Evaluating Commercial Loan Origination Systems: Defining Performance Drivers and Financial Impacts
The decision to evaluate and implement a commercial loan origination system (CLOS) is a big one for a financial institution, giving it the opportunity to leapfrog the competition and truly transform its commercial lending processes for its borrowers and employees. Careful planning and execution are key components of every successful CLOS evaluation, selection and implementation.
In part one this exclusive three-part series, the expert banking consultants at Cornerstone Advisors identifies four factors that distinguishes a successful evaluation and selection project, including:
Documenting Needs: FIs must clearly document the specific needs their commercial loan origination system (CLOS) must address in order to fully realize the value of the undertaking. Surprisingly, this often isn’t done to any significant extent – if at all. The documentation process requires a true understanding of the objectives and underlying needs that are driving the CLOS initiative, and a clear consensus and articulation of these objectives across the institution.
Aligning Stakeholders: Only once all stakeholders are aligned can the project team effectively define how to achieve the objectives set forth in the documentation process. Each stakeholder must be aligned to do what is best for the borrower and the institution – and not individual silos.
Effective Change Management: An effective change management program will manage action items, changes, milestones and risk mitigation during a system evaluation effort. It can also ensure processes are in place to manage potential issues for escalation and remediation. Change management must ensure appropriate communications to ensure impacted parties are aware of actions they need to take and when. Stakeholders must be clear on the responsibilities and action items required to support the CLOS evaluation and selection process.
Measurement Tracking and Planning: Successful CLOS evaluations start with a set of metrics and baseline measurements for desired improvement. Too many FIs make the mistake of skipping this important step. Well-defined future state target operating models should incorporate all desired improvement areas and ensure that the overarching focus remains on solving current problems in the origination and servicing of commercial loans.
“The experience an organization wants for its customers should be a key factor in deciding which initiatives and transformations best align with the organization’s strategic roadmap.”
– Cornerstone Advisors
To learn more about how to evaluate, select and implement a commercial loan origination system at your financial institution, download this exclusive three-part series now.
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