How automated lending can make your bank more efficient

A number of fintechs provide solutions that automate a portion of the lending process. The goal? To reduce labor-intensive back-office processes. These companies claim that this greater efficiency can help community banks grow revenue and, ultimately, improve customer service on the front end.

By Mary Yerkes

Community banks are looking for ways to stay competitive, and lending automation technology just might help. Not only can it create back-end efficiencies, but experts say it can also free up staff to provide the high-touch service that differentiates community banks from megabanks.

“You can still have a high-touch experience with a digital process,” says Steve Hoke, a vice president and general manager of mortgage and commercial lending Finastra, a banking technology and fintech based in London and the U.S. “You don’t have to lose the relationship. It’s all about the customer experience.”

Quick stat


The drop in time it takes Rock Canyon Bank to finalize a loan after using an e-signature solution

Jeremy Gray, vice president and director of credit administration at $450 million-asset Rock Canyon Bank in Provo, Utah, experienced this firsthand. His community bank recently implemented an e-signature solution that enabled customers to sign their loans digitally. One of the bank’s customers was out of the country when bank staff mailed the loan documents. But with a digital process in place, the client was able to sign the loan agreement and complete the process on his smartphone.

Solutions such as these not only enhance the customer experience and satisfaction, they can also bring significant cost savings from a materials and resources standpoint. Bank staff aren’t spending time printing out paper or fixing errors, like going back to the customer for a missing signature.

Finastra’s research supports Gray’s experience. The banking technology provider claims its clients experience a 50% improvement in customer service and productivity, an 87% reduction in errors, twice the revenue with the same operations staff and a 20% reduction in costs while growing their business.

“Because of increased efficiencies, we’ve been able to deploy resources in more high-touch ways, allowing staff to visit customers and see their businesses,” Gray says. “Automated lending also allows our staff to be more involved in customer acquisition and the maintenance of our customers. We’re able to expand our footprint.”

“Automated lending also allows our staff to be more involved in customer acquisition and the maintenance of our customers. We’re able to expand our footprint.”
—Jeremy Gray, Rock Canyon Bank

Hands off

A concern expressed by many community banks is the amount of time loan officers spend trying to secure documentation manually. Blend, a digital lending platform in San Francisco, recently addressed that challenge by adding new functionality to its automated lending software.

“Bank statements sometimes go stale while waiting for a loan to close, which meant loan officers had to go back to the consumer to request updates statements,” explains Grace Qi, a product manager at Blend. “Last quarter, we launched a new functionality: an assets refresh button. Now, a loan officer can click a button on the back end and the lending solution will pull the latest statements.”

Blend’s lending solution has enabled many of its partners to cut the amount of paper they use by moving from documents to data, from 400 pieces of paper to 100, and helped shave an average of up to 10 days off of the entire mortgage process, according to the company.

Another lending-related challenge for community banks is the pressure to remain compliant, which can be costly. Compliance with mortgage-related regulations accounted for about one-third of all regulatory costs in 2016, according to a report released by the Federal Reserve Bank of St. Louis in 2018. Automated loan technology can significantly reduce this burden.

“Regulatory requirements evolve into the technology,” says Samir Agarwal, vice president and segment leader for community banking at Wolters Kluwer’s Compliance Solutions business in New York City. “Working with the right digital loan solution provider distributes liability, enabling community banks to focus on what they do best—banking and meeting the needs of their customers.”

Digital lending solutions let community banks not only remain compliant but also create resiliency within their organization. It can be difficult to stay compliant with larger, more complex loans. If your bank has a piece of technology tracking everything, then it isn’t solely reliant on the loan officer. The software keeps the paperwork organized and accessible, so you can remain organized and armed to serve clients quickly, efficiently and with a higher level of service. Resiliency and process keep things moving forward.

When considering technology solutions, keep in mind that while efficiencies are essential, experts say, they should enhance, not detract, from the customer experience. Community banks should evaluate each potential digital experience through the eyes of the borrower, ensuring it meets their evolving needs.

With lending automation technology, community banks can have the best of both worlds: the efficiencies afforded through innovation and an opportunity to offer a tailored experience to customers. Technology, when used according to a bank’s values and strategic goals, doesn’t detract from the relationship banking model, but it can alleviate some of the back-end work that’s separate from the customer experience.

How Rock Canyon Bank reduced loan finalization time by 46%

Jeremy Gray

Rock Canyon Bank in Provo, Utah, set out to expand its presence and streamline its consumer and commercial lending business. To meet its customers’ growing lending needs, the bank looked to eliminate time-consuming manual tasks from its loan application process while enhancing the user-friendliness of its loan services.

“We found that our loan applications were often delayed by a few days simply because customers had to sign and return a physical copy of our loan agreements,” explains Jeremy Gray, the bank’s senior vice president and director of credit administration. “If a customer happened to be busy or was out of the country, they were unable to access their new funds until they could sign these documents in the branch or send them via postal service.”

To address that challenge, the community bank implemented an automated e-signature solution that integrated seamlessly with its existing lending technology. According to Finastra, the bank’s automated lending partner, the software reduces transaction costs up to 75%. Gray said Rock Canyon Bank experienced added efficiencies as well. The e-signature solution nearly cut in half the time it takes to finalize a loan. The new application is popular with bank staff as well, because it eliminates the frustration of chasing down customers for their signatures.

Mary Yerkes is a writer in North Carolina.