Why transformation for banks is NOW urgent.
CEO and CFOs are now understanding the cost of ignoring their appraisal department. Historically, it’s taken a backseat to the lending side, the sales folks of the bank. However, a holistic view of the competitive nature of banking from a digital transformation perspective suggests ignoring the department can result in significant long-term negative impact.
“Is your appraisal department aligned with a digital transformation focus to best facilitate the customer journey while protecting collateral?”
Longitude, an FT Group company, published interview research of 517 senior global banking executives, 32% CEO, 20% CFO and 16% CTO surveyed. The majority (46%) of the bank size surveyed was $1 to $10 billion but also included 5% of $50+ billion in assets.
Bank longevity questioned
The study concluded that about 65% of North American banks think they could cease to exist within the next five to 10 years if they don’t make significant changes. About 46% of the banks felt their delayed digital transformation was because they focused on short-term profitability. A whopping 74% think Amazon or Google could take a large share of the banking industry in a five-year window.
The survey highlighted that post-COVID trend of more digital services by younger more tech savvy customers. Less than 50% of the banks surveyed considered their digital transformation strategy as mature.
The new thought is to use technology to help stay customer centric instead of transaction-based relationships. A satisfied customer is the best business strategy of all.
Appraisal Dept. transformation
You can argue that your fee panel are transaction-based relationships. A new thought for the appraisal department is to leverage your vendors by re-establishing relationships. Second step, communicate new expectations that are mutually beneficial since both face similar headwinds.
The power of reaching out to your fee panel generates a lot of intrinsic benefits. That said, the relationship needs to be tweaked some. Ask your fee panel about their annual technology investment and process improvements. Let’s face it, it often comes down to turn around times and cost. Technology can help with both of those. However, if your vendors lack software like DataComp Suite, they pragmatically can’t shorten delivery times significantly.
Set new expectations
From our valuation world we can help modernize the customer journey, thekey to transformation. When a new appraisal request comes in, the appraisal department should have a platform to crush their SLAs while providing reporting to the c-suite and transparency to the lending side.
“The appraisal department is part of the bank customer journey.”
The due diligence of collateral protection is already built into the process, but how much focus is on the borrower’s journey as they proceed through the appraisal department?
“Is a 4 – 6 week commercial loan turnaround still acceptable in 2022?”
Do borrowers have other lending options? Will tech companies try to fill the customer time expectation gap?
Fee appraisers are pragmatically an extension of the bank. How did they treat your borrower? How was their communication via text, email or call? Were they timely and courteous? Did they dress and act professionally?
At Realwired, we have a mantra for our appraisal/environmental workflow platform YouConnect; “We simplify loan origination with appraisal procurement software.” For commercial fee appraisers, our goal with our software is, “We simplify commercial real estate appraisal creation.”
Trust is the new currency
The research suggests working to create a closer, more trusting relationship with customers will improve trust in your bank’s brand.
Focus on your bank’s digital transformation.
Don’t ignore your appraisal department.