HOW TO SELECT THE BEST COMMERCIAL LENDING SOFTWARE VENDORS

According to the American Bankers Association, only half of large banks and 38% of small banks currently use an online or digital loan origination channel. Commercial lending software makes it easy to quickly calculate loan periods, track collateral, and estimate cash flow.

Which commercial lending software vendor should you choose? There are dozens. To find one that will offer you the best services and features at a reasonable price, follow the four detailed steps below.

Find the Best Commercial Lending Software Vendor

Banks and other institutions that offer commercial loans should look for a system that will:

• Automate the tedious tasks and calculations that relationship managers, credit heads, and other employees don’t have time to perform on a daily basis;
• Free up employees’ time so they can focus on establishing better communications with customers;
• Provide vital funds to customers when they need them and constantly renew commercial loan periods as customers’ needs change;
• Manage risk to prevent revenue loss and calculate appropriate collateral for each customer based on advanced predictive analytics;
• Follow the most robust data security best practices and all commercial loan compliance regulations; and
• Offer these services at a reasonable price—whether your institution is small or large.

To find loan origination software vendors with systems that do it all, follow these four steps: 

1. Seek out automated commercial lending software;
2. Ask whether the system is configurable;
3. Estimate the time to market and return on investment; and
4. Verify that the software is secure and compliant. 

By the end of this process, you should have all the information you need to make the right choice.

Step 1: Seek Out Automated Commercial Lending Software 

The first step to finding the best commercial lending software vendor is to narrow your choices down to the most automated systems. There are a few reasons why this step is so important. 

• It simplifies the commercial lending lifecycle—everything from loan origination to cash flow tracking is done for you. 
• Your loan managers won’t have to perform any manual data entry, so they’ll have more one-on-one time with customers. 
• Risk-benefit analysis ratios are automatically calculated based on hundreds of individual factors and custom equations. You’ll instantly approve or deny loan applications, saving your employees and potential customers a great deal of waiting and processing time. 
• You can extend the loan period or renew it at a later date. When your customers need last-minute funding, you’ll instantly know whether your institution can provide it.

As you shop around for the best commercial lending software vendor, look for systems that include automated:

• Loan origination and application decisions;
• Loan tracking and data entry;
• Risk assessments and pricing;
• Accurate risk scorecards based on predictive models;
• Commercial loan spreading; 
• Collateral management;
• Customer service performance assessments and surveys; 
• Task assignment to individual employees and workflow monitoring; 
• Loan covenant monitoring and other important documentation for tax purposes;
• Exception management; and more.

A commercial lending software that has all of these automated features will be easy to use and far more accurate than a manual or paper-based system. Your risk will be lower and your customers will also appreciate having all of their documentation in digital form.

Step 2: Ask Whether the System is Configurable 

Once you’ve determined that the commercial lending software vendor offers all of these automated services, you should ask the vendor whether you can customize the system. 

Configurability is important because it lets you make your own rules and authorizations. Your institution may prioritize commercial real estate loans (e.g.). You can configure the software to favor those real estate applications and take into account certain exceptions that you wouldn’t offer for other types of applications. 

Only you know what system will work best for your institution. The best commercial lending software vendors recognize your role in the software design process and will ensure that you can customize every detail, from deviation policies to the dashboard user interface.

Step 3: Estimate the Time to Market and Return on Investment 

The software’s features and configurability are both important, but you also need to consider how long it will take to get the new system up and running. The commercial lending software vendor should know the approximate time to market and be able to provide a relatively fast return on investment (ROI). 

The best commercial lending software vendors offer hybrid systems that are functional straight out of the box and include additional configurable options that you can deploy at a later date. You could start using the standard version of the software immediately. It shouldn’t require any extensive changes to your existing workflow or infrastructure. When you’re ready to create a custom user interface or add loan exception rules, you can. 

This also leads to higher ROI. It won’t take months or years to install the new system and you won’t experience long periods of downtime. The software will pay for itself in no time.

Step 4: Verify That the Software is Secure and Compliant 

Commercial lending software is more secure than manual and paper-based systems. That’s because you can track exactly who made each decision and you can hold every user accountable for their actions. You’ll also have better-organized documentation and digital backups of vital information. 

When choosing a vendor, ask if they provide:

• Secure authorizations and access to data sets based on roles;
• Multi-factor authentication;
• Routine audits; 
• Encryption of sensitive data and financial information; 
• Secure backups of all data in the cloud or on physical servers.

A trustworthy vendor will already have multiple security steps in place to keep your data safe and flag suspicious activity. This will help you meet and exceed all compliance standards for your industry.

Selecting a Commercial Lending Software Vendor: Next Steps

Next up:

• Ask for examples of user interfaces or systems they’ve made in the past;
• Use a demo of the software system to test whether it meets all of your needs;
• Communicate your institution’s business strategy and priorities to ensure that the vendor understands your needs;
• Discuss pricing and service level agreements (SLAs).