By Kristin Zell, Director of Sales, Lending at Jack Henry

The pandemic has changed the lending industry forever and has left consumers expecting modern digital experiences at every stage of their financial institution relationship. Now, with a possible recession in sight, staying up to date on digital channels is more important than ever to satisfy customer expectations and compete with tech-savvy fintechs. When it comes to lending, community and regional banks and credit unions are familiar with changing focus to keep up with shifting markets or trends but may be falling behind due to a lack of automation, communication, and transparency.

Here are four reasons why:

1. Inefficiency: A long-standing defect of the traditional lending process has been a lack of efficient internal communication due to siloed processes, from both a personnel and technology standpoint.
2. Lack of Automation: The dependence on manual processes segments the workplace and slows processes for borrowers and financial institutions alike.
3. Disparate Systems: Most lenders manage consumer and commercial requests on different platforms, leading to disparate, siloed systems that do not easily integrate with one another.
4. Inadequate Underwriting Capabilities: Many lenders still rely on Microsoft Excel to support their underwriting systems, but this platform is unsuitable for complex lending processes or accurate decision-making.

In today’s digital world, the demands of borrowers can be satisfied much more effectively with a fully digitized and flexible lending process. For example, investing in a single platform technology model for loan origination eliminates the possibility of error, increases efficiencies, and gives borrowers faster access to funds, boosting satisfaction rates.

Some key features of a single platform model that will benefit both financial institutions and their customers and members are:

1. Process Unification: Perhaps the biggest benefit of a single platform model is the elimination of disjointed systems that are common in many current, yet outdated loan processes. Unifying these systems into one platform centralizes the loan approval process, allowing required data to flow freely and decisions to be made more efficiently.
2. Lower Costs & Increase Returns: By consolidating lending processes and reducing the time it takes to underwrite a loan, the total cost of lending will decrease, creating a larger margin for smaller loans and allowing lenders to focus on more complex loan inquiries.
3. Reduce Rekeying Errors: Commonly, when there is an adjustment to a borrower’s details or ownership structure, lenders must rekey information into numerous systems used throughout the approval process to update the application. This can create a huge administrative burden and the biggest “bottleneck” in the lending process. Modern and flexible lending technology can update data within the origination platform, reducing the time spent rekeying errors and delivering both lenders and borrowers an improved experience, and faster access to capital.
4. Increase Capacity for Additional Business: By leveraging a more advanced and efficient lending system, banks and credit unions will free resources to allocate to additional business and expand market share and focus energy on maintaining and improving relationships with customers and members.

Improving the accountholder’s digital banking experience should be a priority for banks and credit unions in order to compete with tech-savvy fintechs and larger financial institutions. Investing in modern technology, like a single loan platform, will yield more volume, lower overhead, increase profit margins, provide faster access to capital, and ultimately, lead to happier customers and members.