Technology Spotlight: The Small Lender Can Survive

*The Small Lender Can Survive*
**Community Banks Profiled**

***There is a growing trend in which small mortgage lenders are adopting Web-based, transactional online lending technology as a way to narrow big lenders’ competitive advantages. This strategy creates greater visibility and accessibility in the online channel at affordable cost. Community lenders, limited by more modest resources, are countering big lenders’ deep pockets and brand-name dominance with point-of-sale origination platforms that manage custom-branded loan application websites. The advanced capabilities of these tools have enabled community lenders to use the technology as a marketing tool to attract new customers and members to the online convenience and as an operational advantage to expedite the loan-approval process. Here are some examples:

****Matt Cotter, Mortgagebot’s senior vice president of sales and marketing, says this technology is turning out to be the great equalizer in leveling the playing field against big lenders. With pay-as-you-go pricing, adopting PowerSite has become an increasingly easy strategic decision. “Community banks and credit unions are embracing it for competitive reasons—increasing name recognition, widening the client and member base and creating more accessibility to their products,” he says. “In growing online loan volume through a solution that offers affordable scalability, they capture an audience they otherwise would have difficulty marketing to.”

****The switch to advanced online technology greatly expanded lending opportunities for community banks and credit unions—including Bank of Galesville, of Galesville, Wis.; First National Bank of Catlin, of Catlin, Ill.; Paper City Savings Association, of Wisconsin Rapids, Wis.; and Community West Credit Union, based in Kentwood, Mich.—all lenders with less than $165 million in assets. The lenders went from no online-application capability to full PowerSite deployment within the last year. They achieved:

****>> Accessible online presence. A user-friendly website branded to the lender’s corporate site features products for 24/7 accessibility by online borrowers. Steve Poss, senior vice president of $85 million-asset Bank of Galesville, confirms the bank has received many applications it may not have received without Mortgagebot, even though its products have always been as competitive as other lenders’ products.

****>> New Customers/Members. Lenders attract new borrowers, often from a younger demographic, who are largely comfortable with the online space. As much as 70 percent of Catlin Bank’s online applications in the first quarter of 2012 were submitted by new customers, with many between 25 to 45 years old. In the first month of PowerSite use, the bank received an average of about one application per day.

****>> Operational cost savings. Lenders gain virtual branches with no additional cost. Catlin Bank, which already commands the third largest market share in a one-county area, successfully expanded its market area. Bank President Jeff Fauver, says, “The reason for our success derives from PowerSite, which enabled us to move into the adjacent county without the expense of establishing another physical branch.”

****>> Stable referral relationships. Realtors and referral partners appreciate the solution’s convenience and ease-of-use. Paper City Savings, a $160 million-asset bank, uses PowerSite to solidify realtor relationships. Executive Vice President Debra Edwards, says, “We’ve stepped up our competitive edge by showing realtor offices how easy it is to use the website. It places us at an even level with big lenders.”

****This type of technology enhances efficiency with streamlined processing, through such features as automated appraisal orders, credit report requests and delivery of compliance disclosures. Paper City Savings can collect the application fee, order an appraisal and obtain approval in ten days, the same period it once took staff to mail disclosures and collect the application fee.

****Offering convenience to borrowers has also proved critical in attracting more business. PowerSite gives borrowers the easiest way to apply. On-the-spot rates and multi-channel flexibility—the ability to work on the same application online, over the telephone, or in-person at a branch—further create a seamless experience. Applicants can begin an application online and later complete it in person. Heidi Hunt, mortgage specialist of Community West CU, directs members to their website. “I can view an application in progress and collaborate with borrowers. This flexibility provides a stress-free experience for members.”