7 ‘must-haves’ for an effective commercial loan origination platform
Commercial loans are often low volume products for many banks but they are also high value. However, they can be complex and costly to deliver, particularly for specialist lending such as for a commercial mortgage or real estate loan. It's not always possible to simply adopt a purely digital sales and onboarding process.
As well as web portals and mobile apps, clients may choose to use their bank branch or third-party brokers. This means the commercial banking loan origination process can involve multiple steps and channels. Corporate Relationship Managers will usually need to navigate between internal and external stakeholders, including CEOs or CFOs, treasury departments, product teams and credit committees.
Too often, Corporate Relationship Managers also have to contend with broken commercial loan origination systems. These can involve laborious, paper-based manual form filling and outdated legacy systems. That's not simply inefficient and frustrating; there is also a very real risk of Relationship Managers' missing valuable business opportunities.
The commercial loan origination process is ripe for innovation
Here at VeriPark, we are convinced that effective commercial loan origination systems for banks and commercial loan origination software for brokers can deliver massive benefits. When banks achieve straight-through processing in their commercial mortgage or real estate loan origination software and commercial banking loan origination processes they will see significant improvements in customer experience, speed of decision making and, ultimately, profitability.
With numerous commercial loan origination system vendors in the market, deciding which one is right for your business isn't always easy. To help, here's a simple checklist of seven features to consider when making your commercial loan origination software comparison.
Best-practice commercial loan origination systems and software should include:
1. End to end Customer Lifecycle Management
Whatever channels your commercial loan client chooses to use, their customer experience is enhanced by managing the entire customer lifecycle in one, unified customer relationship management (CRM) platform. An effective CRM solution will cover everything from prospecting, qualifying leads and onboarding to loan approvals, after-sales service and collection management. This helps make your commercial loan origination process flow seamless and efficient.
2. Credit Policy Rules
Most commercial loan origination systems provide some form of customer credit scoring and rating. But, it's important to conduct an in-depth commercial loan origination software comparison. VeriPark's VeriLoan, for example, uses Inrule. This is a powerful rule engine that fully automates credit policy with minimal, or no, human interference. With the help of Inrule, business users can easily change policy rules and calculations without the need of programming. It empowers your organization to calculate the customer's eligibility based on your specific product's credit policy. This helps make your loan origination process more transparent and easy to use.
3. Data Quality
High quality, consistent and manageable data is an essential part of the commercial loan origination process. Banks need to evaluate customers' liabilities and credit scores across multiple lending institutions and credit bureaus. That's why VeriLoan has real-time integration capability with internal and external data sources.
4. Customer View
When you can effectively and automatically calculate exposure with crucial percentages, bank staff are empowered with data and a broader view to assess the customer. This improved understanding of a customer's history with parent and related companies and shareholders allows for a better understanding of the risk level. It enables the bank to offer the best loan structure with appropriate pricing and term.
5. Risk and Compliance
Many corporate loan origination software vendors integrate with the host systems to evaluate the credit decision-making process. VeriLoan, however, also has real-time integration capability with watch and black lists, such as AML List, Bounced Cheques list and PEP List. By simplifying KYC and AML check processes, the banks become more comfortable with calculating global exposures and mitigating risks. The process is very quick so you can improve risk management without slowing the commercial loan origination process flow.
6. Document Management
Commercial loan origination will always require strong document management skills. However, as much of the process as possible should be completed digitally. This should definitely include DocuSign to enable digital signatures – it's a simple way to improve the customer experience and free-up relationship managers to focus on higher value activities. It also eliminates hassles, costs and lack of security in printing, scanning and overnighting documents for signature.
7. Exceptions Management
Of course, automation across the commercial loan origination process is great for efficiency. But, it should never put valued customer relationships at risk. For example, many loan applicants may not fully comply with the bank's defined credit policy. However, that customer is still likely to be a valuable asset to your bank. VeriPark's VeriLoan commercial loan origination system takes this into consideration, as the software allows for exceptions in the approval process. This gives you the opportunity to evaluate the loan application and customer relationship holistically and reduces the risk of your relationship managers missing new business opportunities.
The best commercial loan origination process will always involve operational complexity and strong relationship management skills. It is critical for banks to improve efficiency to help them reach decisions faster, mitigate risks and make the most of business opportunities. Finding the best commercial loan origination software for your needs will help you achieve some easy wins.