How This Community Bank Tripled Loan Volume Using Smart Automation
D.L. Evans Bank’s Robert Watts discusses how the $3 billion Idaho-based community bank transformed its consumer lending process, growing from 200 applications annually to 300 monthly while maintaining strong risk management.
By Justin Estes
On this episode of the Banking Transformed podcast, host Jim Marous sits down with Robert Watts, VP consumer credit administrator at D.L. Evans Bank to discuss how the $3 billion community bank based in Southern Idaho is modernizing its lending processes while maintaining strong risk management.
Q: Can you tell me about your career path and how you got to where you are today?
Robert Watts: I’ve been with the bank for 18 years. As a credit administrator, I followed a different career path. I started in the compliance department, doing HMDA verification, fair lending review and branch audits, and I got involved when we switched technology back in 2006.
I was part of the team that led that change and really got my foot in the door with the credit admin side. Then, in 2010, I got hired to the consumer credit administrative position and have been there ever since.
Q: How does your compliance background influence your current role?
Watts: It’s a challenge. Balancing the compliance aspect versus the risk and ensuring the customer needs are also met. My mindset is very much black and white, which made me good at compliance. It’s been a challenge being a credit administrator, letting that gray area grow a little bit.
A lot of our consumer applications or needs come from our commercial and agricultural customers to meet their consumer needs. Whether they need a car loan or a credit card, their kids need loans. That’s really where our portfolio has grown on the consumer side.
Streamlining the Loan Process
Q: How easy can current and new customers get loans?
Watts: Our process really doesn’t differ whether you’re a new or existing customer. We have ways to apply online, but customers can also come into a branch and apply regardless of whether they’re new or returning or new or existing; it’s the same process.
We’re looking to add efficiencies to try and make the process for the existing customers a little bit smoother with connectivity to our core processor and getting their information to flood into the application system. But really, we’re just taking the application and trying to use MeridianLink’s application to really trim the fat, so to speak, to ask the specific questions that we need to make the process very smooth and straightforward.
Q: What impact has instant decisioning had on your loan volume?
Watts: Since we’ve implemented instant decisioning, we’ve gone from, I think, when I started back in 2010, we were doing 100, 200 applications a year to now. Last year, we were probably working with around 300 applications a month.
Balancing Speed with Safety
Q: How do you balance compliance requirements with customer expectations for speed?
Watts: Yeah, I think it’s got to be a blend of everything. Obviously, you need speed to get the customer a quick response. You’ve got to have the compliance aspect of it to keep regulators from being too hard on you for decisions.
At the same time, it also manages the bank’s risk. There’s a three-pronged approach. You’ve got the customer, the regular, and the bank, all of which have to work together.
Q: What role does your existing customer relationship play in risk assessment?
Watts: Really, just having the customer relationships we have is kind of the balance there. We don’t have the compliance challenges because they’re our customers. We want to take care of them, but at the same time, we don’t have the risk. Because they’re not necessarily a new customer coming off the street, we have to do a bunch of due diligence on them. We’ve had the relationships for 20, 30, 40 years sometimes.
Technology Partnership Selection
Q: How do you evaluate and select technology partners?
Watts: Typically, we have a whole management team that comes together from compliance, lending, marketing, and whatever departments might be touched. And they all have the same amount of input on whether it’s a good fit, whether it’s a product we go forward with, whether it’s going to meet the needs we’re looking for. Then, we make a decision.
Q: What challenges have you faced in implementing new systems?
Watts: I think a lot of it just comes down to finding the right fit. Before we were with MeridianLink, we were a CRIF client, which MeridianLink acquired back in 2018. CRIF was a great company. They were good to work with. They were probably a bit more focused on the community bank side than MeridianLink.
As they acquired CRIF, they’ve kind of had to shift focus a little bit and take our viewpoint into perspective, as opposed to just the credit union. Sometimes, there have been challenges regarding the way a bank operates as opposed to a credit union. And so they’re trying to work through some of those hurdles, making things efficient and smooth for both parties.
The Path Forward
Q: What enhancements are you looking to make in your loan operations?
Watts: Although we have instant decisioning, I think there are definitely improvements that we can make. We can pull different vendors into the framework to make the speed even that much quicker and remove some of the redundancy aspects, whether it’s verification of income, verification of employment, or manual underwriting versus automated underwriting.
Another thing we’ve done is, about two or three years ago, one of our branch locations became an actual digital branch location. They’re housed in our corporate office, and all they do is process online applications.
Those applications coming in allow a certain department to grab them, pick them up quicker, and make a quicker decision, as opposed to maybe falling through the cracks on a branch loan pipeline that may be focusing on larger commercial customers rather than consumer deals. That way, the digital department can pick those up and get a quick response.
Q: What recommendations would you give other institutions on their modernization journey?
Watts: I think the biggest thing is not trying to tackle everything all at once simultaneously and knowing who you are as an institution. When we implemented it, we didn’t really do anything that was outside of the norm for the institution.
For example, we still offer real estate loans, but we don’t make instant decisions on those types of credits because they’re a little bit more risk and a little bit more to review. And so, we didn’t fully implement instant decisioning on those.
We have some smaller dollar volumes that we’ll allow instant decisioning on, but we didn’t apply instant decisioning across the board because we weren’t comfortable with it. So, you kind of know what you’re comfortable with and what your institution is looking to accomplish, and then you just work towards it. And once you accomplish that, move on to the next piece of it and just do it step by step.
Q: So you’re moving towards more risk management, which is a major change in your perspective.
Watts: And sometimes there are challenges involved with that because, kind of back to some of the topics we’ve already touched on, there’s the regulatory aspect. There are internal processes that we have to deal with that sometimes the bank has to give up some of those traditional processes and go more to a new modern aspect of things and really kind of look to make a philosophy switch or just kind of a mindset shift to get more up to speed with things.
Justin Estes is an award-winning writer, strategist, and financial marketing expert with expertise in banking, investments, and fintech. His clients include the NYSE, Franklin Templeton, Credit Karma, Citi and, UBS, and his work has appeared in Forbes, Barrons and ThinkAdvisor as well as The Financial Brand.
For a longer version of this conversation, listen to "Balancing Speed and Safety with Instant Loan Decisioning", a podcast with Jim Marous, available here. This Q&A has been edited and condensed for clarity.
