Growing Commercial Lending

Category: Banking.

Growing loans is the primary means by which bank executives improve revenue. However, if a bank’s process is inefficient, commercial lending can have the opposite effect. With the current competitive lending environment, banks need to seek out opportunities to provide faster and more efficient service. While technology has helped with the process in terms of automation, banks need to rethink their processes, job roles, and expectations.

Banks need to place themselves in a position where customers want to take advantage of their lending services. Financial institutions need to make deliberate and conscious efforts to maintain a consistent and loyal customer base. By developing OKRs and focusing attention on the betterment of the organization, your lending services can continue to grow and increase your revenue.

Below are metrics (or KPIs) that financial institutions can use to measure the growth of its commercial lending:

  • Commercial Loan Fees per Commercial Loan Officer: This can be derived through the division of the total amount of dollar of commercial loan fees earned over a specific period of time by how many commercial loan officers the bank has.
  • Unit Cost of Commercial Loan Application: You can calculate this by dividing the total cost of commercial loan applications processing by the total number of processed commercial loan applications over a particular period of time.
  • Commercial Lending Headcount Ratio: This can be deduced by dividing the number of all the employees of the company by the total number of the company’s commercial lending employees at the same point in time.

Commercial Lending Business Process Improvement

Commercial lending is a key source of a bank’s profit, because of the interest attached to the loans. Below are some ways a bank can maximize the commercial lending process:

Have A Strong Customer Service Culture

An excellent customer service culture is the foundation of any thriving business. According to Ron Gagnon of Hitachi Solutions, a quality relationship with customers is the fuel on which the “engine” of any business enterprise runs.

Building and emphasizing customer relationships is key to a strong customer service culture. A rich relationship with customers opens up many possibilities, including commercial lending prospects. To compete in the current environment, banks need to prioritize these relationships and deliver customer service across a variety of mediums.

For example, Leumi Bank, Israel’s leading commercial bank, has taken customer service a step further when they launched ‘Leumi V’ application, which delivers face-to-face contact for the customers at their desktop, and through mobile devices.

Expand The Bank’s Business By Considering New Products

Your research team should constantly be thinking about what products and services your organization can offer. An institution should always be considering new products that will bring in new clients and expand the potential for commercial loans. Maybe that means adding auto-loans to your bank’s services–think about what you can offer to your existing and new customers.

Understand and Improve the Current Commercial Lending Environment:

When it comes to process design and automation, the commercial lending workflow has received less attention than other simpler workflows because of the complexities of the process. It’s important to consider the perspective of a lending expert who can review the current process and look for opportunities for improvement.

Leverage Technology To Enhance Business Process

It’s important to consider the ways your lending process could be more effective with additional technology. Monja, a commercial lending firm, posits that automation can be used to re-engineer and streamline your business processes in order to build your commercial loan portfolio. Automation eliminates most manual handling of customer data. This will cut down overall processing time and enable your bank to receive and sort more loan applications.

An example is Wells Fargo, who in 2016 launched an online lending product built in-house called FastFlex. With the automated process, borrowers can receive their loans as soon as the next business day. In addition to that, Wells Fargo partnered with a startup called Blend that allows customers to see data and provides documents and e-signatures easily. According to Secil Watson, head of wholesale Internet solutions at Wells, with the right algorithms, the bank can make better risk assessment and the underwriting process can be made faster.

Optimize Automation With Performance Monitoring

You should endeavor to optimize this technology by supporting it with performance monitoring. This is more efficient to do because this technology provides customized reports. This technology enables you to capture sources of loan guarantees directly from the customer’s documentation without necessarily asking him or her. It will also enable you to monitor how well customers are using their loans.


With this information in mind, you can create an OKR that will help you optimize your commercial lending, beginning with the objective “Improve Commercial Lending Process.”

    Objective: Improve commercial lending process

  • KR1: Launch a robust ‘unified processing’ lending cycle with human interventions limited to 3
  • KR2: Complete third party data source integration with the identified 25 agencies
  • KR3: Launch browser-based configuration tools to customize modifications content and speed

In KR1, unified processing is used where relevant information about new customers, their loan requirements and loan specifications is registered only once. All other computation and reports calling for this data fetches it from the central database.

In KR2, third party data source integration is the KPI and it facilitates automatic access to industry-leading credit data sources allows lenders to access the data fields they need, to obtain a more detailed applicant profile as part of the qualification process.

The configuration tools used in KR3 allow authorized users to quickly and securely make modifications. Because commercial lending is an integral part of a bank’s profit, this specific OKR could align with a corporate OKR “Increase Revenue”, or “Improve Profitability” to show that connection. Having a complete understanding of how you can improve your lending operations allows you to evaluate what changes need to be changed within your own organization. After you’ve determined what’s most important to focus on, you can use these improvement tips to construct an OKR that will help put you on the path to success.

The goal of improving your organization’s lending operations is to ultimately deliver a great customer experience. For that reason, the OKR mentioned above could align with a corporate OKR to “Improve the Brand’s Reputation” or to “Improve Customer Experience.”

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