The steps behind commercial real estate lending have not changed in decades. On average, it still takes 3 months to close a commercial real estate loan. Manual processes slow down the lending cycle, banking data currently lags behind client needs. In 2019, 43% of US banks still used COBOL, a programming language created before the internet.
These frustrating hang ups come at a time when commercial real estate is being reimagined. In the wake of remote work, companies are rethinking how office spaces are used. The shift to e-commerce has caused stores to operate as mini-warehouses for curbside and delivery services while distribution sites, logistics warehouses, and storage spaces will continue to rise in demand. As the landscape of commercial real estate changes, why should the lending process stay stagnant?
Lenders’ core values haven’t changed. They still want deals with strong, long term value. However, the way leanders define a quality property investment will look different in 2021 and beyond. Commercial lenders need digital solutions to their problems.
In the modern lending process, fintech lenders will process mortgage applications 20% faster with no increase in defaults. Lenders enter their criteria and brokers enter loan details and borrower preferences. Advanced algorithms match brokers and lenders to their perfect-fit deals. Compare the speed of algorithms to the calling around favored by earlier eras. Consider how many better deals can be made when all the information is in the same system.
The benefits are enormous. 99% of lenders believe that technology can help improve the commercial mortgage application process. Lenders and brokers both save time and effort when all the information is in one place, lenders can instantly update loan criteria as appetite changes, and bidding and negotiating can all happen digitally to reach a deal more efficiently. Commercial lending’s future is now.