Automation is key to winning in the brutal commercial lending industry


By Suzanne Konstance

As the commercial lending industry, along with the world, collectively emerges from the COVID-19 pandemic, we are being reminded that commercial lending is brutal business.

The process of issuing a loan is still too often a long and manual process. Most lenders have very thin margins, which makes risk the primary factor, rather than price or value. Lenders are forced to find ways to reduce the costs of every part of the loan process. Even considering the effects of the pandemic, it can still be argued that there is too much capital in the economy. Thousands of banks, including the roughly 70 “mega” lenders, savings and loans, credit unions, fintechs and online startups, are all competing for what slice of the pie they can grab.

This environment means that a borrower’s risk factors are less important than winning the deal and freezing competition. Price wars are never good for business, and that’s especially true in an industry like ours.

Then consider the work required to fully screen a borrower. It’s a process that demands near-perfection across the entire organization: credit scoring, deal structuring, and supporting business processes. After closing, further loan servicing costs arise. All of these factors were true before COVID-19 upended financial norms. But now the risk is even greater as businesses grapple with labor shortages, supply chain issues and unpredictable demand.

Due to the large number of pre-loan tasks to be performed, a lack of digitization and bloated processes can impact the efficiency of a commercial loan team early on. Organizations often use multiple systems, processes and vendors to work on a loan, often more than 10 systems from the start to the end of a loan cycle. This results in multiple transfers, disconnected systems and siled information.

This kind of “Rube Goldberg” lending operation is no longer viable, if it ever was. Commercial lenders can and should remove all obstacles that impede growth.

Link perfection as a driver of change

The importance of perfecting liens is something that will remain constant regardless of the external variables in the commercial lending space, and this could very well be the perfect place to illustrate how automation can help lenders succeed. .

Filing a UCC is seen by many – mistakenly – as a simple post-deal transaction. A significant risk lies in the management of the privilege for reasons such as:

  • Disconnected systems where anyone with the ability to access the Secretary of State’s web portals can create, modify, or release a privilege. Consider that every year 16 percent [1] debtors have a changing event that can materially affect lien status.
  • A lack of transparency and visibility into lenders’ lien portfolios. Lenders who file UCCs without the assistance of a service provider tend to see up to a 22 percentyou [2] rejection rate.
  • Difficult to understand the systems and processes that lead to imperfect privileges — which can amount to up to 30 percent [3] of a portfolio without the knowledge of the lenders.

Automating large parts of the privilege lifecycle is possible with the right set of tools. Privilege management platforms, such as Wolters Kluwer’s iLien, can automate monitoring of a privilege wallet and trigger reports on its health to be sent to stakeholders periodically, or even on demand. Losing track of a UCC deposit because it was filed by a third-party agent can be a thing of the past: lenders can consolidate all their liens, no matter where and when they were filed, into one synchronized interface for full visibility and ongoing management.

Automation and digitization with a platform like iLien can completely transform the privilege perfection process on its own. As much as 70 percent steps can be removed from a lender’s lien workflow while still providing perfected loans.

Reallocate resources

The real value of automation could actually be the release of human capital, allowing employees to add more value to the organization by focusing where they are needed most. Automated tasks help reduce errors while ensuring a commercial lending team can scale more easily to support the business and meet margin requirements.

Other important components of automation platforms are artificial intelligence (AI) and application programming interfaces (APIs). AI allows lenders to use data to learn patterns, diagnose problems, better predict behavior, and even prescribe future behavior. APIs replace repetitive data entry with auto-filling forms, provide borrowers with a faster, quality experience, and encourage customer retention.

Automation should not replace human capital. Instead, he should reinforce it.

Rather than just managing loan documents, an account manager can leverage AI and automation for account maintenance, while acting as a borrower’s advocate, providing advice on how to manage things like interest rate fluctuations and currency exposure.

Or they could be the catalyst for a whole new set of value-added services from the lender, such as educating borrowers about phishing scams and the latest security vulnerabilities. These concepts go beyond the basic commercial loan transaction and create an attractive landing point for more commercial loans.


The volatility in the global financial space has created a situation that requires continued automation and digitization by commercial lenders. Mature and innovative digital touchpoints are replacing manual methodologies, and commercial lenders can leverage new capabilities to lend quickly, flexibly and responsibly.

Whether you’re juggling tasks, getting spread out, or just need guidance, Wolters Kluwer Lien Solutions is here to help with industry-leading products and services that help create effective, high-quality privilege management in all circumstances. Our comprehensive solutions, automated processes, and outsourcing services help you maintain your privileges to mitigate your loan risk, while better deploying your team to compete and win in a brutal business.

Call us to discuss your unique situation and let us show you how lenders can use lien management to mitigate risk. Call us today at 800-833-5778 or visit

Suzanne Konstance is Vice President and Head of Link Solutions at Wolters Kluwer Compliance Solutions. She and her team are focused on understanding and solving customer problems in order to provide innovative and effective secured lending solutions. She has led teams to create new best-in-class products and services that dramatically improve lien and title management. Konstance is the executive sponsor and one of the founders of a divisional network of women’s initiatives to promote the career development of women at Wolters Kluwer, and was recognized with the 2021 Businesswoman of the Year award from CEO today magazine; Senior FinTech Leader of the Year 2021 by Wealth & International Finance magazine; a Women in Finance Award in 2020 by Monthly Finance; and Female Entrepreneur of the Year, Business Products, Women in Business 2020 Stevie Awards.

[1] Wolters Kluwer analysis of public records data
[2] Wolters Kluwer analysis of public records data
[3] Wolters Kluwer analysis of public records data
[4] Based on Wolters Kluwer’s experience with customers

Comments are closed.