Co-authored with Tiffany Johnston
Customer experience is emerging as a key differentiator in commercial lending, driven largely by digital technology.
After enjoying the latest digital innovations in their personal lives, many commercial lending customers expect a superior experience that is fast, efficient, and convenient – and they are increasingly unwilling to settle for less.
Yet most commercial lenders still compete based on traditional parameters such as price, loan terms/structure, and salesperson relationships – with efforts to improve the customer experience often limited to increasing headcount.
To compete and win in today’s increasingly digital banking environment, commercial lenders should develop a comprehensive vision of digital transformation that takes full advantage of the tools and innovations that are emerging at every step of the customer journey.
Traditionally, a commercial customer that wants to talk to a bank has to make a special effort to schedule a meeting with a relationship manager. The relationship manager then prepares for the meeting by gathering the documents and notes the bank has about the customer and the relationship.
Now, thanks to digital innovation, customers can use a digital scheduler application to conveniently pick from a list of available meeting times, and relationship managers can prepare by instantly pulling up a relationship dashboard that contains comprehensive information about the customer, including everything from ownership information, personal history with the bank of any guarantors, to assets, liabilities, and debt service coverage. Also, customers can upload a digital version of their most recent financial statements to the bank’s customer portal, instead of having an accountant email a file attachment.
During the meeting, the relationship manager delivers a digital, customized client presentation that was automatically generated in advance by the bank’s pitch center. The relationship manager and customer then co-create and analyze different loan structures (e.g., term debt versus revolver) on-the-fly, using the bank’s loan scenario tool, which has been pre-populated with the financial data from the customer portal.
After agreeing on a proposed loan structure and initiating the application process, the customer receives an automated notification when an underwriter is assigned, which may include a request for additional documents. Once the required documents have been uploaded to the portal, the underwriter receives an alert to start the pre-screen packet, along with an auto-assisted credit write-up to support the discussion.
4. Term sheet
When the proposed term sheet is ready, the customer receives an automatic alert to view and approve it in order to initiate the full underwriting process. Concurrently, as the relationship manager prepares the credit memo, the bank’s intelligent credit package prompts for additional collateral requirements that need to be completed in preparation for the Loan Committee.
A smart routing application automatically assigns the underwriter’s credit approval to the appropriate committee and prioritizes it on the digital agenda relative to other deals being presented at the same meeting. When a decision is made on the loan, the customer receives an alert from the customer portal, which can be used to view and accept the final terms.
6. Digital close
The customer’s representatives can use digital signatures to remotely sign the required documents as they become available. This digital progressive closing accelerates the process and saves everyone from having to clear their schedules to meet at a specific location, date, and time for a traditional loan signing. During the close process, any post-approval changes are immediately updated in the bank’s virtual credit file and digital closing documents, so that the moment the closing is completed the loan can instantly be booked and the final documents automatically stored.
Making the vision a reality
The digital customer journey for commercial lending uses technology innovations and automated work flows to help eliminate much of the cumbersome back-and-forth that traditionally occurs between all of the parties.
Also, the process is designed to be transparent so everyone involved – the customer and bankers, as well as the customer’s accountants and attorneys – can easily track the loan status and see what needs to happen next.
The potential results?
Improved efficiency. Lower operating costs. And most important – improved customer satisfaction and convenience, which in today’s commercial lending market can be a key differentiator and valuable competitive advantage.