Embracing Convenience and Connection in Commercial Lending

Commercial borrowers are among the most valuable customers within community financial institutions, which is why so many of these institutions serve the commercial segment with a very hands-on approach. Commercial lending can also be one of an institution’s most manual processes, as bankers fear that digitizing processes will lead to loyalty dilution and loss of personal relationships.

But there is good news for bankers: they can have the best of both worlds if the right approach is taken.

When the Paycheck Protection Program (PPP) was announced, financial institutions had to quickly and efficiently provide small businesses with the financing they needed to keep their doors open. The most effective way to achieve this was to take advantage of technology, allowing the large volume of loans to be processed more efficiently and quickly. Many banks have learned that delivering personal and meaningful service is still possible through digital experiences.

Digital Loan

Paper-intensive processes can be a burden on both borrower and lender. Today, many lenders spend around 30% of their time researching documents and asking clients for information they may already have access to, such as personal financial statements. The time spent on these tasks could be better spent on more meaningful conversations about strategy and business growth.

Embracing more widespread digitization for commercial and SBA lending allows banks to increase efficiency and more effectively engage in cross-selling opportunities. Take tax returns, a traditionally cumbersome process, for example. By digitizing the process, the customer could be notified and the documentation automatically sent to lenders, providing transparency into the customer’s cash flow and overall business relationship.

As a result, the lender can spend meetings discussing the state of their finances, not researching and filling out paperwork. Another equally important benefit: Approaching digitization in the right way can help lenders facilitate personal experiences at scale.

Corporate borrowers have shown they don’t mind a more digital approach to service when it translates to increased convenience and speed. In fact, many community banks are losing small businesses to automated online lending companies offering high rates, simply because it can be quick and easy for the borrower. A digital-first approach saves business owners valuable minutes from their day and helps improve communication outside of office hours.

Going forward, institutions that hope to remain relevant will migrate more aspects of the commercial lending process to digital platforms, leaving lenders more time to focus on the most important part of their job: building personal relationships and meaningful with great people. Personalized and seamless experiences are necessary for any service provider to be successful in attracting and retaining customers.

Local financial institutions stand out in the financial services industry through their customer relations and their individualized communication. That hasn’t changed, but it’s no longer good enough with increased digital customer expectations. Bankers are now expected to provide a seamless digital experience while demonstrating that they know and understand their business borrowers and their business goals and needs. Fortunately, both can be achieved for all community financial institutions using the right tools.

Long gone are the days when bankers had to choose between human connection and efficiency. Personalized service can be done digitally and at scale.

Every piece of technology an institution adopts is a chance to remove a barrier for current customers and help attract new ones. Even though competitors can be quick, they will often struggle to build relationships. The right combination of speed and personal relationships will allow community financial institutions to differentiate themselves and successfully move forward.

Joe Ehrhardt is founder and CEO of Teslar Software.

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