Commercial Lending

4 of the Greatest Challenges in the Commercial Lending Industry

When it comes time to taking advantage of the tools and tech afforded by digital transformation, commercial lenders encounter a number of challenges.


Over the last two years, the pressures of adapting to remote work during pandemic restrictions have accelerated digital transformation across industries and around the globe. In 2020, 45% of businesses reported reprioritizing digital transformation in their strategies, and presently, 91% have ongoing digital initiatives. However, the banking industry continues to stand out as a notable exception to these trends, with a mere 27% committing to new digital modernization schemes in 2021. 

Although the institutional gears grind slowly in the financial services world, it has become increasingly clear that temporary pandemic adaptations have made a permanent impact on how customers evaluate business performance, driving up expectations for responsiveness and empathy by 32%. As customers continue to leverage digital technologies to expand their access to services and make their preferences heard, lending institutions that commit to adopting new digital processes to improve efficiency and meet customer expectations will have a significant edge over the competition. 

Institutional Challenges for Commercial Lenders

For commercial lenders, modernizing and streamlining the loan application process will require adjustments in four critical areas. 

1. Inefficient Document Collection Processes

Most commercial lenders still heavily rely on paper hard copies and email attachments in the document collection phase of loan applications. To date, only a third of lenders offer clients the option of submitting documents digitally. 

With clients responsible for handing over dozens of documents, including bank statements, notarizations, and profit and loss statements, downtime accumulates rapidly when they have to make time to deliver hard copies or wait for loan officers to find and respond to emails. Operating this way, waiting for documentation consumes as much as 40% of the commercial lending sales cycle time. 

The bottleneck in document collection processes kills much potential productivity and contributes to client dissatisfaction. Going forward, banks will need to adopt digital solutions that enable efficient, trackable workflows in document collection for both loan officers and clients.

2. Redundant Manual Data Entry and Collection

Manual data entry processes still abound in the commercial lending industry. Recent studies estimate that loan officers spend 30-40% of their working hours on automatable redundant data entry tasks, often manually inputting the same information into different systems up to five times. These redundancies stem largely from the use of unintegrated systems that require many of the same entry fields, such as credit analysis, underwriting, loan booking, and portfolio management. 

Weeding out data entry redundancies requires a twofold approach. Firstly, organizations need to invest in integrating software systems and services to create shared visibility for client information. Secondly, they must identify steps in their processes that can be automated, further reducing time lost to manual inefficiencies.

3. Legacy Tech

Prior to the evolution of software-as-a-service (SaaS) systems that enable cloud-native infrastructures and microservices, most banking institutions used in-house proprietary platforms that ran on mainframes. These systems were generally unique, complex, and expensive to maintain. 

As IT infrastructures continue to move to cloud-based platforms and services, banks are beginning to experience a rift in their IT staffing expenses. Legacy systems typically require a high degree of proficiency in programming languages such as COBOL that are now largely deprecated and for which the available pool of experts is steadily dwindling due to retirement. 

While upper management tends to be reluctant to scrap expensive custom systems that technically still work, holding off the transition from legacy mainframe tech to cloud-based infrastructure will only become more expensive over time. Experts in antiquated technologies will become harder to find – and will likely expect higher compensation – while institutions will almost certainly have to expand their in-house IT resources to include specialists in current technologies regardless of their commitments to sweeping structural changes.

4. Evolving Client Service Expectations

Today’s customers in almost any industry have come to prefer digital engagement and omnichannel communication over traditional face-to-face meetings. Companies that respond to customer preferences and expand their digital communications and self-service options see an average 15-20% increase in customer satisfaction, a 20-40% reduction in operational costs, and a measurable bump in the chance customers will recommend their services to others. 

While loan officers have traditionally built their successes and personal brands on in-person charm and charisma in meetings with clients, maintaining high standards of customer satisfaction going forward will require developing those same skills in other channels of communication. Collecting up-to-date customer data and making it accessible to lending staff, so that they can provide personalized customer experiences, can help in this regard.

FileInvite: Digital Solutions for the Lending Industry

FileInvite’s automated document collection platform provides solutions to many of the commercial lending industry’s core digital challenges. Giving clients a single secure portal to upload all of their documentation eases the collection process on their end. For loan officers, FileInvite stores all client documentation in one organized space and can automate reminder emails and messages to keep processes in motion. 

Offering 256-bit end-to-end encryption for document storage and transmission along with SOC 2 Type 2 security compliance, organizations can take the highest degree of confidence in choosing FileInvite to streamline their document collection processes.

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