Signature Bank implements online loan-processing system

by Karen E. Culp

SBJ Staff

Signature Bank will be one of the first banks in the country to use an online processing system for loans. The Competix program is a computer loan-processing program that uses the Internet as its vehicle for sending and processing the information on loans, allowing loan approvals to occur in a much quicker time frame than conventional loan-processing methods.

Signature Bank began looking for a program like Competix about a year ago, said Randall Doennig, vice president of the bank and its consumer loan officer.

"We were looking for a computer system that processed loans, and as we were looking for systems, we were approached by them (Competix)," Doennig said.

Competix is a joint venture of the Bank of Montreal and American Management Systems, said Bill Stoner, executive officer of Competix. The product Competix offers was first introduced in the Bank of Montreal in 1996, Stoner said. Signature is one of the first two banks in the country to move forward in implementing the new service. Bankwest in Goodland, Kan., is also going to implement the service.

Signature will first be a beta test site for the service, and that testing is likely to begin in the second quarter of 1999, Doennig said. When the bank had looked for a computer loan-processing product, it found that most of the programs required the bank to hook up to a mainframe or employ some other technology to reach a central processing point. Because the Competix program is Internet-based, it does not have such data-processing requirements. That feature is one that makes the program very attractive to smaller banks, said Herb Hall, manager of customer support for Competix.

"Often, many of the computer-based loan-processing programs will require a capital outlay on the part of the banks, to acquire the means to use the program, and often the bank will have to also look at adding or expanding a data-processing staff to keep up with that technology. With this, you don't need any of that," Hall said.

"The equipment we need to run this program is really here in the bank now. We will have zero expenditure to purchase equipment to run this program," Doennig said.

The program is offered on a fee-for-service basis, so Signature will pay a fee for each time it uses the program. The fee for each application will range from $25-$50, Stoner said.

The program is also equipped with features that allow it to be customized for a particular bank. Competix develops logic trees for the system for each bank, so that the decision process the program goes through reflects the decision process the particular bank chooses, Hall said. Ultimately, the bank can decide whether it will allow the system to make the decision on granting or rejecting a loan application, or the bank can let the program process the application and then leave the ultimate decision to a loan officer. Doennig said Signature will use the program in both ways.

"We will probably let the program complete the decision process for those applications that are somewhat cut and dried: definite nos or definite yeses, but we will have those that are maybe somewhat gray to come back to me as the loan officer for a final decision," Doennig said.

Signature will use the program only for consumer loans at the beginning, although the program may be adjusted for other types of loans at a later date. Signature will post an application for a loan on its web site and the customer can initiate the Competix process on his or her own through that channel. That will be the only self-guided loan application, though; if customers come into the bank to apply for a loan, a loan officer or customer service representative will take their information and input it into the Competix program. Doennig said the bank has not yet decided who will have access to the system in the bank.

Both Hall and Stoner said the system will serve small- and medium-sized banks well in that it will give them access to a system similar to what larger, holding company banks already have. The system is customized for each bank to provide the one-on-one type of service the smaller banks desire.

"What we have seen is that the smaller banks want to have a high level of customer service. They want the customer to feel as though the decision is being made right there in their hometown rather than at some office far away. This system is ideal because the programs will be created so that the decisioning process is exactly that bank's process," Stoner said.

The system is also user-friendly and easy to understand, Doennig said.

Using the Competix program will not only level the playing field for Signature among other banks, especially larger ones, but it will actually put Signature ahead, Doennig said.

"This technology is really cutting edge. It's far ahead of what most institutions are doing," he added.

Doennig said he thinks the computerized loan processing system will allow better continuity in loan decisions and could therefore improve Signature's portfolio.

Customers will also have the advantage of receiving a decision on their loan on the spot. Hall said some processes have been as quick as five seconds, and Doennig estimates that many could take place in under a minute. The Competix program will use three credit bureaus to receive credit ratings on customers: Equifax, TransUnion and Experion.

The bank can specify which bureau it wants to use on a given transaction, or the system will choose a bureau based on other facts. For example, TransUnion is used more frequently in Arkansas, and has more information on Arkansas customers than other bureaus, so if an Arkansas customer comes to Signature for a loan, the system will automatically choose Trans-Union because of the customer's Arkansas address.

"We want to stress to our customers that they are not going to see any changes in how our system works or how we do business with them," Doennig said.

Signature Bank has $85 million in assets and is a 16-month-old Springfield community bank.

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