Pub. 2 2021 Issue 4 20 In Touch A s s o c i a t e M e m b e r I f there was a gold medal for financial services, lenders earned it in 2020 and 2021. The rollout of the Paycheck Protection Program’s (PPP), its associated changes, the next tranche of PPP, and the next, and now forgiveness (not to mention bankers’ work with some existing business borrowers to modify loans under government programs), has kept staff at banks swamped for more than a year. These factors, most likely, have also kept most lenders deep inside their loan origination systems more intensely than at any other time in their history. Widely reported, many financial institutions took the opportunity during the COVID-19 pandemic to digitalize some or many of their financial institution’s processes and services, including lending. Abrigo’s 2021 Business Lending Process Survey found that a slight majority of respondents (53%) accelerated digital transformation plans as stay-at-home orders and other social distancing measures forced workers and customers alike out of branches or lending centers. Largest lenders led the digital push Digital transformation varied somewhat by the size of the financial institution in Abrigo’s survey. 77% of institutions topping $10 billion in assets accelerated digital transformation plans due to the pandemic. That compares with: • 46% of respondents from institutions with $3 billion — $10 billion in assets • 50% from institutions with $500 million — $3 billion in assets • 52% from institutions with less than $500 million in assets COVID-19 and related events also led many banks to refocus on efficiency. Nearly half of respondents in Abrigo’s survey said their institution renewed an emphasis on finding efficiencies due to the pandemic. And just as the larger institutions more frequently reported accelerated digital plans than did smaller institutions, a larger share emphasized renewed efficiency among smaller banks and credit unions. However, despite digital pushes and efficiency focuses, lenders across the board in Abrigo’s survey reported their financial institutions use manual lending processes that add costs, create delays, and make their staff work harder than they must. Some of the same methods are also known for hurting lenders’ ability to drive loan growth, manage credit risk, and satisfy customers or members. Repetitive data entry is a top lending obstacle One example of processes that add costs, create delays and make staff work too hard is repetitive data entry. Most frequently named as the most significant obstacle to respondents or their institution in the commercial lending process was entering the same data multiple times or in multiple places. 35% of those surveyed identified repeated data entry as their largest lending hindrance. What is the magnitude of repetitive data entry in business lending? Nearly two-thirds of respondents said their financial institution reenters the same data point for a loan in another field or system up to five times. A quarter of respondents reported entering the data at least six times. In a similar survey by Abrigo in 2020, 20% of respondents said they entered data at least six times. In addition, only one of every three respondents in Abrigo’s survey this year said their institution currently offers the ability to apply online for a commercial loan. Lenders with online applications can often port the borrower data across the origination platform, resulting in fewer repeat data entries. The good news is that a higher share of survey participants said they now offer more online business loan applications than they did last year when only 20% offered them. However, this year 13% of respondents said their institution does not provide or plan to offer online loan applications in the future. Lenders’ Obstacles: Many Manual Processes Despite Digital Pushes BY MARY ELLEN BIERY, ABRIGO