Gearing Up for Small-Business Push, PNC Building an Assembly Line

By Oppenheim, Sara | American Banker, May 27, 1997 | Go to article overview

Gearing Up for Small-Business Push, PNC Building an Assembly Line


Oppenheim, Sara, American Banker


In a recent speech to his small-business lending staff, PNC Bank Corp. president James Rohr gave the regular marching orders: reduce costs, increase revenue, improve customer service.

The message was not unusual, but the venue was. Mr. Rohr was speaking at a newly opened three-story loan center in a suburban Philadelphia office park. In his audience were people who will likely never meet the entrepreneurs they serve.

PNC's move to centralize and automate small-business lending-with loan officers working the phones and fax machines instead of pressing the flesh is a bid to embrace the future.

The bank is using the highly automated facility to sell secured loans, credit cards, and equipment leases nationwide through direct mail and telemarketing.

"People insisted that small-business lending had to be done in the branches," Mr. Rohr said. "But our business has changed, our technology has changed, and our competitors have changed."

PNC's centralized loan factory illustrates how banks are coping with the evolution of small-business lending toward a high-volume, low-margin market. Like PNC, lenders large and small are trying to streamline to compete in the new order.

Pittsburgh-based PNC plans to process 25,000 small-business loan requests a year and lend $1 billion nationwide in the next year through its loan center.

As of June 1996, PNC was the 10th-largest bank lender to small business, with 48,601 loans outstanding for $2.5 billion, according to Sheshunoff Information Services.

The centralized operation has helped PNC increase its processing volume from 70 loans a month a day? during April 1996 to 125 loans a day last month.

Anuj Dhanda, PNC senior vice president and manager of the small-business loan center, said such speed is necessary for the bank to keep costs down as it moves into markets nationwide.

"If we are going to grow at the rate we want to, we have to go outside our geographic market," Mr. Dhanda said. "When we go to Kansas, we will have the lowest costs and go after the highest quality credit."

The overriding goal of PNC's new system is speed. In an age when business credit is often as easy as dialing "1-800," entrepreneurs want an approval or rejection fast. PNC is mindful of that at every step in its process.

PNC loan center employees currently handle applications faxed in by the branch staffs. By the end of the year, the bank plans to send and receive applications by direct mail.

Loan-center employees type application information into a computer system and send a fax back to the branch, either requesting more information or confirming they received the loan request. Loan-center employees keep the fax in a folder which is filed later so the bank has a printed record of the original application.

PNC uses one computer system for all aspects of the lending process, while some other banks use separate systems for applications, approvals, and servicing. Integration means the underwriters and the documentation staff don't have to re-type the same information.

The automated lending system has made a big difference for Alicia Madura, who moved from a local lending office in Erie, Pa. to supervise documentation preparation at PNC's loan center.

"I'm amazed at the number of loans we can pump out of here," Ms. Madura said. "One person puts the information in once and that's it. It has made our lives so much easier."

Then underwriters check the information and use an on-line system to review the collateral. …

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