Speeding SMB Loans Through The Cloud

Banking has been making the leap beyond traditions rooted in paper rather than technology. It’s been a slow-moving process but a necessary one, and it’s likely to speed up as nimble firms, especially in alternative finance, rooted in digital ways, make competitive inroads and grab the loans that might otherwise be steered toward mainstream players.

Against this backdrop, banking information technology company nCino is linking with West Monroe Partners, a consultancy firm, in a joint effort to bring both software and the services needed to get the most out of that software in order to automate treasury management and backend processes.

In an interview with PYMNTS, Pierre Naudé, chief executive officer of nCino, said that his company offers what can be termed “off-the-shelf” technology solutions, with a focus on the cloud and secure computing. One advantage of the nCino Bank Operating System platform, said the executive, is that the system “comes out of the box” with the ability for IT professionals to “write code up to five times faster,” which then improves workflow, even as the software becomes customized to fit certain organizations and processes.

The banking industry, especially among smaller, community banks with assets of less than $10 billion on the books, still relies on legacy systems and manual processes, with a focus on paper — applications, checks and the like — to get funding through to SMBs.

That leads to inefficiencies on both sides of the transaction between borrowers and lenders, with the typical loan process going across as many as nine to 12 stages, which leads to any number of bottlenecks, said Naudé, who stated that the flow of documentation and interactions between applicant, lenders, lawyers and others “is not a serial one.” The embrace of the cloud and streamlined processes means that the loan process can see a shaving of as much as 30 percent to 40 percent off the time devoted to legacy, siloed and traditional flow seen in the absence of updated technology.

There’s also an advantage for the banks themselves who move to the cloud, said Naudé. He noted that banks can see a 10 percent “pull-through” improvement in loans that are accepted and disbursed, which immediately accrues to the bottom line.

“Compliance and speed are not mutually exclusive,” said Naudé, contrary to what some banks, with a mindset that acts a roadblock to technology adoption, may think. The alternative lenders, he continued, have been quick to embrace speed (no pun intended) as a competitive advantage over traditional lenders, and speed also allows them to charge relatively higher rates on loans.

The continued growth in the alternative lending space does much to help illustrate the relationship between would-be borrowers and lenders — a relationship that Naudé said may not run as deep as some banks suspect.

“The most important parts of a relationship to a borrower, to an SMB, include: ‘Have I been approved for the loan?’ and ‘When will I get the money?’” said Naudé, revealing that firms are looking for ease of use in applying for a loan and may be agnostic as to where it comes from.

Banks moving into the cloud gain advantages chiefly through automated workflow and especially document management. All parties across a loan, from, say, lawyers to appraisers to banks to borrowers, can see which documents need to be provided and when, which helps eliminate the guesswork of the process. And some documentation, said Naudé, can be provided through imaging, such as drivers’ licenses or check deposits. The real-time document flow and all-around view of that document flow from stakeholders mean that communication continues across the spectrum and that that process is not held up due to inadvertent omissions.

The ability to use mobile — across phones, tablets and the like — means that “in-the-field” loan officers and SMB executives can see where loan terms and steps remaining stand, and with the absence of paper documents (which can be lost or stolen), safeguards are in place as well.

For nCino, said Naudé, the partnership with West Monroe helps move toward greater penetration in banks that have more than $10 billion in assets and also helps save the costs of having to hire new service personnel to help roll out new processes at those clients.