Getting Real about Real-Time in Commercial Lending
Posted By: Dean Snyder
More than a decade ago, there was a monumental shift in the way consumers expected to do business. With the advent of the age of the smart phone, if you want it, you can get it, immediately. Online access from anywhere means that virtually anything is available at the click of a button or swipe of a finger. Clients except immediacy in fulfilling their requests – they want what they want, when they want it, quickly, efficiently, and accurately.
I recognized, then, that the “I want it now, when I want it” mentality would translate into the commercial lending market as a natural progression from consumer goods to banking. And now, here we are witnessing the evolution and the fast adoption of real-time, 24/7 servicing in the commercial lending space. Not because the bank advertised it or wanted it, but because the customer demanded it.
Enhancing the Customer Experience with Real-Time
The customer experience is important no matter the industry, but in all types of banking, which is rife with competition, being able to deliver a superior customer experience is crucial. The most fundamental way to measure the credit, and client, experience is speed of response—to market fluctuations, to regulatory demands and to industry trends, yes, but first and foremost to client requests.
Customers are no longer satisfied waiting days or weeks for replies to loan requests and approvals; they demand answers almost before they ask the questions. The “old way” of one person taking the request, forwarding to another through a patchwork of systems, waiting for analysis through yet another patchwork of systems and people and then waiting for the data to be “cycled” through – steps that all take hours if not days – is no longer acceptable. With technology that supports and drives real-time processing and access, the time to market is dramatically faster in half-lives over what banks traditionally do today in terms of approvals, lending, and funding of loans. You get a much better customer experience, so you have happier customers that become repeat customers.
Mitigating Risk in Real-Time
And more than delivering this critical level of customer experience, real-time information access is also vital in identifying and reacting promptly to risks and exposures. Stock prices drop or unexpected loan collateral issues? No more waiting to find out from the news or a phone call and then waiting hours or even days to know your risks and exposures. Concerned about capital (and who isn’t)? Real-time 24/7 access to your data means you can identify, understand, and mitigate risk before it even becomes part of your portfolio. With real-time, you know, immediately, your risks and exposure, and can react, immediately, before there is an issue.
Integrating the Credit Process for Real-Time
So, “real-time” is here; it’s a basic requirement in order to be able to compete – for customers and for market share. Unfortunately in these areas, most banks’ core legacy systems are unable to deliver on the immediacy of information required to compete, because so many are still stuck in a model built on batch-oriented, delayed systems. Now you not only can have, but must have real-time approvals, payments, advances, payoffs, closing loans, originating loans, any changes, modifications, renewals, etc. – all that's done in real-time. And to get that capability, banks need a platform and technology investment that can provide enterprise-wide, front-to-back and beyond credit lifecycle management.
Generating Revenue in Real-Time
Put simply, getting “good” customers on board with their loans faster, reacting to market and industry fluctuations faster, recognizing and avoiding risks faster, means you get revenue recognition a lot faster.
Getting Real about Real-Time
In order to deliver the experience customers have come to expect from their day-to-day lives, banks require a new, holistic, real-time accessible commercial lending platform capable of delivering the information banks need to respond to requests with the immediacy expected. Banks need to be able to react to demands and the market—on demand, anywhere, real-time, all the time.
The time has come for real change in the way the financial industry approaches commercial lending. Which means the time has come for banks with outdated, obsolete, patchwork systems working the “old” way to look at how much the “status quo” of doing business is costing them compared to all that can be gained from investing in a true, real-time system.