COMMUNITY BANK TECHNOLOGY: HOW TO PROVIDE COST-EFFECTIVE, INNOVATIVE SERVICES

Community banks must keep current with technologies that provide the type and level of services expected by today’s consumers. Most community banks don’t have the IT budgets or economies of scale enjoyed by larger lending institutions. For many community banks, the thought of implementing new technology can seem overwhelming. However, major IT advancements now make for quick implementation of innovative services, so that community banks can realize the benefits of the latest advancements without massive expenditures of money and time.

Community Bank Technology Solutions to Address Digital Consumers

Community bank technology— including cloud, configurable applications, easily-integrated third-party lending services, analytics, and business process outsourcing (BPO)—helps community banks deliver the services expected by customers That’s especially true for the growing number of millennials and generation Z who live digitally. As an example, let’s explore how these community bank technologies help implement a modern approach to lending.

Cloud Facilitates Fast Implementation and Lower Costs

Cloud-based loan origination solutions (LOS) facilitate fast implementation by eliminating the need to acquire and install new IT infrastructure to support new software. LOS hosted in the cloud are quickly deployed and securely accessible via the internet. Home and branch offices can use the new LOS without delay. Customers have secure access via desktop or mobile devices to initiate and track the progress of loan applications.

 

Community banks benefit from the latest functionality provided by cloud-based LOS. That includes improved performance, scalability, mobile UX, decision rules, auto structuring, role-based security, and improved compliance with evolving regulations. Frequent, automated software updates ensure employees get the latest improvements immediately. Community banks often realize measurable capital and operational savings by adopting a cloud strategy.

 

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Integrate the Specialized Functionality You Need

Community bank lending processes are unique. An LOS that easily integrates with cloud-based lending services lets community banks choose from a wide range of specialized functionality to meet customer expectations, improve efficiency, and support better-quality lending decisions.

 

• Mobile loan applications support anytime, anywhere all-digital submissions.
• eContracts are created and sent electronically to applicants within seconds of loan approval.
• Alternative data sources provide a different perspective of applicant financial strength. that can lead to more loan approvals.
• Fraud analysis identifies high-risk applications to help reduce defaults.
• Machine learning simplifies credit scoring and proposes the optimum, risk-adjusted terms for each borrower.

Integration of these capabilities via the cloud allows a community bank to add specialized functionality without costly, time-consuming custom programming.

Configuration to Meet Your Specific Lending Processes

Configuration allows community banks to tailor the LOS to match their unique lending processes. Using menus that cover all areas of the loan origination process, lending professionals determine scorecard layout, create decision rules and workflows, establish credit policies, create custom formulas, and integrate cloud-based lending services. Configuration accelerates time to deployment and eliminates the need for custom coding.

Analytics, a “Must-Have” Technology

Regardless of the size of the institution, analytics is a “must-have” technology. When tightly integrated with an LOS, analytics provide actionable insight into nearly every aspect of the process, from applications to funding to portfolio performance. With analytics, you determine which underwriters are most / least efficient, discover funding bottlenecks, track overrides, closely correlate borrower attributes with risk, identify loans likely to default, and apply this insight to continually improve lending efficiency and strategy.

Business Process Outsourcing: An Alternative Way to Benefit From Technology

Just as the cloud has transformed the way IT services are implemented and managed, business process outsourcing (BPO) offers community banks another way to access the latest technology. Outsourced loan servicing lets community banks focus their expertise on lending to the communities they serve. Outsourcing lets you provide loan servicing cost-effectively, without the need for capital investments and operational expenses that may stress annual budgets.

An outsourcing approach to loan servicing provides an integrated account administration platform, multi-channel customer care, a full range of collateral management, automated billing and collections, real-time updates to accounts, and tight integration with the corporate general ledger. For many community banks, the best technology choice for loan servicing may be business process outsourcing.

Community Bank Technology For Today’s Consumers 

Community banks focus on understanding the needs of their local customers and fostering long-term relationships. New technologies are changing the nature of those relationships. A growing portion of younger generations will rarely set foot in a bank. The community bank technologies mentioned above are helping these banks cost-effectively provide the type and quality of services expected by today’s consumers. An investment in these technologies helps ensure community banks remain competitive and profitable.