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Transforming the commercial lending process

In a stressed global economy, loans continue to be the foremost means for banks, private lending companies, mutual funds companies, and other financial institutions to grow their revenue. Commercial loans offer the maximum opportunity for growth and profitability to financial institutions.

The banking industry cannot afford missteps in commercial loans, as many businesses see them as an excellent option for quick funding. Unlike private lending, commercial lending is unimpeded by too many constraints and can give good returns when executed efficiently and economically.

Banks need to evolve beyond manual processes and adopt a sustainable, digitalized, enterprise-wide approach to commercial lending in order to provide real-time, on-demand experience to customers. To succeed in the dynamic, competitive market, banks should provide convenient lending solutions with a smooth and hassle-free experience to the clients across all industries.

How can banks transform their commercial lending process?

Banks should analyse their lending process to get insights into the challenges, client requirements, and the process gaps and redundancies.

Identify the challenges:

Commercial lending presents a great opportunity but is also a potential area of high inefficiency. Understanding the complex processes and challenges is crucial. Some of the challenges faced are as follows:

  • Losing clients to competitors who oversee and avoid time-consuming hurdles in the process
  • Poor project management capabilities
  • Inefficacies across the hierarchy
  • Culturally entrenched bad practices
  • A shortage of junior bankers to look after the underwriting processes
  • Inefficiency in capturing, storing, analysing and manipulating large amounts of data
  • Cumbersome, complex processes and risk factors
  • Error-prone and slow lending workflow due to a paper-based person-to-person process

Initiate the digital transformation process

: To stand out and stay ahead of the competition, it is essential for banks and other financial institutions to keep up with new technologies and inculcate them in their processes. Banks have to adopt a culture of streamlined lending with optimal resource usage.

Commercial lending processes can be transformed with the help of automation. Given the intricacy and complexity of the lending processes, automating certain stages can cut down the errors and the overall time taken. It also gives the staff time and freedom to focus on other aspects of the process that require lateral thinking, decision making, creativity, and innovation.

Outsource the process:

Consulting partners bring expertise in process improvement methodologies, domain skills, tools and frameworks, experienced practitioners, and technology innovations. Outsourcing partners with deep experience in the commercial lending value chain can help upgrade processes and create a sustainable operating model to:

  • Reduce operating expenses

    by driving down costs associated with underwriting and risk-monitoring
  • Replace inefficient, paper-based process steps

    that lack transparency and satisfactory audit trail
  • Create a dynamic, unified, scalable back office

    , eliminating traditionally disparate processes and systems
  • Offer desired business outcomes

    , such as rapid improvement in cycle time and better customer experience.

Digital transformation is an iterative and intricate process with great scope for growth. The digital transformation of commercial lending can help banks generate high revenues and desired business outcomes (improved cost efficiencies and satisfied customers) fast.