Commercial lending is a unique aspect of the banking industry.
Unlike consumer loans, which are underwritten based on a snapshot of the customer’s current creditworthiness, commercial lending decisions are a continuous work in process. As any business owner will tell you, revenue and profitability can change dramatically from one year to the next, which is why banks work so hard to monitor commercial portfolio risk.
Thankfully, technology exists to ease the burden of managing this risk. In this article, we’ll explore five common types of commercial loan software.
#1: Credit Analysis Software
Before a lending decision is ever made, the bank must perform adequate due diligence on the entity that is requesting funds. Even after underwriting is complete, banks must continue to monitor and track the creditworthiness of their commercial borrowers. This is typically done by transferring data from the customer’s financial statements into a format that is easily analyzed by the bank.
Banks often leverage credit analysis software to perform spreads, which are used to understand the financial health of the business. Credit analysis software is a vital tool for efficiently and effectively developing financial ratios based on data from balance sheets, income statements, and other financial reports.
#2: Document Tracking & Exception Management Systems
You can’t analyze what you don’t have.
Document tracking and exception management systems streamline the collection and tracking of missing and expiring documents. Unlike manual ticklers, which must be manually updated by staff, automated document tracking systems streamline the creation and clearing of exceptions.
For example, our AccuAccount platform integrates to your core and creates document placeholders upon a loan’s booking. Once a missing document has been scanned into the system, AccuAccount automatically clears the exception on your behalf.
Automated exception reports keep lenders and bank management in the loop while simultaneously eliminating the need for manual tracking spreadsheets.
#3: Customer Relationship Management Software (CRM)
A loan is much more than just an exchange of financial capital. At the heart of every loan is an interpersonal relationship between the lender and the borrower.
Bank customer relationship management (CRM) software helps commercial lenders create a scalable relationship workflow. In addition to serving as a repository for basic information (such as contact details, opportunities, referral sources, etc.), an effective bank CRM integrates data from the core and provides a 360-degree view of each relationship. Account balances, related entities, and exception data should be a click away, enabling the borrower to elevate the customer experience without jumping between multiple systems.
#4: Document Prep Software
Commercial loans involve a lot of paperwork. Manually creating documents has become a thing of the past, thanks in large part to doc prep software.
When a loan is approved, document prep software goes to work and generates all of the required paperwork for closing the loan and perfecting the collateral. Some doc prep systems offer an eSign module, which provides an even more streamlined closing process.
#5: Imaging Software
Keeping all of your commercial loan documentation in paper format is a risky proposition. Not only are paper documents more likely to get lost, damaged, or destroyed, but they also create unnecessary bottlenecks for commercial lenders. Each time a customer stops by to inquire about additional lines of credit, the lender must track down the customer’s hardcopy file (which may be stored at a different branch). This slows down the lending process and creates unnecessary friction with the borrower.
For these reasons, approximately 69% of community banks utilize imaging software to organize their commercial loan files. Imaging software reduces the risk of information loss, elevates customer service, and eliminates unnecessary bottlenecks in the lending process. And, when combined with an automated exception management system, imaging technology can also accelerate document tracking and credit analysis.
Connect the Dots with AccuAccount
If your bank is in the market for commercial loan software, be sure to take a demo of our AccuAccount platform. AccuAccount provides integrated imaging and exception management, connects to 30+ core banking systems, and integrates to the other commercial lending tools that your bank uses.
Chat with our team of former bankers to schedule a risk-free demo of our software.