What does automation look like for community banks?

The idea behind banking automation platforms like Banker’s Dashboard is simple enough: spend less time performing manual processes and more time analyzing up-to-date data about your bank’s financial position. But how can you get there? And what might it look like when you do?

We asked some experts in banking automation, as well as actual Banker’s Dashboard customers, for their perspective on how community banks can improve profitability through automation.

Automation Best Practices

As with any new process, adopting a banking automation platform will be most successful when you keep a few best practices in mind. Sam Kilmer, Managing Director and Fintech Advisory Practice Leader at Cornerstone Advisors, offers four suggestions for community banking leaders to consider when embarking on the journey towards automation:

1. DO understand where the initiative fits on a Strategic Initiatives Valuation Map and set expectations accordingly.
2. DO focus on the people involved as much as the automation involved. People like to talk about and champion other humans as much as automation tech.
3. DON’T confuse automation productivity/efficiency solely with cost reductions. A bank’s efficiency ratio is at least as driven by revenue growth as it is cost reductions.
4. DON’T obsess over ROI models, but do obsess over anticipated impact and gaining consensus on that impact (and whether you are achieving that impact or not).

Chris Ortega, CEO of Fresh FP&A, echoes this sentiment. Chris says community banks will increase their chances of success with automation by “incorporating the three I's of any successful software, IT or technology initiative: introduction, implementation and integration.” In other words, community banking leaders will get the most out of an automation platform by getting staff buy-in (introduction), fully deploying the automation platform (implementation), and using it consistently across the organization (integration).

Community banking leaders will be well served to remember that, while automation platforms are extremely powerful tools, they are simply that: tools. It is up to the community bank’s leadership to make sure everyone—from those whose processes will be automated to those who will be running the analyses—knows the expectations and benefits of the new technology.

Automating out of Necessity: PPP Loans

When the Paycheck Protection Program (PPP) rolled out in early 2020, many community banks were overwhelmed with the number of loan applications they received. Because they had to enter application data manually, they often became so overworked that they had to pull staff from other departments to process everything on time. “It was hardly an efficient or cost effective use of time,” says Jim Perry, Senior Strategist at Market Insights Inc.

“The needs of small businesses were obviously so urgent during this time that banks could not expect customers to tolerate slow response times,” Jim says. This led many community banks to invest in automating the loan intake, processing, and approval process. “By automating elements of the underwriting process,” Jim says, “banks were able to quickly collect and transmit data to the SBA and keep countless small businesses from collapse.”

Syed Bukhari, Partner at Elixirr, saw exactly how automation made the PPP underwriting process more manageable. In a previous position, Syed helped deploy an automation system for processing these loans. The system “streamlined and automated loan application, evaluation and approval,” Syed says, which “resulted in more than 26,000 PPP loans being funded with an average loan size of $230,000.” This volume would have been untenable had automation tools not been brought in. But thanks to automated processes, banks were able to evaluate each application faster without burdensome and error-prone manual data entry.

“Lessons learned from these experiences are hopefully prompting a closer look at other areas where automation can improve the customer experience,” Jim says. The good news for community banks is that automation tools exist today that can save hours of work and provide insights based on same-day data.

Real Results from Banker’s Dashboard

Automating routine processes at a community bank doesn’t just shave off a few minutes from manual processes here and there. It fundamentally reshapes how a community bank can use its resources to improve results.

First Community Bank of the Heartland (FCB) is an inspiring example of what’s possible. Throughout the pandemic, many banks have seen a downward trend in net interest margin (NIM). However, First Community has maintained their NIM at greater than 4% throughout the pandemic, with only one dip to 3.97% in Q1 of 2022.

When asked the secret to their success, CFO Tim Goodin doesn’t mince words: “Banker’s Dashboard has helped us to become a more profitable bank,” he says. “It automates the ability to look at our bank financials daily at a glance without a lot of effort. It summarizes on a customizable dashboard all the things we find important and want to routinely monitor. This helped our bank maintain a strong NIM during the pandemic while many banks experienced significant compression.”

Not only did Banker’s Dashboard help keep FCB profitable, the solution also helped the bank double its number of branches. “When we started with Banker's Dashboard we only had five branches. Since that time we have expanded our footprint with an additional five branches and plans for the sixth branch within the next 18 months,” Tim says. “Banker's Dashboard has allowed us to monitor those new branches individually and at a statewide level, providing branch and regional reporting and monitoring.”

Ultimately, FCB credits increased efficiency and profitability to their strategic use of Banker’s Dashboard.

Get Started with Banker’s Dashboard

For these and many other banks, the results of implementing Banker’s Dashboard have been immediate and positive. Automation allows you to budget faster, forecast more accurately, and have a better understanding of your bank’s financial position—all of which helps you stay competitive.