Happy New Year and welcome to 2010! It has been a couple of months since my last post and thank you to the numerous emails and phone calls from readers giving me a hard time, excuse me, "holding me accountable" to keep up the blog. My last entry was fresh from the MBA conference and I mentioned that I felt as though the industry as a whole was beginning to thaw; I was correct. November and December turned out to be surprisingly busy months with my company and our lender clients even though the year was wrapping up; but I am rambling, so on with the show…
During my discussions with several lenders over the last few months, I noticed that there is a shift towards reinventing the lending process to improve service to the customer, implement better controls and the ever present mantra of cost per loan reduction. One question that I was asked was my preference on a centralized or decentralized environment. I answered "yes". This argument is not new and both camps (sales and operations) are pretty entrenched on their opinion. In my career in lending, I came up through the sales ranks and then due to my attention to detail and process design abilities, migrated to the operations side of the house. This background gives me a unique perspective to truly see both sides of the discussion. I am going to spend the next few of blog entries discussing some of the myths around the discussion and a few of the potential benefits from my suggested solution.
Myth #1- We need an onsite team presence because they are better equipped for the "local" market. I am sure most strategic managers have heard this argument in the past. In my opinion, this is a partial myth. As borrowers grow more comfortable with online applications, banks can spread their lending footprint without the traditional brick and mortar that was needed ten years ago. This approach does have its limitations however. To truly "develop business" in an area (note that I didn't say "take applications"), a lender should have a local presence to "win the hearts and minds" of the local customer base and to be a part of the community. However, this onsite requirement is only applicable to the sales cycle of the lending process. A local operations team is not needed. Through today's automated technology and access to information, a specific local market is now accessible from any location around the globe. This takes us back to my earlier answer of "yes" with respect to my preference between centralized and decentralized lending environments; the ideal scenario for a lender would have a local sales presence in a decentralized format (call center originations work but again we are discussing business development not simply taking applications) and a centralized back office operations teams.
(to be continued)
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