Podcast Feature
Balancing Speed and Safety With Instant Loan Decisioning
This episode of the Banking Transformed Podcast is sponsored by MeridianLink®.
Join Jim Marous and Robert Watts of D.L. Evans Bank as they discuss digital transformation, instant decisioning, and balancing innovation with compliance in this special episode of Banking Transformed, recorded at MeridianLink LIVE!
WATCH THE FULL EPISODE
Jim Marous (00:09):
Welcome to a special eight-part series of the Banking Transformed Podcast recorded at MeridianLink LIVE in Nashville, Tennessee.
Jim Marous (00:17):
I’m your host, Jim Marous. During this series of episodes, we dive deep into the world of digital transformation in the financial services industry. We speak with executives from a diverse range of financial institutions, each of whom has embarked on a unique digital transformation journey to become more future ready and responsive to the changing needs of their customers.
Jim Marous (00:38):
We explore the strategies, challenges, and lessons learned by these forward-thinking organizations as they navigate the complex landscape of digital transformation.
Jim Marous (00:49):
Whether you’re a financial services professional, a fintech entrepreneur, or simply interested in the future of banking, this series provides you with valuable insights and inspiration as we explore the cutting edge of digital transformation in the banking industry. We hope you enjoyed these candid conversations with organizations of all sizes.
Jim Marous (01:11):
Hi, this is Jim Marous from Banking Transformed Podcast. Today I’m report — no, I’m not reporting. I said that last time. I’m not going to go that route. Okay. Today we’re coming from.
Jim Marous (01:22):
Hi, it’s Jim Marous from the Banking Transformed Podcast. Today I’m coming from MeridianLink LIVE in Nashville, Tennessee at the Gaylord Hotel. This is filled with 1700 financial institution executives that are sharing ideas, insights, and experiences as to how their digital transformation process is going.
Jim Marous (01:43):
In addition, they’re listening to sessions from those who have implemented ahead of them and some new ideas that are coming down the way. We also have solution providers of MeridianLink here to show their aware. So, there’s a little bit of everything. It’s a big conference to say the least, and there’s a lot of energy coming from it. So, today I have Robert Watts from D. L. Evans Bank. So, for myself and for the others, where’s D. L. Evans Bank?
Robert Watts (02:09):
Well, thanks, Jim. So, D.L. Evans Bank is based out of Southern Idaho. We cover Southern Idaho and Northern Utah as our territory. For those that are familiar with the state, basically everything from Boise to the Orem, Provo area.
Jim Marous (02:22):
And your organization is how big again?
Robert Watts (02:26):
So, our asset side is barely over 3 billion in assets.
Jim Marous (02:32):
Okay. And how many branches?
Robert Watts (02:33):
43, I believe.
Jim Marous (02:35):
Okay. So, it gives you a perspective of size, not too large, not too small. And you’re a bank as opposed credit union. So, tell me a little bit about your career path and how you got to where you are today and what you’re doing today.
Robert Watts (02:48):
Sure. So, I’ve been with the bank 18 years. As a credit administrator, I came through a different career path. I started in the compliance department doing hmda verification and fair lending review, branch audits and just got involved with technology as we switched technology back in 2006.
Robert Watts (03:10):
I was part of the team that kind of led that change. And really kind of got my foot in door with the credit admin side. And then in 2010, I got hired to the consumer credit administrative position and been there ever since, so-
Jim Marous (03:25):
That’s kind of an interesting switch.
Robert Watts (03:27):
It is.
Jim Marous (03:27):
Doesn’t usually come that way. And it’s interesting because the discussion we have around this is the fact that your organization is really progressively trying to embrace change automation, instant decisioning, all these things that in your old role would’ve kept you up at night to a degree.
Jim Marous (03:44):
And maybe, if you’re writing last into the process, you’d be the one who goes, “No, I’m okay with this.” And so, how do you balance that within yourself where you’re trying to move the process forward? And it probably works for you because you still have to keep the whole issue of risk fraud, compliance, all those things at the forefront.
Jim Marous (04:07):
But how do you balance those? Because really the consumer wants speed of accessibility and of funding. What you’re trying to do is make sure, “Yeah, I understand it, but I got to keep it safe.” How do you deal with that?
Robert Watts (04:21):
It’s a challenge. Balancing the compliance aspect versus the risk and just making sure the customer needs are also met. My mindset is very much black and white, which made me really good in the compliance world. It’s been a challenge being a credit administrator, letting that gray area kind of grow a little bit.
Robert Watts (04:40):
But really, I guess, so a lot of our consumer applications or needs are coming from our commercial and ag customers to meet their consumer needs. Whether they need a car loan and a credit card, their kids need loans. That’s really where our portfolio has grown on the consumer side.
Robert Watts (04:57):
But really just having the customer relationships that we have, I think is kind of the balance there. So, we don’t have the compliance challenges because they’re our customers we want to take care of them, but at the same time, we don’t have the risk. Because they’re not necessarily a new customer coming off the street that we have to do a bunch of due diligence on. We’ve had the relationships for 20, 30, 40 years sometimes, so-
Jim Marous (05:19):
So, from what I understand, your modernization process of the consumer loan side, it’s pretty progressive. You’ve done well in that area. And you’ve made it easier for people to get loans. How easy is it for a current customer to get a new loan if they’re already a customer and those who aren’t new or are new for the process?
Robert Watts (05:39):
Yeah, so our process really doesn’t differ whether you’re a new customer or an existing customer. So, we have ways to apply online. They can come into a branch and apply regardless of whether they’re new or returning or new or existing, it’s the same process.
Robert Watts (05:57):
We’re looking to add efficiencies to try and make for the existing customers a little bit smoother with connectivity to our core processor and getting their information to flood into the application system. But really just taking the application, trying to use MeridianLink’s application to I guess really trim the fat, so to speak, to just ask the specific questions that we need to make the process very smooth and straightforward. Kind of makes it a little bit easier to get around some of those hurdles.
Jim Marous (06:26):
You also have instant decisioning, so once they get through the process, they can find out immediately how they’re doing?
Robert Watts (06:33):
Yeah. So, a customer that applies online, it’ll come back with their credit score and basically give them a credit approval letting them know that everything’s good to go forward. We do have our communication basically come back to them saying, “You’re credit approved, but we may still need income verification or something of that nature.”
Robert Watts (06:48):
So, they know that process isn’t quite done yet, but that they are approved and good to go forward. And really, since we’ve implemented incident decisioning, we’ve gone from, I think when I started back in 2010, we were doing maybe 100, 200 applications a year to now last year we were probably around 300 applications a month, so-
Jim Marous (07:11):
You beat me to the question, which was, have you seen the impact on the volume, and you basically have. And so, would you attribute that to the fact that in the past you may have lost people in the process because it was innately slow and now it streamlined enough that people aren’t leaving their shopping cart empty, so to speak?
Robert Watts (07:32):
Yeah, I think that’s part of it. I think some of it too was just the focus. So, until I took over my position that I have now, there wasn’t really a direct focus on the consumer aspect. Whereas now we focus on it, we market on it, we have processes for it streamlined procedures for online applications, the instant decisioning just that quick turnaround response really can allow us to compete better with those turnaround times, so-
Jim Marous (08:01):
So, when I speak to large groups, I talk about the fact that you need to bring compliance into the front end of processes so you can have them be part of the team to implement something that’s going to pass muster at the end. You kind of do that based on your background.
Jim Marous (08:16):
When you’re selecting partners, knowing that you’re also looking and saying, “I got my right brain and my left brain, and one saying I need it as fast and easy as possible. I want a seamless transition. I got to believe in all the process along the way and make it faster and easier for the consumer.”
Jim Marous (08:33):
But on the other hand, you’re going, “Got to make sure this compliance … you almost, I would imagine to a degree, educate your partners along that line, whoever it is, be it MeridianLink or anybody else. How do you make the decision as far as how good a partner is? Is speed going to win out? Is the ability to pass muster on a compliance basis without very much tweaking going to win out versus a blend? How do you look at that?
Robert Watts (08:58):
Yeah, I think it’s got to be a blend of everything. So, obviously you need a speed to get the customer a quick response. You’ve got to have the compliance aspect of it to keep regulators from being too hard on you for decisions.
Robert Watts (09:13):
But at the same time, also managing the risk that the bank has as well. So, there’s kind of a three-pronged approach. You’ve got the customer, the regular, and the bank, all that kind of have to work in tandem with each other.
Robert Watts (09:23):
As far as knowing what vendor to go forward with typically what we do is we have a whole management team that comes together from compliance, lending, marketing, whatever departments might be touched. And they all have the same amount of input on whether it’s a good fit, whether it’s a product we go forward with, whether it’s going to meet the needs that we’re looking for or not. And then we make a decision at that point.
Jim Marous (09:46):
So, as you look at the process right now, and you look at where you are in the process, what do you see going forward that you’re looking to enhance your loan operations process and your deliverable to the consumer? What are you looking at as being the next big thing you need to do at your organization?
Robert Watts (10:05):
So, although we have instant decisioning, I think there’s definitely improvements that we can make, different vendors we can pull into the framework to make the speed even that much quicker, remove some of the redundancy aspect of it. Whether it’s verification of income, verification of employment, manual underwriting versus automated underwriting.
Jim Marous (10:28):
So, the beginning part of that whole process as opposed to simply instant decisioning is great if it comes at the tail end of other aspects that are simplified and fast, right?
Robert Watts (10:39):
Right. Yeah. One other thing that we’ve done is, so about two or three years ago, one of the branch locations that we have is an actual digital branch location. So, they’re housed out of our corporate office that that’s all they do is the online applications.
Robert Watts (10:52):
So, for those applications coming in, it allows a certain department to grab those, pick them up quicker, make a quicker decision, as opposed to maybe falling through the cracks on a branch loan pipeline that maybe they’re focusing on larger commercial customers as opposed to the consumer deals. And so, that way that digital department can pick those up and get a quick response.
Jim Marous (11:12):
So, we’re in a process of ongoing digital transformation in the bank system. Everybody’s having to do it. There’s a lot of challenges. What are some of the challenges that you’ve met in the process of changing your stripes? Not what your overall master plan is and what your brand is, but changing the way you do certain things within that framework? What’s been the biggest challenge?
Robert Watts (11:37):
I think a lot of it just comes down to finding the right fit. So, an example, before we were with MeridianLink, we were a CRIF client, which MeridianLink acquired back in 2018, which CRIF was a great company. They were good to work with. They were probably a little bit more focused on the community bank side than MeridianLink was.
Jim Marous (12:00):
I think as they acquired CRIF they’ve kind of had to shift focus a little bit. And take our viewpoint into perspective as opposed to just the credit union. And sometimes there’s been challenges there as far as the way a bank operates is opposed to a credit union operates. And so trying to work through some of those hurdles making things efficient, smooth for both parties.
Jim Marous (12:21):
What’s been the challenge within your organization as you implement these changes? I say it almost every podcast change sucks. It doesn’t matter.
Robert Watts (12:30):
No. And nobody likes change.
Jim Marous (12:32):
But, but unfortunately, the consumer doesn’t see it that way. They’re wanting change every day and they’re comparing the way you do your business with how their streaming TV does their business, how Amazon does their business, how Uber does their business, how the airline you took to get here and the hotel that you’re staying at has done their business sets the bar higher and higher.
Jim Marous (12:54):
What overall have you seen that really has been impactful to how you run your business? What are you seeing going forward that you’re going to have to do, not just the back-office change, but how do you make that all implement from an employee standpoint where they’re feeling comfortable with what’s going on?
Robert Watts (13:15):
Yeah, I think a lot of it is, because as customers we don’t really like to give out our information. We don’t like to wait; we want everything now and we want everything as soon as possible. And so, I think the quicker we can make a decision, the quicker we can get them their loan and the money that they need to make whatever purchase they need, the better off we’ll be.
Jim Marous (13:34):
And sometimes there’s challenges involved with that because kind of back to some of the topics we’ve already touched on is there’s the regulatory aspect. There’s internal processes that we have to deal with that sometimes the bank has to give up some of those traditional processes and go more to a new modern aspect of things and really kind of look to make a philosophy switch or I guess really just kind of a mindset shift to get more up to speed with things.
Jim Marous (14:08):
I mean, it changes all the time. And you’re in a very interesting part of the country that within the people within the organization, within the states, you have a lot of legacy thought patterns that want to modernize. Because you have great universities in the area that put out a whole lot of new minds out there on a daily basis, and you have to respond to those people as well.
Jim Marous (14:30):
Finally, when you look at banking going forward and you look at the organizations that are trying to do the same thing you’ve done, what recommendations would you give to other financial institutions that are embarking upon their loan transformation journey, instant decisioning, the entire customer experience?
Robert Watts (14:48):
I think the biggest thing is not trying to tackle everything all at once. And really knowing who you are as an institution. When we implemented it, we didn’t really do anything that wasn’t outside of the norm for the institution.
Robert Watts (15:01):
For example, real estate loans, we still offer those, but we don’t instant decision on those type of credits because they’re a little bit more risk, a little bit more to review. And so, we didn’t fully implement instant decisioning on those.
Robert Watts (15:14):
We have some smaller dollar volume that we’ll allow instant decisioning on, but we didn’t apply instant decisioning across the board because we weren’t comfortable with it. So, kind of knowing what you’re comfortable with, what your institution is looking to accomplish, and then just working towards it. And once you accomplish that, move on to the next piece of it and just do it step by step.
Jim Marous (15:33):
Great. Thank you so much for being on this show. It’s great talking to you. And it’s interesting hearing the inner battles that kind of go on when your legacy thought pattern is the avoidance of risk, and now you’re really moving towards more of a management of risk, which is a very major change in the way you look at things.
Jim Marous (15:52):
But it also gives you a perspective that others may not have on how you got to keep the balls rolling, but you got to stick — get done. Thank you so much for being on the show.
Robert Watts (16:03):
Thank you.
[Music Playing]
Jim Marous (16:03):
Appreciate it. Thanks for listening to Banking Transformed, the top podcast in retail banking and the winner three international awards for podcast excellence. We appreciate the support we’ve received from MeridianLink in making this eight-part series of episodes a success.
Jim Marous (16:20):
This has been a production of Evergreen Podcasts. A special thank you to our senior producer, Leah Haslage, director Dave Douglas, audio engineer, Chris Fafalios and video producer, Will Pritts. Thanks for joining us and until next time, keep innovating and transforming.
Chat with our experts — learn how
you can develop lifelong financial management relationships to support a consumer’s entire financial journey.