Cloud-based technology has become nearly ubiquitous in our lives and its impact on the financial services sector has been substantial. To explore some of the ways cloud-based technology is specifically transforming the commercial lending space for the better, ABF Journal spoke with Paul Clarkson, executive vice president of U.S. financial institutions at nCino, and Van Dukeman, president and CEO of Busey Bank.

What are some of the most important recent developments in commercial lending technology and how have they affected the lending lifecycle?  

Paul Clarkson: I think what we’ve all learned is digital is not a nice to have anymore. It really has been thrust to the forefront. At nCino, we’ve, for a long time, talked about the agile enterprise and always had our eyes on moving to the intelligent enterprise. The advent of AI analytics and predictive analytics allows you to make smarter decisions faster beyond just being able to go from application to close on a loan for a customer faster. Folks expect AI-driven insights and digital channels now. I’ve seen that really accelerated, probably over the last year, more than any other time.

Van Dukeman: We really got thrust into having to get the Payment Protection Program unveiled for our customers, both in the funding as well as the forgiveness process, in 2020. If we hadn’t had a more automated system, particularly in commercial banking, that process would have been much more difficult.

How has cloud-based technology developed within the financial services industry and where does it stand today?

Clarkson: It’s changed a lot. I’ve been at nCino for almost six years and when I first started at nCino, bankers were very resistant to the cloud, but now it’s become the industry standard. Everybody’s moving things to the cloud. When you think about forward thinking customers, like Busey Bank, moving to the cloud enables them to be much more agile when things do pop up or if the industry shifts. It also enables you to quickly aggregate all of that information and provide a single cloud-based experience for all of your customers as well.

If you look at Busey Bank, they use us for commercial lending, but they also use this for treasury sales and onboarding, that way they can have targeted conversations with their customers on a single platform. Ultimately, that provides a much better customer experience where you’re not having to swivel a chair between manual processes and different point solutions. That also, with the advent of the cloud, enables banks to consume innovation much faster because there’s no more on-premise deployments.

We’re doing two releases a year and customers can consume that innovation very quickly with each release, and I think Busey Bank is absolutely an excellent example of that. You’re always iterating. You’re always looking to what’s the next thing we’re going to do on this platform so that we can stay ahead of consumer expectations.

Dukeman: After we had the commercial banking platform in place, a couple of years later, very quickly we were able to add the treasury management platform. If that was not cloud-based, it would have been extremely difficult to do.

The other thing that’s really helpful is we’ve been fairly acquisitive, so as we’ve bought banks,  we can get them onto the nCino platform very quickly and interface with our core operating system. If you don’t have a cloud based-system, it’s much more difficult to onboard. Banks are a little bit hesitant to do this because of concerns about data privacy and risk, but once implemented, it’s the best way to go and it’s going to be iterating as we move forward.

Clarkson: The M&A market is really heating up again. There’s a lot of mergers and acquisitions taking place, and the winners like Busey Bank have good cloud infrastructure so that they can rapidly onboard those banks that they do acquire, and it gives them the scale to quickly do it.

Generally speaking, what are the benefits of cloud-based technology for commercial lending operations?

Clarkson: It allows you to bring the customer to the center of the process by showing them where they are and providing a digital channel where they can directly interact with the institution. I talked a little bit previously about the ability to consume innovation quickly and be iterative. I think that’s also really, really important, especially as we learned in 2020, the ability for your employees and your bankers to work from anywhere, anytime requires that infrastructure. It allows you to never be stagnant with your infrastructure. It also reduces a lot of overhead in terms of technical debt.

Dukeman: It really transformed manual origination, credit and closing activities for the origination or renewal of commercial loans to an automated process. We went from doing a lot of the nuts and bolts manually to doing it in an automated fashion. It also provides you so much more transparency into the pipeline from the request all the way through looking at the loan and then the monitoring after that. That all just became so much more automated and the transparency at different stages of the pipeline is extremely helpful.

We’re in four states and the ability to improve the portfolio management capabilities with this robust reporting in dashboards remains very important to track region-by-region activity. For management, that’s very helpful. It’s obviously more helpful for the customer too because you can communicate real-time where their application happens to be.

How does this type of technology play into the loan lifecycle, whether that be business development/origination, underwriting, etc.?

Clarkson: For the financial institutions, the ability to have transparency as to where things are in the process ultimately allows them to provide a better customer experience. It’s going to enable collaboration and become more thoughtful about how they’re onboarding a specific product for that customer because they can take into account the entire relationship. It’s not just a single transaction that we’re talking about, but we can actually look at how does this fit into the overall relationship? What are some of the other products they have with us? How can we work with them there? Then you can show more creativity and flexibility to put your customer first in some of those situations.

When you talk about the ability to price loans, to take into account the entire relationship’s profitability before you make those final decisions, it allows relationship managers to be more of a hero in the eyes of their customers, as they can provide t different scenarios that could benefit them. When you move to the middle in back office, I think the key here is allowing a financial institution to make decisions faster while still mitigating risk. Obviously, we can see the regulatory environments continuing to evolve and we want to eliminate manual typing in spreads, allowing the analyst to actually analyze and make thoughtful credit decisions for the financial institution by automatically spreading financials using our auto spreading technology.

You’ve seen a lot in the consumer side of the bank, where there is a lot of automated scoring and automated decisioning. That’s starting to become more real on the commercial side of the bank too, as we continue to have more robust artificial intelligence and risk modeling so that we can make those decisions faster.

Dukeman: The speed of the process really is critical and there’s no doubt the consumer is leaning into the commercial. If you think about yourself as a consumer, if you order something, you want it tomorrow. Everybody wants everything that they want quickly and it’s no different for a commercial customer.

A business customer wants to know whether their bank’s going to support their request. This ability to monitor and move the process along quickly is really critical, but it’s important to do it inside of a bank’s risk tolerance. But even if the answer is no, customers want to know the answer quickly.

In addition, banks historically haven’t done a very good job of monitoring pipelines. That’s really important that leaders know what their pipeline looks like.

How might a cloud-based solution improve relations between lenders and borrowers?

Clarkson: Consumer expectations in the landscape have completely changed. And to Van’s point, we can order something with one touch on Amazon and get it almost the next day or sometimes the same day. But ultimately, what consumers care about is: “Am I approved and when can I get my money?” If you can give that to them, you’re ultimately going to improve your relationships with them. If you can also give them transparency in the process via a digital channel or a portal, that also is going to improve customer satisfaction.

But I think giving your relationship managers and loan officers the ability to have rich insights and avoid redundancy make for a much better customer experience and it’ll allow you to put your customer at the center of everything you do.

Dukeman: The ability to really bring together that full customer view really should help in our sales efforts so we can utilize that data to make good decisions on prospects or customers. It also makes it possible for the customer to directly put information though the nCino platform so that it goes right into the system.

How much more important has having cloud-based infrastructure been for financial institutions during the COVID-19 pandemic?

Clarkson: I think before 2020, cloud infrastructure was strongly encouraged and you probably should have it. Now it’s mission critical and there’s really no option if you want to keep up with consumer expectations and continue to thrive in this market. You need to have the ability to allow folks to work from anywhere, anytime. You need to enable a remote workforce at the drop of a hat, unfortunately, as we learned, and then you also need to be able to rapidly adjust to changing consumer expectations. You need to be able to quickly onboard new products and adjust with different consumer expectations, and you certainly cannot do that without a robust cloud infrastructure in your financial institution.

Dukeman: We were all moving in this direction with the cloud, from like-to-have to should-have to must-have. The pandemic just accelerated it to the point where must-have happened very quickly.

What has your experience been using this kind of technology? Does Busey Bank utilize any other forms of technology to improve operations?

Dukeman: With platforms like nCino or others, the user has to put in good data and information. There’s a lot of hard work on the front end and I think, many times, financial institutions underestimate the work that it takes to get to that final outcome. Therefore, in some cases, it sits on a shelf and doesn’t really get optimized to help you become more efficient and help your customers with the basic benefits. We took the position that we were going to do all the heavy lifting and give this a full-court press to get the data in the system and to optimize it. It’s now been converted to muscle memory. We know we use it every day.

I think we have more than 400 users, probably close to 500 licenses, just as we bring on new banks and grow, but it takes a lot of work on the front end, and Paul’s probably seen this with some of his clients. When we’ve failed in the past, I think it’s been because we wrote the check but didn’t invest the time that we needed to really make the system work for us.

The other thing is the ability for core operating systems to interface with nCino is also a critical component. We wanted to make sure that whomever we worked with on a group operating system also is well-versed in helping us interface with nCino..

What technologies do you expect will have a major impact on commercial lending in the years to come (AI, machine learning, robotic process automation, etc.)?

Clarkson: I think it aligns well with the nCino vision, where we talk about being able to automate and optimize processes for our customers with what we call the agile enterprise. But now we’re talking about artificial intelligence, predictive analytics, portfolio analytics and the ability to proactively do those things throughout the entire loan process. That means having artificial intelligence at every part of the process so that you’re making those smart decisions and you’re being predictive with those decisions.

It’s not just doing a probability of default (PD) or a loss given default (LGD) with your book loans, it’s figuring that information out as part of the underwriting process so you can be proactive so you can also deliver much better insights to your bankers and, in turn, deliver much better insights to your customers.

To Van’s point, he talked about being able to pull all that customer information together on a single platform. When you have all that on a single platform, then you start to make decisions based upon the entire profitability of the relationship, not just what one loan is doing for you. You can take that entire holistic view of the customer, make those decisions and be a much more profitable bank but also have much happier customers.

Dukeman: You pull that data together and you know more about the customer. You also know their behaviors, so with artificial intelligence, if you have all the information about the customers and their actions, it allows you to anticipate what their needs might be as well. One of the reasons that we like partnering with nCino is they’re an industry leading business partner for us and they’re going to end up providing us more opportunities to make this process better for our commercial loan and treasury management businesses. It’s clear that banking regulators continue to want us to have an active risk management process around our commercial banking and treasury management, for obvious reasons and nCino helps to accomplish this.

The other thing that we have done, is partner with a company called JAM FINTOP, which is a private equity fund that’s being funded by numerous commercial banks of various sizes to invest in fintech companies. There is a lot of fintech penetration into the wealth management business as well. I’m very interested in that area. Where is that going to go from a financial technology standpoint and with young savers and wealth builders? We’re paying attention to that area as well.