As 2014 was ending, SunTrust Banks decided legacy lending systems should be something to leave in the past.
The company was tired of the antiquated system it had and didn't like losing out to marketplace lenders, which could beat it on closing and funding loans. After 18 months of replacing and integrating a dozen old systems and processes with the help of Accenture, the Atlanta-based company went live with nCino's Bank Operating System this week.
"When you think about what clients want, most of all they want their money quickly, and they go to fintechs because of the speed," said Pam Kilday, head of operations at the $199 billion-asset bank. "We see speed as a competitive edge and we want to be at the forefront."
With the new system, the bank will bring its commercial loan operations into a unified, centralized platform, Kilday said. Among other things, this will allow SunTrust to process loans faster and provide quicker lending responses to clients, provide more mobility for employees to complete tasks on the go and increase flexibility to quickly add or modify products in response to market demands, regulatory requirements or business changes. The vendor says it can reduce loan closing time by 30% to 40%.
SunTrust's adoption of nCino is a sign of changing times for commercial lending. The speed of fintech and marketplace lenders has made banks of all sizes pay attention to how they can reshape their business. For nCino, it is another example of its move upstream. The firm, which grew out of Live Oak Bank, initially gave community banks an edge and it counts about 130 of them as customers, but Pierre Naude, its chief executive, says it is also now working with seven of the top 20 banks in the U.S.
"The fintech arrival was a major wake-up call to banks because it proved that convenience and speed can overcome price," Naude said.
Much of the speed advantage comes from gathering the data into a central place that is easily accessible. At its core, that's what nCino is seeking to do.
The investment "will add a lot more transparency to the lending process," Kilday said. Historically, it was difficult for bank relationship managers to know where in the process a loan was since many disparate internal systems were involved.
"Now, from an operational perspective, this gives us an end-to-end processing view" of each loan, Kilday said.
She added that members of the commercial lending team will be able to work more efficiently now.
"This eliminates the back-and-forth between groups, such as underwriters and relationship managers," she said. "The system won't let a deal get to underwriting without the proper documentation already there."
Now, relationship managers don't have to input the same data sets into multiple systems, Kilday said.
"It's entwined with Salesforce, so it's an easy interaction," she said. Relationship managers input information once to the customer relationship management system at the front of the transactions, and nCino captures it automatically. "This eliminates a lot of manual input and manual errors."
While it is mainly focused on commercial lending now, that one-time input is at the core of nCino's vision of its future where customers who have commercial loans with the bank can easily get a personal loan or even a mortgage. It currently handles deposit services and commercial loans, including wholesale and small-business loans. By this time next year, Naude said, nCino's system should expand to retail and equipment leasing. Mortgage will take more time to develop.
After a customer "submits a document once, they'll be able to use it across the organization," Naude said.
The company is also working on expanding the customer capabilities so that customers can see where their applications are in the pipeline, upload documents and be an active part of moving that process along.
Investing in commercial lending technology could be a wise choice for banks, especially in serving their small-to-midsize clients, said David O'Connell, a senior analyst with Aite Group. These customers are more like consumer clients and typically want loan decisions quicker.
"Absolutely, banks should be spending money on this line of business," O'Connell said. "There's too many repetitive processes and it usually takes too long to respond and do the underwriting. And there's too many [bank employees] putting identical data points into documents."
O'Connell said a survey he conducted this year of small and midsize businesses indicated it might not take much for banks match the swiftness of alternative lenders.
Nonbank lenders' speed advantage "is a little overhyped," he said. There are "fewer pain points with alternative lenders than traditional lenders, but it's not a huge gap."