Is your corporate loan origination in step with the digital world?

If you time travelled from the 1990s to today, you’d see huge changes in the personal banking landscape. That’s because, in many ways, banks have been technology pioneers. Your personal customers now take fast, efficient digital banking for granted.

However, the business of originating corporate loans is still carried out in much the same way it was decades ago. Now, that’s changing too, as banks are looking to implement technological solutions in business loan services. They are being spurred on by technology-enabled competitors and the need to be more efficient, productive, and responsive to customers.

Why is corporate lending so out of step?

The size and complexity of corporate loans is much more variable than in retail banking. There’s more risk, stricter eligibility requirements and multiple internal and external departments get involved in the decision making process. In business loan origination, no case is ever the same, so automating processes is more difficult.

Here’s an example of just how complex the process can be.

When the Relationship Manager (RM) at one of our clients received an urgent loan request from an important customer, one of their biggest challenges was getting the customer data they needed to prepare for their meeting. The RM wanted to understand and discuss their customer’s individual needs, so they could find the best solution to the problem. But, to do that, this RM had to navigate 14 different legacy bank systems.

It was a lengthy process but they made manual notes to get a view of the customer’s financial position and current product holdings. In the meeting, the RM captured all the customer’s requests on paper, came back to the office, logged in and manually entered the same data multiple times to send it to different departments. This process lacked consistency and accuracy. But, above all, it was extremely time-consuming.

The RM’s frustration didn’t end there. On top of all the back and forth with the customer’s CFO, treasury department and financial operations team, they also had to ease the bottlenecks that occurred at numerous steps in the internal approval process. They spent days calling and emailing different stakeholders to get the information and decisions they needed to customize and approve the offer.

The problems with this are easy to see. Errors creep in with multiple data entry, which makes customers unhappy. Because they’re spending so much time on administration, RMs miss cross-selling or other valuable relationship-building opportunities. The risk for the bank is that, as the volume of corporate loans increases, so does the challenge of meeting customer needs while also complying with complex rules and regulations.

How a unified, customized platform fixed this broken process

Our VeriLoan end-to-end loan origination, servicing and collection platform based on Dynamics 365 transformed this process. It pulled together all the information from the 14 different backend systems onto a single platform. This gave the RM a consolidated view of their client.

Loan request data only had to be input once. Straight-through processing (STP) and built-in workflows allowed different teams to coordinate easily. Integration with the Rule Engine software meant that policy checks and risk committee rules and validations could be completed seamlessly. The platform was also customized to integrate with external systems such as Moody’s, Dun & Bradstreet and Credit Bureau to enable speedy risk assessments, Know Your Customer (KYC), anti-money laundering (AML) and blacklist checks.

Doing all this on the same system created a seamless, agile customer journey. It also made loan application workflow more efficient, improved customer and internal communications starting from digital document capturing. As the RM was no longer running around making internal emails and phone calls, they could spend more time doing the job they love; building and enhancing customer relationships. In fact, employee engagement improved across the bank as all the teams involved in corporate loans, from underwriting to credit analysis, coordinated their work more efficiently.

Driving a customer-centric bank

The rationale for automating key steps in the corporate loan origination process goes way beyond simple efficiency gains. The need for enhanced business relationships based on accurate customer insight data and the attraction and retention of talent across all departments are powerful drivers of the uptake in Omni-Channel business banking solutions.