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Loan Origination

In the customer-first era, the failure to modernize lending journeys is a threat to your survival.

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Overview

Keeping up with a changing lending scene

Despite many advances in digitization and automation, many financial institutions still fall behind in digital lending.

  • It typically takes 1 hour to complete a conventional loan application. Digital lenders do it in less than 15 minutes.
  • Around 30-40% of the loan origination effort is spent on non-core and automatable tasks.
  • The average time to process business loans is between 3 to 5 weeks with time to disbursement at nearly 3 months.
  • Digital lenders make decisions faster, taking only 5 minutes to process and less than 24 hours to cash.
Value Consulting
Spot the signs

What are the signs your lending processes are broken?

Here are some obvious (and not so obvious) signs that indicate broken lending processes:

  • High abandonment rate - a high dropout rate for online loan applications can indicate a larger issue - redundant data entries, manual document submission, and long wait times all contribute to a poor loan origination experience. According to Forrester, abandonment rates can reach up to 97.5% if processes are not optimized.
  • Long Time To Yes (TTY) and Time To No (TTN) - slow decision turnarounds negatively impact the borrower experience and hurt your revenues.
  • Inefficient underlying processes if your lending teams are spending 30-40% of their time and effort on non-core activities such as data collection and communication bottlenecks, then this may be a sign that your processes need to be optimized.
  • A low share of wallet - the average consumer holds 7.4 financial products, of which only 2.8 are with their main bank. A low share of wallet could be a sign of dissatisfaction with lending processes, hence customers look elsewhere for financing options.
Loan Origination - Spot the signs
Don’t miss out

Why is broken lending a threat to banks & credit unions?

With lending at the heart of most customer-bank and member-credit union relationships, poor lending processes can have a huge impact on your business.

Lost borrowers

Recent research indicates that unless applicants can complete a new loan application in less than 10 minutes, the abandonment rate can increase up to 60%.

Missed revenue opportunities

A survey revealed that many organizations are losing more than 75% of the potential loan business in a given year, a number that is not sustainable for banks and credit unions with high growth ambitions.

Increased risk & cost

Manual data collection, validation, and storage result in more errors, longer turnaround time, and higher operating costs. It can also affect your bank's ability to spot non-performing loans early, increasing cost of risk.

Take action

Drive better revenue from loan origination

Achieve remarkable results by re-architecting lending around your customers and members.

Engage to sell

With one in every five loans coming from an existing customer or member, it’s easy to see that cross-selling just works. While traditional marketing and referral sources are important, reaching out to customers that you’re already serving with relevant product offers can help you drive more applications at a lower cost. Your move: Send personalized recommendations to existing customers through their banking apps to drive more applications and increase your share of wallet with Backbase Digital Engage.

Backbase Digital Engage

Loan Origination - Engage to sell
Loan Origination - Compete on customer experience
Loan Origination - Dont forget underlying processes
Loan Origination - Enhance your readiness
See results

3 drivers for lending transformation

  • Faster credit decisions, lower cost to serve. With 30-50% less time spent on decision-making, customers and members get cash up to 80% sooner.
  • Increased profitability. A bank with a balance sheet of $250 billion can capture close to $230 million in annual profit through cost efficiencies and revenue gains.
  • Tap into new markets. Banks and credit unions with the right digital lending capabilities can take on the unmet financing need in the small, and medium-sized business sector, a $5.2 trillion a year opportunity.
Loan Origination - See results
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