How Technology is Innovating Underwriting
Consumers have been applying for personal credit and mortgage loans online for many years, but business owners have not been so lucky. Technology has come a long way and it’s now possible for traditional commercial lenders and Banks to offer online commercial lending. Human interaction is still a very important part of commercial lending but technology is now innovating the traditional commercial lending space.
It started with Merchant Cash Advance companies many years ago disrupting the space by offering fully automated online fast funding but now traditional commercial lenders are innovating with new technology tools available to them. And now the financial industry as a whole is embracing the idea of boosting their traditional underwriting methods with cutting edge technology to respond faster, provide a better experience for customers, speed up the loan application and funding process, and reduce risk. Businesses can now apply for funding and receive approval in record time by traditional lenders using commercial underwriting technology.
But why should traditional commercial lenders embrace underwriting technology and change their traditional methods?
- If you don’t your competition will. There are now more choices than ever for commercial loans. A quick search online brings up many alternative lenders all touting a quick response and a fast quote in seconds. And when business owners go to your website and they have to fill out a long form or worse for a callback, download a PDF and manually fill it out and send it back to you, they will likely shop for other lenders that make the process painless.
- Traditional underwriting still matters. Even though your traditional company is using technology or Fintech methods doesn’t mean you abandon your sound underwriting principles. You just use technology to apply your standards to your traditional process and free up your underwriters and loan officers to concentrate on the bigger picture and make critical lending decisions more effectively.
- Fraud prevention is more important than ever. Nowadays, there are very sophisticated fraud schemes under way that many commercial lenders aren’t aware of. New technology helps identify and pinpoint fraudulent accounts, identify trends and patterns not readily apparent to the human eye when there is often a large volume of information needing to be analyzed. Technology also enables commercial lenders to ensure their specific underwriting criteria and process is applied to every customer every time, assuring consistency and reducing errors, and minimizing the potential for fraud.
- A sale makes a living, an investment in good customer service makes a fortune. Lenders that offer convenient and fast ways for business owners to apply for working capital and get a faster response will do better. If they can apply for funding on their time from any device, it frees up their time to manage their businesses and they will be more likely to do business with you over another lender. If they have a good experience with your company from the outset, they will be more likely to choose you as a lender and continue their relationship as long as possible. What’s more, they will recommend you to other business owners and you will get repeat business.
- Businesses expect it. With most people connected to their devices 24/7 and being able to do personal banking, shopping, and virtually anything online these days business owners expect the same from their interactions with commercial lenders. Commercial lenders that implement technology to make the process smoother will be the go-to lenders.
- Technology helps reduce costs. The adoption of technology in lending increases efficiencies, which in turn, reduces costs. Lenders simply increase the quality of their service and lend faster. Without increasing resources on their team, the right technology enables them to lend faster, add more customers, and reduce overall costs. Underwriters spend less time on tasks that once required hours to complete, saving time and allowing them to close deals faster and reduce errors.