Must Haves for a Commercial Lending Solution

Aug 3, 2022 11:30:00 AM commercial lending

Posted By: Dean Snyder

I recently read an article in Bank Automation News titled “4 must-have characteristics of a great fintech system” by Michael Jaiyeola, which got me thinking: what are the must-haves for a successful commercial lending system transformation? This blog delves into what those must-haves are.
Over the past decade, and longer, there’s been a lot of discussion around a “digital transformation revolution” in the financial industry, a topic that is still very much at the forefront of any forward-looking planning. 
In just the past three years, there has been a steep uptick in the number of medium to large-sized Financial Institutions (FIs) announcing “Digital Transformation Programs,” “Core Platform Modernizations,” and “Commercial Lending Digitization Efforts” to upgrade their legacy, technologically out-of-date systems. In addition to these upgrade efforts are smaller, growth-oriented FIs seeking a digital, enterprise-wide approach to commercial lending management in order to handle the expansion of their portfolios and keep up with their momentum. 
Whatever the impetus for your commercial lending transformation, you need a system that provides the on-demand experience that today's customers want. But what does this transformation entail? What are the must-have components that ensure FIs get the digital, real-time, straight-through processing required to provide a stellar customer experience and promote competitive growth? Let’s take a look at the top 4 “must haves” of a successful commercial lending solution transformation we’ve been hearing from both specific clients and the industry in general.
Accessibility and Reliability
The best technology in the world doesn’t mean much if you can’t get to the data when you need to, and how you need to. It may sound pretty basic, but it’s a critical piece of a commercial lending solution that really can’t be stressed enough—it needs to be accessible in real-time and the data needs to be proven reliable.
Reliability in the solution’s data (i.e., accurate and up-to-date every time it is accessed) and 24/7, “anytime anywhere” accessibility is essential to delivering the user experiences needed for success. In order to deliver the experience customers have come to expect from their day-to-day lives, FIs need a holistic, real-time accessible commercial lending platform capable of delivering the accurate information required to respond with the immediacy expected. 
When AFS® introduced AFSVision® more than a decade ago, its real-time, straight-through processing design was considered unique, but many in the commercial lending space were still content to deal with older, “batch dependent” systems. Today, there really is no longer an argument between “real-time” and “batch” type solutions. Waiting for information, or worse, making your customers wait for information, is antiquated. If you want to remain competitive and keep your customers happy, make sure the solution you are introducing into your ecosystem has real-time access for reliable and timely information.

About the only constant in the financial industry is the speed in which it moves. Both opportunities and challenges emerge at a break-neck frequency, demanding FIs (and their technology) to anticipate and adapt on the same timeline or risk being left behind. Instead of being thought of as a “nice to have,” the technology’s agility, how fast it can react to new challenges and opportunities, should be viewed as a critical foundation of any solution being considered.
We’ve heard from clients repeatedly that “one of the things we like most about your solution is knowing it will be able to grow with us.” Solutions must be designed with inherent agility and scalability, or they will diminish, and quickly, on their return on investment.
So, when deciding on what technology and technology partner to invest in, look for those that have a proven reputation and designed for not only reacting to market drivers, but anticipating them. Successful commercial lending solutions all have the embedded ability to efficiently respond to a spectrum of industry changes to enable FIs to take advantage of the new opportunities those changes present.

Efficiency can mean many different things, but here the focus is on how your chosen solution should help you make better use of your money and your people. Maximizing profitability requires efficiency in both, along with better capital planning. The right solution will help with all of this by providing a secure, agile, and proven cloud solution.
The right cloud solution comes with a host of benefits and can address a wide variety of the most pressing issues/questions when looking to see where to make your investment. 
Worried about the size of your investment and capital expenditure? Without having to invest in new hardware and training/maintaining an internally dedicated team to manage the solution, you’ll reduce your capital expenditure from the outset. 
Eager to get started with your new solution? Cloud-based solution implementation timelines are abbreviated when compared to their traditional counterparts. 
Worried your growth will outpace your technology? Cloud-based lending solutions inherently enable expansion, allowing FIs to scale on demand and virtually limitlessly. Additionally, these solutions’ updates should be provided with little to no downtime, which means zero negative impact to your business, data, and customers while getting all the positive impact of the updates to all three.

AFS has seen first-hand the difference the cloud can make to our clients’ growth goals. Clients taking advantage of our fully managed, Software as a Solution (Sass) cloud-ready delivery, AFSCommerce®, see a significant acceleration in their growth and reduction in capital expenditures and operational costs.
Seamless Workflows
A successful commercial lending solution is designed to efficiently and effectively handle the hundreds of processes lending relies on. Gathering information to approve a loan, checking on the status of collateral, taking all the necessary steps in booking the loan, and so many more, need workflows to ensure accuracy and consistency for the loan’s lifecycle.
When AFS set out to design the next-generation software for commercial lending management more than decade ago, we were reacting to clients’ complaints of manual hand-offs, too many points of potential failure, and over-reliance on quality control to catch what should have been avoidable mistakes. The answer for us, and our clients, was enabling on-demand, straight-through processing through flexible APIs connecting to our clients’ ecosystem combined with seamless workflows. If you only have to enter the information once with controls in place to direct work with automated checkpoints along the way, you will get not only improved efficiency, but higher-quality data.
Make sure the solution you choose has a configurable workflow engine that enables detailed input from your FI to be able to incorporate your credit policy and other proprietary requirements. After that initial and vital input, the workflow rules should control the rest, guiding when work moves from stage to stage, with the built-in flexibility to respond to shifting priorities, changing timelines, and market demands.
By significantly reducing manual hand-offs, workflows bring efficiency, transparency, and accuracy to lending, all while reducing costs.

Taking the Next Step for Your Transformation
Focusing on the four must haves—accessibility and reliability, agility, efficiency, and seamless workflows—will help you find the right solution to enable your FI’s commercial lending transformation.