Disjointed Commercial Loan Origination in US Banks

Why Commercial Lending Is Struggling?

Commercial lending has grown rapidly in the US, but banks are struggling to keep up. Despite strong loan demand and heavy IT spending (over $180 billion in 2015 alone), many banks face slow, costly, and error-prone loan origination processes.

The root cause is disjointed technology and manual workflows. Over time, banks built layers of separate applications for lead management, loan tracking, spreading, rating, documentation, compliance, and reporting. These systems don’t talk to each other, creating silos, duplication, and high operating costs.

While fintechs and alternative lenders move faster with streamlined digital platforms, traditional banks are left with:

• Long approval times
• High manual overhead
• Inconsistent compliance and audit trails
• Difficulty adapting to new credit policies or regulations

This paper explains how banks can overcome these challenges by simplifying, automating, and connecting their lending processes.

The Core Problems Banks Face

1. Patchwork Systems Creating Gaps
   Legacy IT has grown organically a “house of cards” with thousands of disparate apps that don’t integrate. Adding new tools to fix gaps only adds complexity.
2. Manual, Paper-Driven Workflows
   Loan processing is still highly dependent on paper files, emails, and physical movement of documents. This slows down underwriting, compliance checks, and approvals.
3. Rekeying Data and Work Duplication
   Because systems are disconnected, staff must repeatedly enter the same data in multiple places. This leads to errors and wasted time.
4. Poor Visibility and Tracking
   Lack of process transparency makes it hard to monitor loan progress, track covenants, or audit effectively.
5. Hard-Coded Rules and Slow Compliance Updates
   Changing credit policies or adapting to new regulations requires major IT work, slowing down approvals and compliance readiness.

The Cost of Inaction

Keeping these broken processes has a clear downside:

• Longer turnaround time (TAT) for loans frustrates customers and pushes them to faster fintech competitors.
• High operational costs eat into profitability, especially as margins tighten.
• Compliance risk increases without clear audit trails and automated policy checks.
• Lost market share as digital challengers offer quick, transparent, mobile-first loan experiences.

To remain competitive, banks must modernize but without throwing away years of investment in core systems.

The Path Forward: Connected Commercial Lending

Banks can overcome complexity and modernize gradually by unifying and automating key processes through a Business Process Management (BPM) framework.

Key steps include:

1. Digitize and Automate End-to-End Loan Journeys

Move from paper to digital workflows across origination, underwriting, approval, and disbursement.

• Capture loan requests digitally across all channels (branch, web, mobile, partners).
• Centralize all data and documents in one repository for easier retrieval and compliance checks.
• Automate generation of key documents like credit memos, commitment letters, and management reports.

2. Integrate Disparate Applications Into a Single Front End

Rather than replacing every legacy system, connect them through a unified BPM platform. This provides:

• A single interface for loan officers and underwriters.
• Automatic data exchange between systems like CRM, rating engines, compliance checks (OFAC, Equifax), and documentation tools.
• Better tracking and monitoring with dashboards and SLA alerts.

3. Enable Straight-Through Processing (STP) With Business Rules

Embed dynamic, configurable rules for applicant qualification, risk scoring, deviation management, and loan pricing.

• Update credit policies quickly as regulations or market conditions change.
• Automate exceptions and approvals where possible.

4. Improve Compliance and Audit Readiness

• Keep every decision, approval, and document digitally logged.
• Enable faster, easier audits and regulator reporting.

Choosing the Right Solution

An ideal commercial lending platform should:

• Offer end-to-end process automation from application to post-disbursement monitoring.
• Support multi-channel initiation (branch, web, mobile, partner portals).
• Provide real-time dashboards and SLA tracking.
• Enable credit analysis, covenant tracking, documentation, and review in one place.
• Be configurable and low-code, so business teams can adapt processes quickly without heavy IT effort.
• Integrate easily with core banking, CRM, rating systems, and external checks.

The Newgen Advantage

Newgen’s Commercial Lending Solution delivers all this and more through its robust, low-code BPM platform. Banks using Newgen can:

• Modernize without replacing existing core systems.
• Automate document generation, data capture, and routing.
• Seamlessly connect internal and external systems for a unified experience.
• Track loans in real time with advanced reporting and SLA monitoring.
• Enable faster decisioning and reduce turnaround time.

This “buy + build” model gives banks a ready-to-use, domain-rich solution that’s highly configurable for future needs balancing innovation with cost efficiency.

Measurable Impact

Banks adopting connected commercial loan origination report:

• Up to 50% reduction in loan processing time
• Significant decrease in manual data entry and duplication
• Better compliance and audit readiness
• Lower cost per loan and higher operational efficiency

With these gains, banks can compete head-to-head with digital lenders while preserving their trusted brand and customer relationships.

Act Now to Stay Competitive

Commercial lending is a core growth driver, but the old way of working is too slow, expensive, and risky. Newgen helps banks break down silos, automate complex processes, and modernize at their own pace.