Improving the small business loan experience is a great way to build new relationships and deepen existing ones. We spoke with industry specialists about the priorities for community banks as they build a digital loan process for small businesses.
Digital lending capabilities are quickly becoming table stakes, particularly when it comes to small business lending. It’s critical for community banks to have online loan applications, process automation staff skilled in digitization and more.
However, banks should first consider their customers’ needs and the infrastructure and features needed in a lending platform before adopting a new digital strategy.
Benefits of digital lending
“Today’s customer, whether consumer or small business, has become very comfortable and accustomed to anytime, anywhere self-service,” says Charles Potts, ICBA’s executive vice president and chief innovation officer. “The necessities of a digital-first approach were greatly magnified during the pandemic, with many banks having to close branches and rapidly adopt new digital technology to address the needs of the PPP [Paycheck Protection Plan] loan. Providing a digital lending experience and, at the same time, maintaining a unique relationship banking model is now a critical ‘must have’ for most community banks.”
According to Kevin Wilzbach, director of technology product management for Wolters Kluwer Compliance Solutions, providing digital lending opportunities helps community banks stay true to their mission by providing the best customer experience.
“Consumers have a growing expectation to interact with financial institutions via online and/or mobile services,” he says. “Digital lending is one specific area where community banks can improve customer satisfaction by reducing paper-intensive processes. Additionally, it allows community banks to retain existing small business customers while improving efficiencies.”
“There are numerous reasons to support a digital lending solution,” says Michael Haedrich, a senior product manager at Finastra. Doing so can help community banks:
- Optimize the loan cycle
- Offer the ability to speed up the entire process
- Make it easier to capture applicant information
- Make quicker decisions
- Ensure a more consistent lending process
- Provide convenience by offering its use across multiple devices
- Take advantage of analytics
According to Haedrich, it’s critical for community banks to offer digital signature as an option. “Not everyone wants to sign electronically, but it needs to be offered,” he says. “As our customer base changes, convenience becomes more critical, and electronic signature is synonymous with convenience.”
Offering a combination of digital, hybrid and paper closing options is also critical, according to Wilzbach. “This allows the lender to meet every client’s needs,” he says. “We believe having a flexible digital closing workflow will deliver the best borrower experience, while creating operational efficiencies for each participant throughout the lending ecosystem.”