Improving loan officer productivity

RMA Journal, The, June, 2002 by Terry W. Anderson, J. Kempton Shields, II, Kathryn E. Tusler

Best of all, a spirit of teamwork has developed between the lenders and the back office staff. Each now better understands the other's job and they all find it easier to keep in mind that they have a common goal of exceptional customer service. These new attitudes, combined with the reduced number and frequency of reports and related paperwork, have resulted in greater efficiencies at this institution.

Conclusion

Account officer productivity, like the loan process itself, does not reflect just one person's activity but rather that of an entire group of related functions. Improvements in productivity also are improvements to the support staff's role and to the ultimate profitability of the bank.

See below and next page for author perspectives, 12 years after!

RELATED ARTICLE: Ah, Those Were the Days...

Some things never change--the average commercial loan is still around $1 million, the typical small business loan is $100,000, due diligence never goes out of style, and there are never enough hours in a day. But others do, and the effect of technology over the past dozen years since this article was written is nothing short of phenomenal.

A walk down Memory Lane does not necessarily fill bankers with nostalgia. Consider that in 1990:

* The concept of a loan application was generally linked only to consumers, who anxiously waited for days or even weeks to hear if they'd been approved.

* Commercial loan requests, regardless of size, were subjected to an evaluation of purpose and repayment ability to create viable loan structures. Usually, this was a lender's task, and the process could take days.

* Major banks had spreadsheets on their mainframe systems, and many a young banker in a smaller institution still learned to spread a statement by hand, writing the numbers on a preprinted form. A mid-sized company with a basic financial statement could take a lender up to half a day to manually spread and run basic ratios.

* Huge manuals filled with preprinted forms, each with its own set of instructions on its individual purpose and type of loan for which It should be used. Most of the time, we used the right forms.

* Many hands and minds were Involved In the booking and ongoing maintenance of a loan. Basic loan information was repeatedly entered into a variety of systems to track collateral, payments, loan terms, and so forth. No wonder we had bankers' hours--we all suffered from writer's cramp.

Yes, those were the good old days. Today, it's conceivable to pick up a dozen eggs and a few thousand dollars in the same trip. Small business loans are routinely scored in minutes, using specialized software, allowing lenders to focus on larger credits. Banks use predetermined checklists of appropriate documents and, even more important, doc prep software designed to print correct forms as needed. Errors from incorrect language and usage are history, and a tree near you is pleased to know there's no more stock of outdated forms lying around. Front-end software lets us enter basic loan data once, eliminating the potential for missing and incorrect input. Data is accessible not only to those handling collateral but also the loan accounting system.