Success in Automating Lending Depends on Top-down, Bottom-up Commitment

During times of crisis, funding is critical for businesses. We’re in a time when financial institutions (FIs) must meet customers’ lending needs more quickly and without errors or setbacks. Achieving success will be driven by technology—end-to-end automation based on the Straight-Through Process (STP) will become increasingly the norm.

Effective automation creates experiences that will leave a lasting, positive impression on customers. However, many FIs are reluctant to embrace automation. Many fear control will be lost or don’t fully understand the need to change (i.e., "that’s the way it’s always been done").

For those ready to help their FI move to automation, it’s essential to change the current culture. In doing so, hesitancy from management and staff alike can be addressed effectively.

Some advice on gaining acceptance of automation

When an FI considers end-to-end lending automation, there has to be a concerted effort to get everyone on board with the change, or success will be limited. Change driven from the top-down and the bottom-up will generate buy-in across the organization and position the ensuing transformation for success.

Effective transformation often comes down to how people think about automation. When the STP approach and related automated infrastructure are better understood, management and staff grasp the immediate and longer-term benefits that will emanate to them and their customers.

To move forward, management and staff must accept two important caveats regarding the transformation:

1. Expecting to replicate old processes to an automated approach will fail. Acceptance that processes must be entirely re-engineered is crucial.
2. Silos throughout the FI must be broken down to achieve commonality in IT structure. Buy-in across the organization is vital for success.

Should an FI automate alone?

The COVID-19 pandemic, the uncertainty it brings, and the immediacy of fintechs and challenger banks are now galvanizing FIs to digitize lending. The big question is whether they have the IT and developer base in place to handle the transformation.

Many FIs simply don't.

To effectively change to automated lending, experience matters. Consider working with a partner who applies the STP approach, uses innovative technology to work quickly and effectively, and provides proven knowledge to help guide culture change for an evolving FI.

Read more about ways to leverage automation, STP, and other innovative technologies that help FIs meet the challenges of the new normal. Observations on the importance of culture change can also be found in Chapter 3 of Q2's eBook, "The High Cost of Lending Uncovered."