Revolutionizing Commercial Lending with Automation: A Path to Profitability

In the ever-evolving landscape of the banking industry, maintaining a competitive edge is paramount. One of the key areas where banks often face significant challenges is the approval of loans. The traditional loan approval process can be painfully slow, laden with paperwork and manual reviews.

The time it takes to process a loan application can have serious financial implications for banks. In this blog, we will explore the impact of delayed approvals on a bank’s bottom line and how automation can be the game-changer they need. 

The Shift Towards Automation in Commercial Lending

Automation has revolutionized various industries worldwide, and while banking has been a pioneer of innovation, the business of originating small business and commercial loans has remained largely unchanged for decades.

However, with the rise of technology-enabled competitors, traditional lenders increasingly turn to automation to modernize their loan origination processes. 

Competition isn’t the sole driving force behind this shift. Lenders recognize the need to be more efficient, productive, and customer-centric. They’re also motivated by cost savings and stricter regulatory standards.

For many, automation frees up their staff’s time for more valuable tasks, such as risk analysis and customer relationship management. Furthermore, automating loan underwriting procedures isn’t about reducing human intelligence but enhancing the institution’s brand as an innovator and market leader among its peers.

The Need for Automation in Commercial Lending

Delayed loan approvals can be costly. When customers are left waiting for weeks to receive a decision on their loan application, it not only frustrates them but can also drive them to seek financial services elsewhere. The consequence? Lost business opportunities and revenue.

Upset female about the cost a bank faces due to delayed loan approvals

Imagine a scenario where a small business owner needs funds urgently to seize a growth opportunity. If your bank can’t provide a swift decision, that business owner might turn to a competitor, and you lose out on a potentially profitable customer. Furthermore, the inefficiencies in your approval process can result in higher operational costs. 

Commercial lending is about generating economic benefit through the funding of enterprises while ensuring the lender can make a profit, create shareholder value, and manage risk. Assessing the creditworthiness of any business can be a challenging task. The tools a financial institution uses to do so can impact underwriting standards, timely approval, cost, and the scale of any unpredicted losses. 

By streamlining and automating the lending process, financial institutions are looking for applications that help them overcome these challenges, increase the quality of the loan portfolio, and deliver customer satisfaction. 

Automation’s Role in Key Stages of Commercial Lending

Customer Management in Automating Commercial Lending

Automation mitigates the inconsistency and delays of manually collecting financial data and other required customer information. Customer-facing web-based portals and application program interfaces (APIs) facilitate the digital onboarding of new prospects and existing customer data straight to the lender’s loan origination platform. 

Effective customer management is crucial in the lending process. Automation offers several benefits in this area:

Digital Onboarding in Automating Commercial Lending

Automation streamlines the process of onboarding new customers. Customer-facing web portals and APIs facilitate the collection of financial data and other essential customer information. These platforms provide a user-friendly experience for customers, making it easier for them to submit their information digitally.

Data Integration in Automating Commercial Lending

Automation systems can seamlessly integrate with external data sources and databases, ensuring that customer information is up-to-date and accurate. This integration reduces manual data entry errors and ensures the bank has the most current information about its customers. 

Document Verification in Automating Commercial Lending

Automation tools can assist in verifying customer documents, such as identity documents and financial statements. Advanced optical character recognition (OCR) technology can extract information from scanned documents, further speeding up the onboarding process. 

Customization in Automating Commercial Lending

Automation allows banks to create personalized customer profiles based on their specific financial needs and behaviors. This customization helps to tailor loan products to individual customers, enhancing the overall customer experience. 

Credit Presentation & Decisioning in Automating Commercial Lending

Automation in the commercial loan approval process involves mining the appropriate data and presenting it clearly to make a credit decision. Being able to automate your lending process from start to finish captures the benefits of accuracy, near real-time data, increased efficiency, and reduced decision times. 

Automating credit presentation and decision-making processes can significantly improve efficiency and accuracy in commercial lending:

Data Analysis in Automating Commercial Lending

Automation systems can efficiently gather and analyze vast amounts of data from various sources, including credit reports, financial statements, and transaction records. This comprehensive data analysis provides a more holistic view of the borrower’s financial health.  

Scoring Models in Automating Commercial Lending

Automated systems can apply sophisticated scoring models to assess a borrower’s creditworthiness. These models consider multiple factors, such as credit history, income, and debt-to-income ratios, resulting in more accurate and consistent credit decisions.  

Real-time Decisioning in Automating Commercial Lending

Automation enables near real-time decision-making. Lenders can receive credit applications, process them swiftly, and provide a decision within hours, ensuring a faster and more responsive lending process.

Integration with Existing Systems in Automating Commercial Lending

Automation tools can seamlessly integrate with the bank’s existing systems, including legacy software. This integration ensures that data flows smoothly throughout the lending process, improving overall operational efficiency. 

Automation and Analytics for Client Fit Assessment 

Automating the mortgage application process can speed up workflows and review more borrowers’ files in much less time. A robust automated process can improve access to cash flow analytics, offering lenders a more holistic view of a potential borrower’s financial health. 

Assessing a potential borrower’s fit with the bank’s lending criteria and risk profile is a critical step in commercial lending. Automation, combined with analytics, offers several advantages: 

Data Normalization in Automating Commercial Lending

Automation systems can normalize data from various sources, making it more structured and easier to analyze. This normalization allows for consistent evaluation of borrower data. 

Cash Flow Analysis in Automating Commercial Lending

Automation tools can perform detailed income analysis, helping lenders assess the borrower’s debt capacity and identify recurring transactions. This in-depth analysis provides a clearer picture of the borrower’s financial status, going beyond what traditional credit bureau data offers. 

Predictive Risk Modeling in Automating Commercial Lending

Automation systems can use predictive models based on monthly income to assess the risk of default more reliably and quickly than traditional models. This proactive approach helps to filter out potentially high-risk customers before they enter the lending pipeline. 

Expanding the Top-of-the-Funnel in Automating Commercial Lending

Automation, combined with cash flow analysis, can help identify potential borrowers who may not meet the criteria of traditional lenders relying solely on credit bureau data. This expansion of the top-of-the-funnel increases the bank’s opportunity to work with qualified borrowers and maintain profitability.

Benefits of Automation in Commercial Lending 

Faster Decision-Making with Automating Commercial Lending

Automation accelerates the loan application process, providing customers with decisions in hours rather than weeks, keeping them loyal to your bank.  

Improved Accuracy with Automating Commercial Lending

Automation enhances decision-making accuracy by analyzing vast amounts of data, reducing the likelihood of errors that could lead to financial losses.

Enhanced Customer Experience with Automating Commercial Lending

A swift and accurate loan approval process translates into a better customer experience. Happy customers are more likely to refer your bank to others, helping you gain a competitive edge in the market.

Challenges in Implementing Automation Integration with Existing Commercial Lending Systems 

Integrating automation systems with existing infrastructure can be challenging and requires careful planning and investment in technology. 

Data Security Concerns in Automating Commercial Lending

With increasing automation, data security is of paramount concern. Banks must ensure that customer data is protected and compliant with all relevant regulations. 

Real-World Success Stories from Commercial Lending Automation

Several banks have already embraced automation and reaped the benefits. Wells Fargo, for example, implemented an automated loan approval system, resulting in a 25% reduction in approval time. Such success stories should inspire other banks to embrace automation. 

AI and Machine Learning in Commercial Lending Automation

The future of loan approvals lies in the integration of artificial intelligence and machine learning. These technologies will allow banks to make even more precise lending decisions, reducing risks and increasing profitability. 

Personalization in Loan Approvals in Commercial Lending Automation

Personalization is another exciting trend. Banks can tailor loan offers to the unique financial profiles and needs of their customers, further enhancing the customer experience. 


Lengthy loan approvals are detrimental to a bank’s bottom line, but automation offers a clear path to profitability. By streamlining the loan approval process, banks can provide faster, more accurate decisions, leading to increased customer satisfaction and loyalty.

While challenges exist, the potential benefits far outweigh them, making automation a necessary step for banks looking to thrive in a competitive market. Automation is not about reducing human intelligence but enabling banks to retain talent and engage in tasks that matter most, such as risk analysis and customer relationship management.

It’s time for traditional lenders to embrace the forces of change and join the automation revolution. System Soft’s Bank Automation Accelerator can help you achieve these automation advantages.  

About the Author: Stephen Moritz

Stephen Moritz  serves as the Chief Digital Officer at System Soft Technologies. Steve, an avid warrior of fitness and health, champions driving business transformation and growth through the implementation of innovative technology. He often shares his knowledge about Digital Marketing, Robotic Process Automation, Predictive Analytics, Machine Learning, and Cloud-based Services.