As growing non-interest expenses and loan-loss provisions continued to put downward pressure on net income in 2024, community banks entered 2025 with a growing sense of urgency around efficiency. For the first time ever, efficiency has emerged as the top strategic priority, with 54% of bank CEOs naming it a primary focus in the latest Strategy Benchmark study from Jack Henry™.
According to the new study, most financial institutions (90%) plan to enhance their lending capabilities over the next two years, prioritizing automated workflows, automated financial spreading, and enhanced portfolio credit monitoring. These priorities all reflect an emphasis on operational efficiency as well as the ability to pivot and be nimble in times of uncertainty.
All signs have pointed to a significant shift toward digital lending experiences for both consumers and businesses. Now, as we navigate the current political landscape and the uncertainty that comes with it, it's crucial for banks to take proactive steps. By taking the initiative to digitize lending processes, banks can stay ahead of potential regulatory changes while meeting the evolving needs of borrowers.
Efficiency in lending boosts ROA by reducing loan origination costs. Additionally, efficiency has been shown to reduce delinquencies through automation, reducing cost basis, shortening time to market, and expanding total addressable market, all while improving efficiency ratios.
Globally, the loan origination software market is expected to surge over the next few years, with a focus on a fully digital experience, automation, workflow, data security, and improving the accountholder experience through data analytics and other new tools.
The advantage lies in providing a digital experience throughout the entire loan lifecycle – from onboarding to boarding to core and loan management.
Consider some key ways you can gain a competitive edge:
Utilizing data-driven strategies to enhance decision-making, gain new insights into borrower behaviors, optimize and streamline your origination process, and personalize your customer experience.
Putting data at the center of sound lending decisions. By augmenting traditional lending data sources, your lenders can harness vast amounts of data to deliver personalized service and make more informed lending decisions with greater insight into a borrower’s character, financial health, and creditworthiness. By integrating diverse data sources, you can create a holistic, real-time snapshot of your borrower and improve processing efficiency.
The benefits of data-driven lending systems also include the ability to make more informed decisions and risk assessments, automate underwriting, and allow for more what-if scenarios. This same data creates opportunities for lenders, including the ability to recognize trends, adapt to borrower needs, drive borrower engagement, and recognize new market opportunities.
By investing in digital tools and platforms, banks can streamline operations, reduce costs, and improve customer satisfaction. And when new regulations do come into play, those who have already embraced digital solutions will find it easier to comply and adapt.
Lending is advancing. Don’t be left behind! Today’s integrated technologies can work together to enhance your loan origination system and streamline your digital lending experience for consumer, commercial, and small business lending.
