DIGITAL TRANSFORMATION IN COMMERCIAL LENDING [INFOGRAPHIC]

1.

Change is Too Risky

A top reason for resisting digital transformation in commercial lending is the reluctance to leave behind legacy systems. Despite borrower demand for more efficient experiences, like those in digitally advanced sectors, many lending practices remain outdated, including manual document checks, paper-based management, traditional risk assessment, and using attorneys for document review. Lenders often stick to these known but inefficient methods due to fear of change and perceived risks, such as implementation costs, subscription fees, and ongoing updates. This perspective overlooks the often immediate and continued efficiencies and savings provided by automated solutions, which reduces manual work and expenses, leading to significant savings and better meeting customer expectations. This hesitancy hampers the adoption of digital enhancements that could greatly improve operational efficiency and meet the modern expectations of customers.

For the lender, digital transformation is essential to maintaining competitiveness while also improving the borrower experience. Lenders must find ways to increase loan volume without escalating staffing and operational costs. Digital automation solutions, like GoDocs, help commercial lenders maintain a competitive advantage by streamlining processes, reducing time-to-close, providing borrowers with faster, more efficient service at a lower cost per loan. This operational efficiency translates directly into a better borrower experience, meeting their expectations for a smooth and expedited lending process.

2.

Commercial Loan Closings Are Too Complex

A primary resistance to digital transformation within the commercial lending industry is the perceived complexity involved in automating traditional lending practices. Many lenders perceive the transition towards digital and automated systems as overwhelming, fraught with potential technical issues and significant operational changes. This apprehension typically stems from a lack of familiarity with modern automation technologies and outdated perceptions of the implementation process, which are no longer as complex or time-consuming as they once were. In reality, the implementation of today’s automation tools has become more streamlined and less intrusive to existing processes. This resistance mindset obstructs the willingness to pursue and integrate more efficient, streamlined digital solutions that could otherwise significantly enhance the commercial lending landscape.

For example, companies like GoDocs specialize in digital commercial loan document generation. By automating this specific pain point, GoDocs offers a seamless process that eliminates the need for high-cost attorneys to prepare loan documents across most commercial lending products, including all types of construction loans, from fix and flip to the unique components of a build-to-rent and single-family rental (SFR) projects, across all 50 states, instantly.

3.

Status Quo Is ‘Just Fine’

Many commercial lenders exhibit a strong resistance to embracing digital transformation due to a deep-seated comfort with the status quo. This resistance is often driven by a fear that integrating new digital technologies could disrupt well-established, traditional processes and relationships. Lenders might worry that digital platforms will replace the personalized service and established practices that have historically defined the industry. Consequently, this apprehension leads to a reluctance to explore digital tools that could, in fact, enhance operational efficiency and open up new avenues for business growth. By clinging to conventional methods, lenders risk falling behind in an increasingly digital market, missing out on innovative approaches to commercial lending that could address the evolving needs of the market.

For instance, digital platforms equipped with construction loan capabilities are increasingly in demand among borrowers, particularly in today’s market where construction lending is emerging as a top performer. These advanced platforms cater to multifamily, commercial, and industrial loans, as well as various rehabilitation projects, providing comprehensive construction monitoring, disbursement controls, and mechanics lien protections. Among these technology solutions, GoDocs stands out by perfectly aligning with the unique demands of automating construction loan documents. This shift highlights the unique demands of construction lending and the increased desire for technologically driven solutions that meet market dynamics and borrower expectations.