From Hours to Minutes: A Seven Minute Loan Story

Consumers want immediate, on-demand access to their financial institutions, but digital channels can’t provide that type of speed and convenience without an efficient digital back office. Today, financial institutions must operate more like smart, digital factories and move beyond mobile channels to adapt to new customer expectations.

The digital revolution has completely refashioned the way we approach our daily lives. Examples abound across industries of how companies have evolved their strategies to anticipate, meet and exceed changing consumer expectations.

Consider how Starwood hotels’ front desk associates used WhatsApp to communicate with guests before or during their stay, or how Amazon opened the doors to a checkout-free grocery store. These types of service, functionality, experience and fulfillment provided by other industries such as travel and retail set a high bar of expectation, which banks must now meet. The desire for immediacy and personalized service is driving more proactive digital strategies in the financial services industry, with the ultimate goal of improving the customer experience.

As banks and credit unions evaluate how to make strides toward achieving this overarching goal, there are several avenues worth exploring, starting with treating financial institutions more like a digital factory. Process quality improvements that are traditionally associated with manufacturing can dramatically advance the service areas of a bank by helping the organization become more efficient while also improving quality, reducing costs and risk, and increasing customer satisfaction.

According to Deloitte, a “smart” factory moves beyond simple automation and uses technology to create a “fully connected and flexible system that can use a constant stream of data from connected operations and production systems to learn and adapt to new demands.”

Consider this relevant, historic example. In 1913, Henry Ford installed the first moving assembly line for the mass production of cars and revolutionized an industry. As a result, the production time for a single car dropped from over 12 hours to just 93 minutes, and Ford’s 1914 production rate eclipsed the number of cars produced by all other automobile manufacturers combined. In addition, Ford’s employees’ workday was cut from nine hours to eight hours, demonstrating that the use of smart, innovative technology can increase efficiency and productivity while also saving time.

The Seven-Minute Solution to Digital Lending

Univest Bank & Trust Co. was among many community banks struggling to compete with the speed and automation of alternative lenders. After examining the problem, the bank recognized that it needed a comprehensive solution to deliver its lending products with decreased cost, reduced risk and shortened loan cycle times. The primary consumer benefits of a digital lending solution are the interrelated components of simplicity and speed, but digital channels don’t provide the experience consumers truly expect without an efficient and digitally enabled back office.

Beyond the cost benefits delivered by digital technology, a completely rethought operational back office can result in streamlined delivery and unmatched customer experience, which provides a significant competitive advantage. Similar to the Ford example above, Univest experienced massive productivity gains by utilizing a new technology: a centralized, cloud-based platform. The bank was able to reduce servicing costs by 92%, reached loan approval rates above 80%, and drastically reduced the time to process and approve a loan. All while remaining compliant with risk thresholds and regulatory requirements.

“Customers cannot comprehend a bank providing a credit decision in one day, let alone one hour or even 10 minutes,” said Hugh Connelly, President of Small Business & Capital at Univest. “And we are now closing in on the seven-minute mark from application to closing.”

Treat Your Bank Like a Digital Factory Where The Cloud is Your Modern-Day Assembly Line

Implementing and adopting a “digital factory” mindset can seem complicated. Many traditional banks and credit unions have yet to realize the efficiency gains afforded by technology because of legacy solutions and ineffective change initiatives. However, in a highly competitive banking environment, shifting toward a more flexible, adaptive production system has become an imperative for savvy financial institutions who wish to provide the speed and convenience that customers expect. Early adopters who harness digital technologies that improve their service offerings enjoy the greatest advantage.

Much like Henry Ford’s assembly line did to the automobile industry, the cloud has the power to transform financial services, and to ensure that financial institutions who take advantage of it are well positioned to grow and succeed in the future. With the agility provided by a cloud environment, banks and credit unions are able to effectively keep up with market changes and consumer preferences, and nimbly adjust to any shifts in business needs. The cloud’s flexibility also allows for the easy, quick introduction of new innovations and product tweaks or expansion. And, the cloud’s scalability guarantees that forward thinking institutions like Univest Bank and Trust Co. are able to effortlessly grow along with its portfolio.

Overall, cloud technology addresses all facets of corporate lenders’ digital transformation efforts, from facilitating collaboration across lines of business, to easing the flow of data between systems and third-party platforms, to addressing borrowers’ demand for a digital, on-demand experience.

For an industry that’s lived with batch processing, antiquated systems and process redundancies, the speed and accessibility now available through new technologies has put pressure on distribution, delivery and innovation. Real-time updates, proactive alerts and agile innovation are an integral part of an enhanced customer experience. Financial institutions that focus their digital strategy on creating a digital factory fulfillment channel will achieve differentiation in the market and alignment with their consumers’ needs and goals.

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