Thought Leadership
Implementing a Commercial Loan Origination System: Seven Common Pitfalls and How to Avoid Them
August 18, 2020

Deploying an end-to-end commercial loan origination system (CLOS) is complex and provides many opportunities for missteps. Understanding the most common pitfalls that can happen during the implementation is the best way to steer clear of costly mistakes.

In the final part of this exclusive three-part exclusive series, the expert banking consultants at Cornerstone Advisors identify seven common pitfalls and how to avoid them when implementing a CLOS. These pitfalls include:

Lack of teamwork:

The best implementations have full stakeholder investment, ownership and participation, and the best way to gain buy-in and a sense of empowerment is to distribute ownership to the functional experts who do the work every day. When issues arise, teams that feel they have ownership will dig in and find creative ways to solve these issues.

Implementing, but not improving:

A financial institution needs to have a well thought-out design for how the process should work if it hopes to achieve the desired performance improvements from the system. If this wasn’t done prior to the selection, it should be done now, starting with the implementation team going to see the commercial loan process firsthand, in the office areas where the work is done. Once the current state is understood and measured, the next step is for the team to create a desired future state design that identifies the specific improvement “must-do” items and target performance measure. This design will guide how the system is configured in order to achieve the desired improvement targets and help prevent implementing without improving.

Inadequate system testing:

Once the configurations are completed, the project will move on to user acceptance testing. This is a critical time during the implementation to ensure that the configuration work was done correctly. Fine-tuning the configuration emphasizes the need to be thorough. The dynamics of the project’s complexity are at a peak once the system goes live, so identifying and resolving problems during testing helps limit the amount of user frustration out of the gate.

Poor user training:

Keeping up with daily production is difficult enough and learning a new way of working adds a level of complexity. Allowing the team enough time to gain a basic proficiency with the new system cannot be overstated. Financial institutions need to recognize the effort involved in the training across the enterprise and intentionally limit the number of initiatives in flight during the go-live timeframe.

Lack of a go-live support structure:

At the point of go-live, failure to have a very specific support network finds many institutions ill-prepared. Even with training, end-users will encounter many new scenarios about which they will have questions. Trying to field all of the questions with just the system administrator will bottleneck the launch of the new system and lead to frustrated end-users. A go-live support structure is crucial to a successful implementation.

Implementing too-much, too-soon:

A common dilemma financial institutions have when preparing to implement a CLOS is determining the roll-out strategy. Implementing too much, too soon can have disastrous effects on both line units and clients.

Poor communication after go-live:

A solid implementation plan must have a very intentional communication plan, especially once the system is live. Prior to go-live, the project leader should make and communicate a plan for user meetings that include everyone using the system. These meetings should be held once or twice a week immediately after go-live.

Preparing for the implementation of a CLOS starts with good organization at the beginning of the project. The foundation is set by building a solid team and clearly defining the objectives and measures of success. Once the foundation is set, financial institutions can improve the odds of success significantly by anticipating the seven common pitfalls, putting plans in place to avoid them and learning where others have stumbled.

To learn more about successfully selecting and implementing a commercial loan origination system, download our exclusive three-part series from Cornerstone Advisors now.

  • Commercial Banking