How a Superior Loan Processing Platform Boosts a Bank’s Portfolio

Loan Processing Platform | Digital Lending | Baker Hill

A smooth, user-friendly digital lending experience is just as much a priority for banks and credit unions as it is for consumers. Having a modern loan processing platform is critical to the digital natives who make up the millennial and Gen Z segments.

In fact, a broad swath of companies—from Amazon and Alibaba to fintechs and alternative lenders to significant institutions like U.S. Bank—are well on their way to digitized lending. But this by no means represents the rule across the financial sector.

Many institutions have lagged in creating a top-to-bottom digitized lending experience. This blog article will discuss the importance of a loan processing platform and how new technology is essential to offering a competitive digital lending experience.

Embracing Digital Lending Technology Is Table Stakes in Today’s Market

Given how fast digital lending technology moves today, the rest of the world will hardly hold the bus as banking leaders try to decide whether and when to get on. 
Is much at stake? Absolutely. Today’s “digital life,” lived out 24/7 on mobile devices and laptops, has conditioned consumers to expect speed and convenience at every turn.

What’s more, those looking for a stronger borrowing experience with a loan processing platform don’t know or care when it comes to compliance and regulatory concerns.

Their thinking is more like, “Amazon knows what I want and sends it to me after just a few taps on the phone. No paper. No waiting. No hassles. Why can’t getting a loan work like that?”

No matter how bankers feel about the fairness of the question, delivering a seamless experience via a modern loan processing platform has become table stakes.

Many in the industry remember when JPMorgan Chase CEO Jamie Dimon warned his bank’s shareholders a few years back, “Silicon Valley is coming.” He was right—more so than even he perhaps suspected.

In the first half of 2017, fintechs were responsible for $15 billion in personal loan origination, according to TransUnion. For all of 2018, that number skyrocketed to $138 billion. Fintech loans now represent 38 percent of all unsecured personal loan balances.

Where Your Loan Processing Platform and Portfolio Growth Meet

But there is good news, as working towards the goal of a digital lending experience with a superior loan processing platform brings financial institutions closer to driving portfolio growth with compelling force.

Let’s look at the small business market. By all accounts, it’s underserved by lenders, even though it holds tremendous profit potential. But clearly, banks want to change that.

A recent survey by the American Bankers Association found that 61 percent of banks surveyed plan to moderately or aggressively grow small business lending over the next two years.

The challenge is that financial institutions process a small business loan of $100,000 the same way as a $1,000,000 commercial loan. That drives them to prioritize high-dollar commercial loans with more significant profit margins.

But what if lending workflows proved seamless for small business owners and bankers alike? What if they had a loan processing platform to deliver the same digital experience at scale?

By modernizing the lending process and leveraging a modern loan processing platform, financial institutions can shrink transaction costs, boost profit margins and provide more funding to small businesses.

A superior loan processing platform gives banks a decided edge since many financial institutions will vie for the same small- and medium-sized lending business in the months ahead.

The Future of Lending: Change Is Here to Stay

Stop for a moment to consider what life for consumers—and let’s face it, everyone in banking is a consumer, too—will be like in just a few years.

In just over a decade, the iPhone changed our habits, expectations, and even vocabulary for good. (Apps and Apple Pay, anyone?)

Imagine telling someone in 2005 that everyone would soon carry a device the size of a playing-card deck that plays music, makes phone calls, fetches email, maps a car trip in real-time, pays for dinner, and takes photos. Oh, and by the way, that camera will snap a photo of your check, front and back, in about 30 seconds and move the funds into your bank account.

Digital banking breakthroughs like remote deposit capture set the consumer expectation bar even higher. And why not? Jim Marous, co-publisher of the Financial Brand, puts it this way in a recent article:

As consumer adoption of the digital lifestyle has gained momentum … people no longer view banking as a place to go … they expect their financial institutions to know them, look out for them and reward them—in real-time—using the channel they prefer

Imagine a digital loan via a mobile phone, using existing customer data to expedite the process, thereby reducing the speed of approval from weeks to minutes. Imagine all the new business you can land with a mobile-ready loan processing platform and what it will do to grow your portfolio.

Now at this point, it’s OK to stop imagining—and start envisioning technology and customer expectations joining forces to move your bottom line at top speed.

Ready to Assess the Maturity of Your Digital Lending Strategy?

Take our quick Digital Maturity Assessment to see where you stand and learn how a superior loan processing platform and origination software can help you execute your digital lending strategy.

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