growing demand for contactless online servicing, easy accessibility of data, and more efficient workflows have finally pushed commercial lending into the digital age.

Banks need to recognize that digitization is no longer a “nice to have” option. In order to stay competitive--retain clients, expedite loan processing, and manage greater volumes of loan servicing--employing end-to-end digitization is the only option. The commercial lending landscape has been irrevocably changed. Banks will either adapt to this new era of e-service convenience and embrace a digital automation strategy, or they won’t.It’s time to sink or swim.

Digitization Requires Automation

The Electronic Signatures in Global and National Commerce Act was authorized over 20 years ago. And the company DocuSign has been operational since way back in 2003. Online applications and e-signatures had become staples of good customer service long before the coronavirus pandemic, but paperless commercial loan transactions have only very recently gained any traction.

The banking industry has held on to manual processes for too long. Today’s commercial clients expect the same fast, easy, customized, and virtually frictionless service they receive from online retailers. But enabling e-signatures is just one tiny aspect of commercial lending to be digitized. More and more manual workflows are being automated as part of the digitization adoption process.

This increased automation enables banks to:

  • Simplify application and documentation management – No more cumbersome data collections. No more duplicate data entries. Digitized loan origination systems minimize human-error and improve the speed and efficiency of loan documentation assembly.
  • Cater to customers more effectively – Present borrowers with a sleek, intuitive interface. Integrating different areas within the same automated system helps banks deliver a consistently flawless service while simultaneously accelerating operations.
  • Create space for more opportunities Automation allows banks to more easily interact with both customers and loans more effectively. Core infrastructures can withstand greater volumes of loan processing. And time saved can be repurposed to cross-market services to other channels.

But ultimately, the lesson this past year has been that simply sprinkling automated touchpoints throughout different banking systems is not enough. To fully reap the benefits of automation, banks will need an end-to-end transformation.

Automation Requires Transformation

Digitized lending is a whole new way of thinking—new customer experience, new lending strategies, new technology, and new connectivity. Major areas (think loan origination and reporting) will need more than a tune-up or update.

The Paycheck Protection Program emphasized the importance of digital transformation over just automation. Early on PPP underscored the need for banks to serve commercial loan clients remotely, quickly, and methodically. Banks that adopted digital platforms found themselves riding the tidal wave of applications instead of drowning under the sudden onslaught. During the first phase of PPP alone, those banks had approved millions of applications and distributed hundreds of billions of loan proceeds.

Simply put: people demand a better experience for loan origination and digital lending is the way to do it. This is no longer a debate. Banks all across the country have concluded that “business as usual” is no longer viable and “it’s always been done this way” is no longer acceptable. Full transformation, not incremental change, is what will enable banks to keep up with competitors, satisfy customer expectations, and adapt to the new technological landscape.

Transformation does not, however, need to be disruptive.

 Our Vikar Digital Automation Platform is highly scalable and easily configurable into core backend and data systems using open API’s and 3rd party integrations to non-Vikar modules. This allows for the consolidation of core data, a streamlined loan origination process, and improved client lifecycle management.

Because our platform was architected to sit on top of existing systems, loan and lending officers can focus on relationship building and value-added analysis.

Summary

Banks must be digital. Lending must be automated. And the industry must be transformed.

Customers are eager for the same digital experience they’ve been accustomed to as online consumers, and delivering that customer experience is paramount to successful commercial lending.

The digitization of commercial lending requires automating front-to-back processes. Full automation requires banks to transform their internal systems and external interfaces. The commercial lending engine of the future is digital, with the capability to drive growth and integrate itself within an ever-expanding ecosystem of banks, fintechs, and tech-savvy customers.

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