Your financial institution's growth is one of the most instrumental factors contributing to its success. To that end, selecting the right commercial lending software solution is vital to ensure long-term support for your lending operations.
But it can be challenging for many lenders to pick the right commercial lending solution. A viable solution provides the scalability needed to grow, adapts to market shifts, and serves borrowers with greater confidence and speed.
We'll explore how to future-proof your lending operations with the right platform. You'll discover which core features to look for in commercial lending software solutions, common pitfalls, and strategic considerations that can influence your bank's long-term success.
Why Future-Proofing Matters in Commercial Lending Solutions
The lending process is continually changing. Borrower expectations rise. Regulations shift. Fintech providers introduce new tools.
In this type of lending environment, a rigid system can slow down your team and add significant costs.
A scalable platform in the form of a commercial lending software solution adapts as you expand your loan portfolio, add loan products, or improve your risk management approaches.
A future-proof platform:
- Reduces manual data entry
- Improves the borrower experience
- Accelerates loan applications and loan approvals
- Supports real-time oversight and informed decisions
- Automates underwriting and end-to-end workflows
- Enhances profitability and minimizes credit risk
In short, a flexible system helps you better respond to market needs without taking on additional risks.
7 Features to Look for in Commercial Lending Software Solutions
The right features in a commercial lending solution will benefit both your financial institution and its borrowers. Ultimately, you want a commercial loan software solution that simplifies the lending process through greater efficiency.
Here’s what to look for:
1. Opt for a System With Modular Architecture
Modern lending requires a modular design. “Modular” means the system is built in pieces. This allows you to turn certain functionalities on or off as needed. You can also add new modules to expand capabilities and grow your loan division.
With a modular system, you can also update part of a system without disrupting the whole platform.
Advantages of modular architecture include:
- Flexibility: You can add new functionality when needed.
- Cost effectiveness: You only pay for the modules you use.
- Quick upgrades: You can swap or update features quickly without significant downtime for your lending platform.
A modular commercial lending software solution also helps lenders adapt to market conditions. If you expand into new loan products or adopt new loan origination software (LOS) capabilities, your platform adjusts with minimal friction.
2. Choose an API-First Design
An Application Programming Interface (API) is crucial in the modern lending landscape. APIs connect your lending platform to your bank's core banking systems, accounting software, and CRM tools.
APIs also provide easy integration with fintechs and third-party providers you partner with as you increase your digital operations. This connectivity provides a strong ecosystem when implementing a commercial lending software solution.
APIs matter because:
- They reduce processing time.
- They support real-time underwriting and risk monitoring.
- APIs help automate workflows and streamline data flow.
- They allow seamless onboarding for borrowers.
- They enable AI-powered tools and digital transformation initiatives.
An API-first design provides a connected environment that supports the entire loan lifecycle. This includes loan origination, underwriting, onboarding, document and loan management, loan approval, loan servicing, and reporting.
3. Multi-Product Capabilities for Sustainable Growth
Future-proofing your lending operations requires a commercial lending software solution that supports multiple loan products.
Many commercial banks and lenders specialize in several types of business loans and products. Your system should adapt to each structure without complex customization or costly reconfiguration.
Look for an LOS system with the following capabilities:
- Term loans
- Revolving credit lines
- Commercial loan packages
- Commercial real estate loans
- Small business lending
- Specialized industry products
A loan origination system (LOS) that handles mixed loan products helps lenders manage a diverse loan portfolio with greater ease. It also simplifies credit risk analysis and decision-making.
4. Evaluate Upgrade Paths and Long-Term Viability
Adopting a commercial lending software solution is an investment that shouldn't be taken lightly. It's vital that the platform your bank uses doesn't become obsolete before you see a healthy return on investment (ROI).
Before proceeding with any vendor or provider, you should feel at ease about asking important questions about how they update their systems. It's also important to know whether they support cloud-based deployments and Software as a Service (SaaS) models.
Questions to ask providers:
- How often do you upgrade your commercial lending software solutions?
- Are upgrades included in the contract or priced separately?
- How much downtime can my bank expect with each upgrade?
- Can we customize features without breaking the upgrade path?
- How do your software solutions stay ahead of regulatory compliance changes?
A clear upgrade roadmap protects your lending operations and ensures greater stability as your institution scales and grows its business.
5. Build on a Strong Vendor Ecosystem
A platform is only as powerful as its ecosystem. Look for software vendors that offer integrations with fintech and third-party partners, CRM tools, underwriting engines, risk management systems, and workflow automation tools.
Features of a strong vendor ecosystem include:
- Loan origination servicing tools
- Customized dashboards that offer real-time insights and analytics for data-driven decision-making
- Compliance-mapping and risk scoring
- Configurable options across the lending process
- Seamless connectivity for smoother integrations
- Strong customer support and security
A strong ecosystem also allows you to maintain control over your technology stack, enabling you to switch tools as needs change.
6. Look for a User-Friendly Design
The best commercial lending software solutions are user-friendly and easy for staff to use. A user-friendly interface and design can ensure that your financial institution adapts quickly and has fewer hiccups during implementation.
Look for:
- Clear navigation
- Intuitive dashboard displays
- Easy-to-follow workflows
- Configurable settings
- Accessible reporting
A user-friendly platform means less training time for your team members, so they can focus more on building relationships with borrowers and growing your bank or credit union's loan portfolio.
7. Support for Digital Lending and AI-Powered Tools
Digital lending has become standard for most borrowers and institutions. Borrowers expect digital solutions and fast approvals. The right digital lending platform supports AI-powered analysis, digital application filing, and data-driven decision tools that increase speed for borrowers and reduce risk for lenders.
AI tools can support alternative credit scoring, fraud detection and behavioural insights, depending on your chosen solution. Here’s a list:
- Alternative credit scoring
- Fraud detection
- Borrower behavior trend analysis
- Workflow routing
- Insights for pricing and profitability
- Risk management
- Personalizing borrower experiences
AI improves efficiency, speed, and decision accuracy while reducing risks and adhering to compliance regulations.
Real-World Success Case Study: Ocean First Bank
Ocean First Bank experienced a critical challenge. The $12 billion regional New Jersey bank needed to scale its commercial lending operations across multiple product lines, including term loans, lines of credit, and commercial real estate loans.
At the same time, it needed to maintain speed, efficiency, and credit risk control. Oceans needed both a borrower-facing digital application and a powerful underwriting portal for its credit team.
By choosing Biz2X, Ocean First was able to deploy a modular, API-ready commercial lending software solution that supported its multi-product needs. Biz2X’s decisioning engine automated much of the underwriting process, allowing the system to intelligently approve, refer, or reject applications based on pre-configured rules.
Since going live in July 2022, Ocean First has seen dramatic improvements. By 2023, they had decisioned over 250 new loan applications through Biz2X, with an average approved loan amount of $195,000.
Automation and modular architecture reduced manual underwriting and left room for the bank to add more loan products without disrupting its core system. This enables Ocean First to scale confidently and stay agile in a changing lending market.
Checklist for Choosing the Right Commercial Lending Software Solution
This checklist ensures that your financial institution's future needs are prioritized when deciding on a commercial lending software solution.
- Modular architecture
- API-first design
- Multi-product support
- Clear upgrade paths
- Strong vendor ecosystem
- Workflow automation
- Full loan lifecycle coverage
- Cloud-based deployment
- User-friendly interface
- Support for digital transformation
- Scalability
In the end, your commercial lending software solution should provide flexible functionality and allow your lending division room to grow. It should also integrate smoothly with core banking systems and CRM tools, leading to greater efficiency, a better borrower experience, and improved profitability for your loan portfolio.
FAQs About Commercial Lending Software Solutions
1. How can commercial loan software solutions help banks?
Loan software automates the entire end-to-end lending process, including loan application intake, borrower onboarding, credit decisioning, document management, loan servicing, and reporting. It ultimately reduces manual workflows so that bank staff can focus more on customer relationships and growing the bank’s business.
2. What makes commercial lending software solutions scalable?
A scalable loan origination system can handle a higher volume of loan applications, multiple loan products, and higher processing demands. All this, without performance issues or increased risks.
3. Are there risks to adopting commercial lending software solutions?
AThe major challenges with incorporating commercial lending software into your bank’s workflows involve costs, security and regulatory risks, and implementation challenges. This is why it’s essential to choose a reputable software provider and fintech partner to mitigate those risks.
4. How does modular architecture benefit growing financial institutions?
Banks can add or remove features, if their lending operations evolve. When modular architecture is a core feature of commercial lending software, it can reduce costs, support faster adoption of new tools, and ensure that lenders can scale more easily.
5. What should lenders consider when evaluating long-term vendor viability?
Key factors include how often the vendor updates its platforms, flexibility for multiple products, customer support record, vendor reputation, integration capabilities, security protocols, and financial stability. You can also ensure your lending platform remains relevant over the long term by choosing a vendor committed to innovation and its partners.
Ready to power your bank’s lending operations with a scalable commercial lending software solution? Contact Biz2X to request a demo. Our platform can help your financial institution reduce its decisioning time and grow its portfolio while reducing loan defaults.
