Digitizing SMB loans: Overcoming speed and borrower experience concerns
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Banks and Credit Unions can take a look at digitizing their business lending process, with the advantages of both improving the borrower experience and increasing scale.
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Digitizing SMB loans: Overcoming speed and borrower experience concerns
- 1. Digitizing SMB Loans Overcoming Speed and Borrower Experience Concerns Steven Martin Vice President steven.martin@sageworks.com
- 2. Download the presentation PDFs are available to download through the Handouts tab The easiest way to listen is through your computer’s speakers or headphones Ensure your device speakers are on, or calling in is an option. Submit your questions Have questions for the presenter? Submit them using the Questions box. For Upcoming and Archived sessions, visit www.sageworks.com Sageworks ALLL & CECL Forum for Bankers Commercial Credit Risk Professionals @sageworks Making the Most of the Session More Resources Connect With Us
- 3. Disclaimer 4 This presentation may include statement that constitute “forward-looking statements” relative to publicly available industry data. Forward-looking statement often contain worlds such as “believe,” “expect,” “plans,” “project,” “target,” “anticipate,” “will,” “should,” “see,” “guidance,” “confident,” and similar terms. There can be no assurance that any of the future events discussed will occur as anticipated, if at all, or that actual results on the industry will be as expected. Sageworks is not responsible for the accuracy or validity of this publicly available industry data. Sageworks disclaims all representations and warranties, express or implied. Risks and uncertainties include risks related to the effect of economic conditions and financial market conditions; fluctuation in commodity prices, interest rates and foreign currency exchange rates. No Sageworks employee is authorized to make recommendations or give advice as to any course of action that should be made as an outcome of this data. The forward-looking statements and data speak only as of the date of the presentation and we undertake no obligation to update or revise this information as of a later date.
- 4. A Problem Worth Solving 5 Borrowers • Expectations • Convenience • Choice Banks • Expense • Scale • Competition Technologies • Integrated data • Automation • Intelligence
- 5. Business / Commercial Loan Lifecycle 6 NEW / RENEW REQUEST DOC GATHERING ANALYSIS PRICING MEMO APPROVAL COMMITMENT LETTER DOC PREP DUE DILIGENCE CLOSINGTRAILING DOCS TICKLERS REVIEW PORTFOLIO MANAGEMENT RISK RATING
- 6. Obstacles to Speed, Borrower Experience 7 Pipeline Loan pricing ALLL Covenants Ticklers Credit analysis Risk rating Doc prep Reporting Credit memo Required documents Correspondence Correspondence Core loan system Loan file Stress testing Borrowers Bank Branch platform
- 7. Challenges Throughout the Lifecycle 8 NEW / RENEW REQUEST DOC GATHERING ANALYSIS PRICING MEMO APPROVAL COMMITMENT LETTER DOC PREP DUE DILIGENCE CLOSINGTRAILING DOCS TICKLERS REVIEW PORTFOLIO MANAGEMENT RISK RATING Originator Experience • Re-keying information • Opportunities managed in various spreadsheets • No common view for sales management Ways to Improve • Some kind of CRM capability • Targeted marketing intelligence • Industry / company intelligence
- 8. Intelligence for Call Prep 9 Vertical IQ • Industry overview • Real time • Show up smart
- 9. Challenges Throughout the Lifecycle 10 NEW / RENEW REQUEST DOC GATHERING ANALYSIS PRICING MEMO APPROVAL COMMITMENT LETTER DOC PREP DUE DILIGENCE CLOSINGTRAILING DOCS TICKLERS REVIEW PORTFOLIO MANAGEMENT RISK RATING Borrower Experience • Unclear about what’s needed • Frustration • Incomplete file delays analysis Ways to Improve • Eliminate re-keying • Secure document portals • Intelligent request forms
- 10. Eliminate Re-Keying 11 ...TO LENDING SYSTEMGETTING FROM TAX RETURN...
- 11. Dr. Robertson’s Experience 12 “Never again” • Lost paperwork • Broken promises by banker • Slow, unresponsive • Missed closing date • Mixed messages - banker versus back office
- 12. Challenges Throughout the Lifecycle 13 NEW / RENEW REQUEST DOC GATHERING ANALYSIS PRICING MEMO APPROVAL COMMITMENT LETTER DOC PREP DUE DILIGENCE CLOSINGTRAILING DOCS TICKLERS REVIEW PORTFOLIO MANAGEMENT RISK RATING Gathering vs. Analyzing • Specialized spreadsheets • Assemble disparate information • Keeping versions sync’d Ways to Improve • One database • Automate rules and analysis • Create an express lane
- 13. The Power of Integrated Database 14 All in one place • Full view of customer • One stop for all documents • 3rd party data integration • Adding to the intelligence
- 14. Create an Express Lane 15
- 15. Challenges Throughout the Lifecycle 16 NEW / RENEW REQUEST DOC GATHERING ANALYSIS PRICING MEMO APPROVAL COMMITMENT LETTER DOC PREP DUE DILIGENCE CLOSINGTRAILING DOCS TICKLERS REVIEW PORTFOLIO MANAGEMENT RISK RATING Presentation of Deal • Creation is time-consuming • Inefficient distribution • Managing updates / changes Ways to Improve • Link database to credit memo • Shared access to memo
- 16. The Credit Memo 17 Time to make improvements • Use template • Pre-fill template • Manage approvals electronically • Create a express lane version
- 17. Challenges Throughout the Lifecycle 18 NEW / RENEW REQUEST DOC GATHERING ANALYSIS PRICING MEMO APPROVAL COMMITMENT LETTER DOC PREP DUE DILIGENCE CLOSINGTRAILING DOCS TICKLERS REVIEW PORTFOLIO MANAGEMENT RISK RATING Diligence and Closing • Re-keying information • Third party docs and data • Perfecting the credit file
- 18. Automate Ordering of 3rd Party Services 19 Ordering and Receiving • Kick off ordering • Track open orders • Notify staff
- 19. A Word About Signatures 20
- 20. Challenges Throughout the Lifecycle 21 NEW / RENEW REQUEST DOC GATHERING ANALYSIS PRICING MEMO APPROVAL COMMITMENT LETTER DOC PREP DUE DILIGENCE CLOSINGTRAILING DOCS TICKLERS REVIEW PORTFOLIO MANAGEMENT RISK RATING Monitoring • Ticklers on spreadsheets • Reviews not timely • Compliance testing • Missing documents
- 22. Getting Started at Your Bank 23 Vision • Problems • Future state Priority • Urgency • Senior stakeholders • Shared vision Execute • Team • Bank experts • External
- 23. Areas to Digitize 24 Information collection Analytics and intelligence Flow and access • Common database • Key once, or not at all • Auto-update • Analysis tools not spreadsheets • Trends, ratios, industry data • Automate rules & portfolio management • Electronic credit file • Borrowers & third parties upload • All teams access the same workflows, docs
- 24. Poll Question 25 Areas for improvement at your institution? • Prospecting, Building Relationships • Gathering Data • Streamlining Analysis, Creating an Express Lane • Quickly Creating Presentations • Adding Borrower Convenience
- 25. Digitizing SMB Loans Overcoming Speed and Borrower Experience Concerns Steven Martin Vice President steven.martin@sageworks.com