Commercial lending executives often identify two perceived barriers to implementing
state‐of‐the‐art commercial loan pricing systems. Cost ranks as the primary objection followed
closely by a lack of familiarity with the software’s benefits. Like many other challenges and
barriers that may be encountered, there are effective solutions to overcome your concerns
with attaining an appropriate Return on Investment (ROI) on your loan pricing system
implementation. Among our foremost recommendations to clients is to ensure that the
investment you make is commensurate with the size and sophistication of your institution.
There are a variety of loan pricing systems that vary greatly in function and price.
Modestly priced systems, for example, may not link with your core data. This often leads to
gross inaccuracies in measures of customer profitability. Overspending on a system might lock
your institution into unreasonably large and / or long term payment streams making the
attainment of a fair ROI difficult, or prolonged. The amount of your investment should be
tailored to the size of your bank’s commercial loan portfolio and to the sophistication and
knowledge levels of your lending and finance personnel.
There are a variety of strategies to consider ensuring attaining a reasonable return on
your investment in a loan pricing system. We’ll cover each of these in the form of short case
studies that we’ve taken from one or more of our existing clients’ actual experiences.
