The typical bank serves three different client segments – retail, small business and commercial. Over the past decade we’ve seen significant growth in technologies that improve the customer journey of the first two groups… but much less innovation in the commercial space.
We believe the reason lies in the complexity that surrounds commercial banking and commercial lending. There are often multiple stakeholders (borrowers, lawyers, accountants, guarantors) and entities involved on the borrower side and several teams involved on the lender side. Furthermore, every borrower is a snowflake. Asset-based customers are different than large corporates are different than non-profits. The type of data you need to onboard, underwrite and service these customers is non-standard (financials, contracts, business plans), the amount of data you need is different, and the in-house expertise you need is different.
As a result, banks often pitch a consultative experience to commercial customers. Check the corporate landing page for any regional bank in the United States. The sites are littered with thought leadership and words like “partner”, “unique” and “complex”. The language makes it very clear that attaining a commercial loan will not be fast. On average, companies requesting commercial financing undergo an application that takes multiple weeks. It’s painful for borrowers and expensive for lenders.
To be clear, we do not think all of this marketing copy is lip service. Commercial bankers and relationship managers provide real strategic advice and guidance to their customers. It’s rare that commercial customers seek an experience that is completely transactional. However, we do think you can make the process faster and more efficient with technology.
A closer examination of the origination process reveals that the principal culprit of the slow throughput times and high expenses is the incredible amount of data collection and borrower “handholding” work required.
We validated this with our limited partner base. On average, 30% to 40% of lending resources are spent collecting and processing complex documents. Until now, banks have not had the tools they need to expedite the workflow.
Building with Commercial Lenders
We understand commercial lending as well as anyone in the market. Our team members are founders and operators of banks, and we incubated nCino. We know that building software for commercial lending is hard. In our opinion, success depends on the approach you take to solving the problem.
When you look at the broader commercial lending technology landscape, you’ll see that most startups in the space are focused on digital acquisition… “we’re going to give you a front-end that will enable customers to start their journey online.” We think these players missed the mark. Banks often want to control their front end experience and pre-filling part of an application does not reduce the number of workstreams that start or end in email.
So before building Able, we had Diego and Andrew spend 100s of hours on-site next to lenders in the Canapi network. Our approach is different. Able is building software that targets bankers across the value chain to stop the “pain-train” that is commercial lending.
The Best Way to Collect Borrower Information
Able uses AI to collect borrower information faster. It is an automation intelligence layer that sits on top of your bank’s existing systems and processes. Relationship managers simply tell Able which documents to collect and the platform takes care of the rest. Borrowers (or their designees) can submit documents in whatever format they prefer… online, via email or in person. Every stakeholder in the transaction is always up to date. The end result is faster loan processing and a better user experience for all parties:
Intelligent Document Automation – Able reads, understands and organizes borrower documents as they come in via email, online or manual upload Collaborative Workspace – Everyone involved in the deal can work together in a secure, private workspace to get the deal done Automated Messaging – Keep customers engaged with clear, customizable status emails and personalized document requests designed to keep deals moving Every System – Unified borrower information in your loan origination, CRM, content management, and email systems to streamline information collection.
Banks are using Able across the entire loan lifecycle, from initial screening to servicing and renewals. For the first time ever, bankers can spend the majority of their time on high-value touchpoints rather than processing paperwork.
Creating a Category
It’s rare that Canapi invests in companies at formation stage, but after meeting Diego and Andrew in 2019 we felt there was a clear opportunity to change the shape of the commercial lending industry. There is a ton of whitespace in this market and no one is building towards it.
Diego’s clear vision and continued ability to recruit top-tier engineering talent from companies like Coinbase, Facebook, Apple and Google made leading both the Seed and A a no-brainer for us. We couldn’t be more excited to partner with Diego, Andrew, Human Capital and the rest of the Able team as we drive towards building a category defining company in commercial lending.