Commercial lending choices are ongoing, unlike the underwriting of consumer loans, which are based on a single point in time. Banks put forth a lot of effort to control commercial portfolio risk because, as any company owner will tell you, yearly income and profit may fluctuate greatly.
Technology exists, thankfully, to lessen the load of risk management. The five most popular kinds of consumer lending software are discussed in this article.
- Credit Reporting and Analysis Tools
It is imperative that the bank does thorough due diligence on the borrower before making a loan decision. After underwriting is complete, banks still need to keep tabs on their commercial borrowers to ensure they remain creditworthy. To do this, the bank often converts the customer's financial statement data into a format that can be read and interpreted with little effort.
Spreads, a common method for assessing a company's financial stability, are generally performed with the use of consumer lending software which banks often employ. Financial ratios may be calculated quickly and accurately using data from financial reports like balance sheets and income statements with the help of credit analysis software.
- Exception Management and Document Repository Tools
In order to simplify the process of collecting and monitoring expired or missing papers, document tracking, and exception management tools have been developed. Automated document tracking systems simplify the process of creating and clearing exceptions, as opposed to manual ticklers, which need constant human attention.
- Customer Relationship Management Systems
There is much more going on behind the scenes of a loan transaction than meets the eye. Relationship building between the lender and borrower is essential to the success of any loan transaction.
Commercial lenders may benefit from a scalable relationship process thanks to bank customer relationship management (CRM) software. An efficient bank CRM combines data from the core and gives a comprehensive perspective of each connection in addition to storing the fundamentals (such as contact information, opportunities, referral sources, etc.). To improve the customer service experience, the borrower should be able to access information such as account balances, connected entities, and exception data with a single click rather than having to switch between several platforms.
- Software for creating legal documents
It takes a lot of documentation to get a commercial loan. Thanks to doc prep software, the days of manually producing documents are over.
All the documentation needed to close the loan and perfect the collateral is automatically generated by document prep software the moment the loan is accepted. Adding an eSign element to your document preparation software may make the closing process even quicker and easier.
- Imaging Programs
It's dangerous to keep all of your business loan records in paper form. Commercial lenders aren't helped by the fact that paper papers are more prone to being misplaced, damaged, or destroyed. When a client walks in to apply for more credit, the bank has to pull up their paper file (which may be stored at a different branch). This causes a needless delay in the financing procedure and strain on the borrower relationship.
Due to the importance of keeping track of commercial loan documents, roughly 69% of community banks use imaging software. The use of imaging software lessens the likelihood of confidential data being lost, improves service to customers, and streamlines the approval process for loans. Imaging technology may speed up document tracking and credit investigation, especially when coupled with an automated exception management system.
