Most of the life-cycle decisions made by retail banks are fully automated. Small business bankers can leverage these learnings to apply automation to their small business portfolios. The ROI gains may be harder to quantify as the volumes are generally lower. However, there are other benefits to automation, such as cost reduction, speed to a decision, process compliance, regulatory compliance, the ability to demonstrate consistency, and show that effective controls and business monitors are in place.
A plan is critical to identify all relevant steps, assign responsibility and create a timeline. It doesn’t have to be done on day one. Start with the simple step of using scores and capturing data. The small business decision-making processes are a combination of tasks that are performed sequentially by individuals. By documenting these processes, you begin to understand how requests for banking services arrive, how they are allocated to underwriters and what credit risk factors are critical to the decision. This initial project should not focus on your most important, mission‐critical business process, but rather with the easier components of the process. Your results lend credibility to your decision to automate and provide the basic understanding you need to expand to more complex areas of your business.
Two of my favorite Peter Drucker quotes are very germane here, first “What gets measured gets improved.” One of the key benefits of automation is the ability to capture and analyze data over time in support continuous learning and improvement. The second quote is “There is nothing quite so useless as doing with great efficiency something that should not be done at all.” The move to automation must first include evaluation of your decision-making process. Is it consistent, accurate and efficient? What does it cost? What will you save moving forward? Look at what you are doing now before you proceed to automate.
This leads us to the importance of the design process. While your IT group will be responsible for the technical work to implement your automated system, you are responsible for describing the business requirements you want them to automate. The first step in that process is to create a graphical representation of the steps you want to implement. At each point in that process, you will want to provide a complete description of what happens at that step, what data are required and captured, who is involved, and any exceptions. You will need to know what forms will be used and how they are completed. You will also need to articulate all allowable responses, what type of data and acceptable ranges.
It is at this point you need to ask crucial questions:
- Does this step make sense?
- Do we need to continue doing this task?
- Is there a better way to accomplish the same result?
- What are the roles of each staff member in the evaluation of new business?
- How are scores and other decision elements being used?
- What information do you need to retain?
- Would it be easier to have a dashboard type approach where you could pull together reports on an ad hoc basis?
- What key document retention process do you need to have in place?
- Can you live with good quality digital captures or do you need to retain hard copies?
- Can you link captured documents to the electronic records?
- Metrics for measuring success are a key result of automation. How will you analyze your results? Who will receive reports and what support for the process will they provide?
Can you bring any and all of the information up on a monitor anytime you want – such as when you are talking with the customer to get what may have changed since you opened the account? This brings up the subject of not stopping at the business initiation activities start thinking about what you want to accomplish across the life cycle – account monitoring – credit line management – collections – annual reviews – marketing & cross-selling.
Finally, remember you will be using this new system to implement your credit strategy (and track its impact) and you need to plan for the ability to easily change that strategy once you have some reliable results. The whole idea of automation is to provide you with the ability to change and not be married to a single approach once you know you can do better.