American Banker's survey found that small-business bankers are divided on the issue of using credit scoring and other automation tools to handle loan decisions. But the gap between large and small banks is even more stark: 76% of community banks said they have no plans to use credit scoring, versus 26% of regional banks. The survey, underwritten by San Rafael, Calif.-based Fair, Isaac & Co., was mailed during March to an estimated 500 bankers nationally. A total of 150 responded, representing all types of banks. Community banks are those with $500 million in assets or less; super community banks are those with $500 million to $5 billion in assets; and regional banks are those reporting more than $5 billion in assets at the holding company level. What follows are key findings: Little used, lot of potential Only 11% of all banks reported using credit scoring, while another 35% said they planned to begin using the system within the next two years. Forty-eight percent, most of those smaller banks, said they have no plans to use the technology. For the love of paper An overwhelming majority of all classes of banks reported using traditional financials in making a loan decision. Though 90% or more used credit reports as part of their evaluation, few used an automated system. Among all banks, here are the information sources most commonly used: Getting a handle on costs Nearly one-third of all bankers said they still don't know how much it costs to originate a small-business loan. But surprisingly, small banks insist their costs are, on average, below the magical $500 figure that many are targeting. Above are the respondents' estimates of average cost per loan. Toward better profits We asked banks what they were doing in addition to automation to make small-business loans more efficient. Overall, regional banks were more focused on issues like developing loan-monitoring systems and centralization than their smaller counterparts.

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