Looking back over the last 12 months, 2021 represented a rebound for banks and credit unions that became almost entirely consumed by the Paycheck Protection Program in the year prior.
For many financial institutions, this means starting the new year off on solid footing and with prospects of growth on the horizon.
As Cornerstone Advisors Managing Director of Fintech Research Ron Shevlin recently put it, “with deposit levels soaring … the industry’s focus has turned once again to lending.” And, that makes digital loan origination systems one of the hottest technologies banks and credit unions are after in 2022.
By now, lenders are well versed in the benefits of a digital loan origination system, such as:
- Providing borrowers with easy, streamlined, and digital applications.
- Providing bankers with automating spreading and financial analysis tools.
- Providing financial institutions with flexible underwriting and frictionless closing experiences.
But sit down with the banks and credit unions leveraging a digital LOS on a daily basis, and you’ll quickly learn of some hidden benefits that make this next generation of LOS distinctly different from legacy systems.
The Top 3 Hidden Benefits of a Digital LOS According to Daily Users
At the end of 2021 we invited banks and credit unions leveraging the Numerated Digital LOS to a virtual event to discuss—among a number of other topics—how they’re using our technology in everyday use cases with their business customers.
Here are the top three hidden benefits they mentioned most often during our discussions:
- Ensures regulatory compliance: Business loan applications are cumbersome. These long, paper applications are painstaking to fill out and often ask borrowers for the same information multiple times. Information the bank already has on their borrowers. Aside from being annoying, they’re also confusing for the average business owner and when borrowers are confused they tend to leave things blank, or provide the wrong information. If these mistakes aren’t caught by bankers or credit officers, it could leave a bank out of regulatory compliance and open to consequences.
Digital loan origination systems fix both parts of this problem. A good digital LOS will digitize an application and pre-fill it with all the data a financial institution already has available on the borrower. This makes it easier and faster for the borrower to fill out.
But, more importantly, a good digital LOS won’t allow a borrower to submit an incomplete application or financial statement, keeping banks and credit unions in compliance with business lending regulations.
- Makes credit more accessible: Applying for credit as a business owner can be incredibly intimidating; requiring them to fill out lengthy forms, take long trips to the branch, and collect mountains of financial documents for underwriting. Given the hectic schedules of most business borrowers, it can take a herculean effort just to get an application submitted.
A digital LOS can make credit more accessible to business borrowers by dramatically simplifying the process and combining it with a best-in-class user experience.
Today’s leading digital loan origination systems give borrowers access to online applications and omnichannel support meaning they can start an application through a self-service channel and only bring a banker into the equation when it makes the most sense for them. This means banks can truly meet their business customers where they are and when they need it most, making the human touchpoint all the more valuable.
- Elevates the job: Unlike legacy loan origination systems that were built for the back office, today’s digital LOS is designed to optimize the entire borrower journey. And, while that means this technology is capable of automating the entire end-to-end business lending experience, it’s goal is by no means to eliminate the role of the banker. Rather, a good digital LOS will free a banker to do more.
Giving bankers best-in-class technology allows them to provide best-in-class service by reducing the time they spend on tedious tasks—like correcting borrower forms and tracking down financial statements—allowing them to focus more on the customer experience.
Banks and credit unions have taken advantage of this time savings to enable their bankers to provide customers with what they call “white glove, concierge service”.
Leveraging a Digital LOS to Grow Small Business Banking
As the small business lending market heats up in 2022, banks will be competing on more than rates. With the borrower experience taking priority in business owners’ minds, banks and credit unions will be looking to adopt technology that can give them a competitive advantage.
Leveraging a digital loan origination system can help banks and credit unions rationalize and grow their small business lending portfolios.