Academic journal article ABA Banking Journal

How Bankers Can Achieve the Optimal ROI from Their Lending Technology Investments. (Special Advertising Section: Executive Summary)

Academic journal article ABA Banking Journal

How Bankers Can Achieve the Optimal ROI from Their Lending Technology Investments. (Special Advertising Section: Executive Summary)

Article excerpt

Today's lending environment is a challenging one for bankers that wish to stay ahead of their competition. Due to our nation's economics, demographic shifts and subsequent legislative changes, credit is no longer considered a privilege, but rather, is now readily available to virtually all Americans. While bankers continue to escalate their fight for share in the A-paper market, the non-prime market has developed and grown substantially. As a result, bankers have had to find ways of effectively evaluating this new population of borrowers while continuing to meet the needs of their A-paper customers as well.

As consumer demand for convenient credit has increased, so has the level of competition among lenders to meet it. This has led to the current level of hyper-competition that exists in today's market. Bankers can no longer rely on geography and brand loyalty to maintain a steady flow of loan applicants. Borrowers now have the ability to borrow from whomever they choose, whenever they choose -- regardless of location and time of day. What lenders are learning is that, more often than not, this decision is fueled almost entirely on the factors of interest rate and convenience. Today, if a banker cannot process a loan application and supply a qualified (and competitive) response within 60 seconds, 24 hours per day, there are a number of other lenders that can -- and will.

How can bankers make the best decisions for their unique circumstances when evaluating and purchasing lending technology? There are some areas and topics that should be carefully considered by bankers when selecting a lending technology vendor, including cost, functionality, interface capabilities, training and consulting capabilities and ongoing support.

When it comes to technology investments, cost of ownership is important for banks of all sizes. Cost of ownership principally comes into play with lending technology when deciding on delivery models and level of functionality in both site license and ASP environments. While ASP delivery once appealed to only mid-sized organizations, its track record has generated appeal to even Top 100 financial institutions.

In addition to cost, bankers looking to invest in loan automation technology need to also focus a good deal of attention on the level of functionality of their system, specifically interface capabilities and the ability to perform equally well through multiple sales channels, such as branch, telephone and the Internet. …

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