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Automating processes can save time, reduce costs and boost the member experience.
Business lending offers great opportunities for credit unions, but the inherent inefficiencies in loan processes, from manual paper processing to redundant data entry, typically translate into frustration for both the business member and the lender. If credit unions can find a way to incorporate automation to streamline this previously burdensome process, they can differentiate themselves by saving time, reducing costs and boosting the overall member experience.
$1.2 billion Corning Credit Union, Corning, N.Y., has risen to these challenges. Corning CU began offering business services in 2006 and has cultivated and expanded those services over the past decade. Today, the CU services a commercial loan portfolio of approximately $125 million, including commercial real estate, commercial and industrial, Small Business Administration, and participating loans. However, as this product line has flourished, the credit union also encountered operational and efficiency challenges in its business lending processes.
One of the major pain points for Corning CU was an inordinate amount of duplicative data entry. For example, individual property addresses often had to be entered 15 times per loan, and a member’s name was entered an average 25 times for each new loan request. These repetitions absorbed a significant amount of employee time and increased the potential for preventable manual errors.
An additional inefficiency was a heavy reliance on paper. Memos were constantly shuffled back and forth between desks to communicate the status of various loans, and employees spent a lot of time in meetings. While the intention of these meetings was good, employees could have spent that time more productively serving members. Corning CU also recognized a lack of transparency in the loan process. There was no effective way for management to accurately track department productivity and turnaround times.
Because of its dedication to stellar member service and process improvement, the CU was determined to identify a comprehensive solution that could reduce friction throughout every phase of the loan cycle and ease these pain points. After conducting careful vetting and due diligence in reviewing multiple automated lending systems, the credit union selected the Bank Operating System, a cloud-based platform from nCino, a Wilmington, N.C. –based cloud banking provider. The Bank Operating System offers loan origination, workflow, enterprise content management, business process management and reporting capabilities.
By leveraging the automation of the platform, the credit union has streamlined and simplified every step of the commercial loan process since going live last May. Previously disparate systems have been consolidated, reducing cost and complexity. By centralizing several functions–such as loan origination and CRM, just naming two–the credit union replaces multiple point solutions and reduces the amount of resources dedicated to vendor and system management, while also streamlining the experience for employees and members. Redundant data entry has also been significantly reduced; the addresses and member names that were previously rekeyed 15 and 25 times per loan are now entered just three times each from application to booking, an 80 percent reduction.
Corning CU has also transformed the post-closing process. While administrators previously had to scan and manually catalogue paperwork, these documents are now electronically scanned and automatically saved and indexed. At one time, the CU’s team members had a three-month backlog of paper files that needed to be imaged and indexed; today, that same process takes on average a single business day because those documents are regularly saved and indexed each step of the way.
Creating new efficiencies has also improved productivity: Corning CU is now processing a higher volume of loans more quickly, with fewer team members performing the same functions. The complete loan package is available to all team members, prompting a smoother, faster transition for each phase of the loan cycle and increasing turnaround times. In fact, from Q3 2016 to Q4 2016, Corning CU was able to more than double the number of loans booked.
Transparency into the process has since improved as well; Corning CU employees can see into each loan’s status at all stages of that loan. This increased visibility into the status and details of the loan process empowers the lending team and management to have greater insight into both individual loan performance and the loan portfolio of the entire team, reducing bottlenecks and empowering employees to correct challenges in real time.
Automation and efficiency boosts have freed the CU’s employees from painstaking manual tasks, instead allowing them to focus on member-facing activities and relationship building. For example, 2016 was the first-year loan officers had the time to complete all of their member site visits, a task that was previously outsourced.
The loan process can be a substantial tool to build and maintain longstanding, healthy relationships with business members as they look to strengthen their financial future. If credit unions can streamline the business lending process and make it more efficient, as Corning CU did, they can cultivate valuable member relationships and strengthen portfolio performance for a stronger, healthier credit union.
Robby Knapp is regional vice president of credit unions, nCino, Wilmington, N.C.
