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How Should Financial Institutions Deal With Growth: Staff Augmentation Or Automation?
Banks and other lenders experiencing a rise in workflow need to increase their ability to process loans quickly. Traditionally, this has meant increasing their staff, but many institutions are turning to loan review software instead. This article looks at this software showing how it can help financial institutions deal with growth.
The Problem: Increased Loan Review Work
Lenders are facing unprecedented changes in the financial landscape and are working hard to keep pace. There has been a rise in demand for commercial loans as businesses struggle to survive hard times, yet there has been a drop in supply as many existing lenders significantly reduce lending activity or fail entirely.
Complicating this is the fact that many loans take longer than they have before. Even financially stable lenders are taking hard looks at their loan portfolios, conducting more in-depth analyses before approving applicants for funding. These two factors leave the approval system of many financial institutions overloaded. These financial institutions need an efficient solution that can be implemented quickly so they can take advantage of the new business.
The Old Solution: Hire More Staff
The conventional wisdom is if your workload increases, you bring on more people to cover the duties. Unfortunately, this solution has many problems associated with it and it will not work for every business.
Training new staff on the bank's existing loan review process takes time. Even experienced loan officers will be trained on their old employer's review system, the details of which are probably quite different from the new one. It can take weeks or months for new officers to come up to speed and other staff members lose time training them. As the lender outgrows existing office space, expenses grow even further as the cycle repeats.
Many banks are still using inefficient loan review systems that have evolved as the institution has grown. These procedures might have been adequate when the lender was smaller, but as the business expands, the inefficiencies grow exponentially. Soon the entire loan review process becomes a bureaucratic nightmare.
The New Solution: Automation With Loan Review Software
Rather than clinging to archaic, inefficient review processes, today's successful financial institutions are turning to a new generation of loan review software that makes credit review fast and efficient. Reviews that took days now happen in hours or minutes.
These advanced loan review software applications allow loan officers to take data from disparate sources to standardize and analyze it in a fraction of the time old systems did. Financial institutions have no more importing data from various reports into a spreadsheet then trying to make sense of the data. Bank personnel can focus on credit review and portfolio management rather than the tedious tasks associated with out-of-date methods of loan review.
Software allows banks to operate with shorter turnaround and more accurate credit analyses. Lenders can expand their commercial loan base without hiring any additional staff or increasing their operational expenses.
Don't throw people at the problem. Use loan review software to offer an efficient, cost effective loan product.
About the Author Dakota Bressler is an author for DiCom Software, the leading provider of loan review software. Their clients include financial institutions from neighborhood banks to multinational corporations with over $180 billion in assets.
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