It’s time to modernize your commercial lending platform or get left behind!

commercial lending banking technology

Posted By: Rick Bare

Blog-time to modernize

It’s long past time to embrace modernization.

Recently, KPMG put out an article on why you should “Modernize your commercial loan servicing platform,” and I admit I got a little excited reading it since it is nice to see a non-service provider putting out an objective piece on the need for financial institutions to modernize to a real-time, digital technology platform. As the article highlights, a modern platform is not a “nice to have” anymore; it is a critical requirement for any financial institution to stay competitive in commercial lending.

As a technology provider whose only focus is on commercial lending, we have seen progress over the past decade since we started stressing the need for real-time, digital capabilities for commercial lending and designed AFSVision to provide that to the industry. The urgency for a digital transformation has increased with, according to KPMG, more than half of commercial lenders expected to spend 6–10% of total operating budget on technology transformations, 33% expected to spend more than 10%. Which still leaves a lot of banks balking at laying out the expense.

Investing in modern technology is a critical key to future success.

We get it. This is an expensive, risky, and time-consuming endeavor. Budgets are tight and events of the past year have everyone trying to “do less with more.” The focus is on maximizing efficiencies, reducing operations and tech spend, and looking for alternate, more predictable alternatives to organic growth (like M&A). But the vast majority of consultants, analysts, and your competitors agree: the one place you need to prioritize in your tech budgets is in modernizing your lending platform to provide the modern foundation needed to be, and stay, competitive.

As a leading commercial lending solutions provider, we believe our role is not only to provide transformative technology but also to work with our clients to manage the expenditure and risk. In the past year alone, we’ve converted four banks to AFSVision, all with minimal (if any) disruption to business and witnessed firsthand how a modern, real-time, cloud-based solution can jump start growth and provide a return on investment through these key benefits.

Don’t miss out on the benefits of modernizing!

“Significant transformation value can be extracted via commercial loan servicing platform modernization.” – “Modernize your commercial loan servicing platform,” KPMG

So, what do you get for your investment in modernizing? Here are just a few of the long-term benefits we’ve seen in our clients who have invested in AFSVision and our fully managed, hosted private cloud.

Technology that keeps pace with industry trends and your growth

Modern commercial lending platforms should be designed to provide a customer-centric experience with integrated products and services that can react easily to changing trends. Investing in new technology will enable you to keep pace with, and take advantage of, the industry’s constant evolution with increased agility and advanced integration capabilities to enable straight-through processing. That why we constantly monitor and take into consideration industry trends to help define AFSVision’s roadmap and next release.

It’s also incredibly important that a commercial lending platform is designed to work seamlessly as a cloud offering as well as more “traditional” ways. Recognizing this need, we ensured that AFSVision was available as an on-premise offering, on clients’ public or private clouds, and our offering the AFSVision Hosted Private Cloud (HPC). Specifically designed for commercial lending, AFSVision HPC provides our clients almost limitless, seamless scalability. The majority of our clients use AFSVision HPC and have not only seen the growth benefits a fully managed offering enables, but also how easily AFSVision HPC accommodates that growth with no disruptions to their business in time or capabilities. Our fully managed cloud offering also ties directly into saving money, helping our clients reduce their technology debt by alleviating the need to invest in costly equipment and in-house expertise to run and maintain the system.

Increased efficiency, generate more revenue, and reduce costs

According to the KPMG article, “using one loan servicing platform for all types of commercial lending products, including bilateral and syndicated deals, can increase efficiency by getting rid of duplicate interfaces and reducing maintenance costs.” And we’ve witnessed this with our clients. AFSVision’s ability to service all types of loans on ONE platform has not only helped them increase process efficiency by eliminating the need to work in separate systems, but also reduce their operating costs and help them generate more revenue.

Replacing intensely manual and inconsistent systems with a single platform that offers “once and done” data entry, process automation, and detailed reporting capabilities has key benefits for you and your customers. Increased efficiency and easier commercial portfolio management means you can get new products to market and drastically improve response times (which your customers will love) while automating workflows and processes will help you capitalize on renewals and identify and claim all of your fees (which you’ll love).

Real-time, advanced processing, data, and analytics

Real-time processing enables constant work with instantaneous access to up-to-date data, which helps improve both the customer and user experience. According to KPMG, “These capabilities typically result in an estimated 15 to 25% reduction in annualized business operating expenditure and a 20% error rate reduction.”

It’s an immutable fact: access to consistent, real-time, reliable data—at an absolute minimum—is required to see any meaningful or sustainable value. We’ve seen clients use AFSVision’s Business Intelligence tools and dashboards, which helped them move to a more data-driven decision-making model. This enables adapting to the constant changes in the competition, customer preferences, and technology.

Enhanced customer experience

Improving the customer experience has consistently been one of the top three drivers for transformation at banks. Your customers expect immediacy in our 24/7 world. Waiting too long for anything—a decision, a response, their status, etc.—has become unacceptable. According to industry experts, it is estimated that as much as 1% of a bank’s revenue loss is due to customer attrition. Replacing legacy systems that may take days to process a request to a responsive and fully mobile and digital one like AFSVision that provides real-time answers on demand means the difference between making a lucrative deal, or having the customer take it to a competitor.

It’s time to choose the right solution and partner for transformation.

When choosing a solution, make sure it checks all the boxes. And don’t underestimate the importance of choosing the right partner; with more than 50 years of focusing solely on commercial lending. Your chosen partner should have a solution with the scalability and flexibility to reach all of your goals, and have a proven, successful conversion and implementation strategy that can be customized for your specific needs. Over the last 20 years, AFS has converted over $3 trillion in exposures—all balanced and completed on time and on budget, from a variety of core and specialty systems—make sure whatever partner you choose can say the same.

As a whole, the industry can no longer be tentative about modernizing or underestimate the long-term growth benefits of a modern platform. As we’ve been seeing in the market, and backed up by KPMG’s article, aging legacy platforms will soon be unable to meet customer demands, prevent banks from meeting their growth goals, and become a roadblock to overall success. Legacy systems are a drag on your business goals. Not spending the money on modernizing is becoming a competitive disadvantage, unable to provide the digital, real-time experience customers want, and the digital, real-time capabilities you need.