If shortening the often frustrating wait between the filing of a loan application and the final word from the bank is a service that can bring customers flocking, Security Pacific National Bank figures it should be doing quite well in the competition for small- business accounts.
The Los Angeles-based bank's 38 statewide business banking centers recently installed a fully automated loan processing and documentation system that bank officials say reduces the time it takes to approve loans--from three weeks to three days on a $10-million loan processed for one of the bank's regular business customers.
The $6.5-million system--initially tested at Security Pacific's Irvine center--frees account managers to drum up new business and maintain a better relationship with existing customers, bank officials say.
Security Pacific's business centers compete with independent and mid-size banks by seeking customers from the ranks of the small and mid-size companies, the backbone of Orange County's economy. Dannie M. Hayes, a senior vice president in charge of the Irvine banking center who also oversees three other centers in Orange County and one in Long Beach, said the bank is aiming to pick up more business customers who need loans of $3 million to $100 million.
"I just came back from a marketing convention, and nobody has anything like this," Hayes said. "In the first quarter last year, I made 50 calls to prospective customers. Now I'm making five times that amount."
And a special computer system keeps track of all those calls and of the information gleaned from prospective borrowers. When a prospect becomes a customer, the file is transferred to the new account so the customer doesn't have to continually repeat the information when filling out forms.
The computer-word processing operation also augurs well for retail banking, where the day soon may come when a customer can apply for a car loan or home mortgage at 9 a.m. and receive approval--or denial--by 5 p.m. the same day, Hayes said.
"If this automation works here (in business banking), it'll work anywhere," he said.
When the Irvine office tested the automated system last November, Hayes and other executives were so impressed by it that they converted the bank's entire business banking operation to computers within eight months.
"We're trying to be a consultive banker--to show businessmen the savings they could expect, the impacts of borrowings," Hayes said. "Automation helps us do that."
Based on projected sales, inventories and other data, for instance, a particular customer's profile and a laundry list of 15 to 20 assumptions about the business's performance can be plugged into the computer, which uses specially designed software to calculate the customer's borrowing needs, said A. Elizabeth Costello, a senior vice president at Security Pacific's Irvine center.
The results could show customers that they may need less money--or more--than they asked for, she said.
Bankers normally spread sheets of financial statements on their desks and take four or five hours to analyze the data and figure the ratios they need to even begin considering such important things as a customer's ability to repay a loan. Now the computer does some of the most complex ratio analyses in 20 minutes, Hayes said.
Security Pacific spent about $3.5 million on pre-programmed software and hardware--mostly for 700 IBM PC computers statewide--and is spending about $3 million to train loan officers and develop specialized computer software, Hayes said.
The need for special software is important because many pre-programmed, or canned, software packages make assumptions that bank officers don't make, he said. One ratio-calculating software package, for instance, assumed a figure on a line where none appeared. That assumption affected other ratios and ended up with approval for a customer's line of credit that was twice what it should have been, Hayes said.
"There's a massive amount of paper work and data that banks deal with, and banks must be detail-oriented," he said. "The automation handles all that and helps us to increase productivity."