What We Can Learn About Commercial Lending from "Home Alone"

Home Alone follows the story of Kevin McAllister, a troublemaker whose family is heading to Paris to celebrate Christmas with relatives that had recently moved. After his older brother, Buzz, ate all the plain cheese pizza, Kevin causes a commotion at dinner leading to spilled drinks and chaos. Kevin shouts, “Everyone in this family hates me!” and wishes that he never sees any of them again as he is sent to the attic to sleep on the fold out sofa as his punishment. That night, a storm knocks out the power causing everyone to oversleep. The family is woken up by the airport shuttle knocking on the door to take them to catch their flight. The entire family panics to get everyone into the shuttle and rushes off to the airport where they run through the terminal, just making their flight. After the flight has taken off and everyone is settled in, Kate (Kevin’s mother) has that uneasy feeling that she’s forgotten something and exclaims “KEVIN!” when she realizes that, as the title of the movie suggests, they’ve left their eight-year-old son “Home Alone.”

As we see Kevin grow from being an eight-year-old who doesn’t know how to pack his own suitcase and is “what the French call ‘les incompétents’” to a confident kid who stands up to The Wet Bandits and defends his family home, we can learn a thing or two about commercial lending along the way.

Don’t Put Obstacles in the Way of Your Borrowers

Peter and Kate McAllister have a large, two-story Georgian style brick home in the Chicago-land area with one interesting feature – a statue of a lawn jockey at the top of their circle driveway. This wouldn’t seem problematic until everyone that pulls into the driveway runs the statue over with their vehicle including the airport shuttle, the pizza delivery guy (twice), and even a police officer that is sent to check on Kevin.

The McAllister’s interesting landscape choice shows us that it’s important to make sure you don’t place obstacles in the way of your borrowers. Borrowers are looking for seamless, simple lending experiences from their banks and credit unions, but outdated processes and disjointed systems create friction. Even something that looks nice like an online loan application can end up being an obstacle to a borrower if you don’t have the right technology and processes to support it.

Identify Potential Problems and Address Them Early

Fuller is Kevin’s younger cousin (fun fact: even though they are playing cousins, the two actors are brothers in real life) who has a cowlick and wears suspenders and round tortoise shell glasses. Linnie, Kevin’s older sister, tells Kevin “You have to sleep on the hide-a-bed with Fuller. If he has something to drink, he’s gonna wet the bed.” Kevin immediately starts trying to come up with a new place to sleep. When 10 pizzas show up for dinner that night, Kevin is already agitated. Not only has Buzz eaten all the plain cheese pizza, someone yells “Fuller, go easy on the Pepsi!” and the camera cuts to Fuller guzzling down a can of cola.

Kevin realizes that he has a potential problem on his hands and immediately takes action to find a solution. The same is true in your approach to commercial lending – especially when it comes to monitoring your portfolio. Identifying potential problem loans early, rather than waiting for lagging indicators like tax returns or financials, ultimately sets your institution up for success. While identifying them early doesn’t guarantee you won’t get stuck having to “sleep on the hide-a-bed” with the problematic loan, you’ll at least be able to take proactive measures to reduce the risk.

Know Your Customers

We first meet Marv, a police officer that is concerned for the homeowners in the McAllister’s neighborhood. He has stopped by to ask if the family will be traveling for the holidays and to make sure they’ve taken the proper precautions to protect their home while they’re away. Spoiler alert: Marv isn’t who he says he is. He’s actually one half of the not-so-well-known cat burglar duo “The Wet Bandits” whose cover is Oh Kay Plumbing and Heating – and they are making plans to rob every house on the block.

If you're lending to Marv and Harry, it’s important to know if the Oh Kay Plumbing and Heating you know by day is really The Wet Bandits by night. Things aren’t always as they seem, so having the right tools, processes, and policies in place to verify your customers is critical – especially for larger complex credits as more people and entities are involved.

Relationships Are Critical

According to Buzz, Old Man Marley (the McAllister’s neighbor who shovels and salts the neighborhood sidewalks at night) is supposedly the “South Bend Shovel Slayer” who murdered his entire family and everyone on the block with a snow shovel. They apparently never found the bodies because he put his victims in his garbage can full of salt to turn them into mummies. Naturally, Kevin is terrified of Old Man Marley until he runs into him at church on Christmas Eve when he finds out he’s a really nice guy, and not in fact a murderer. As they talk, he tells Kevin that he’s there to hear his granddaughter sing because he had an argument with his son several years ago and is no longer welcome around the family. Kevin asks Marley ,“If you miss him, why don’t you call him?” and Marley lets him know that he’s afraid that his son won’t talk to him if he does. In his eight-year-old wisdom, Kevin says, “At least you’ll know…I don’t care how mad I was, I’d talk to my dad. Especially around the holidays.”

Kevin and Marley's exchange can teach us about the importance of relationships. Strong relationships are critical in commercial lending to build trust and confidence with your customers. Building a relationship means getting to know your customers and their needs to the point where you’re able to anticipate them. It means taking a personalized approach and providing them with the right level of service and advice they need to be successful.

Have a Plan and Execute

The McAllister house is the key target of The Wet Bandits because it’s “The silver tuna…It’s loaded. It’s got lots of topflight goods. Stereos, VCR’s…Probably lookin’ at some fine jewelry. Possible cash hoard. Odd marketable securities. Who knows?” But they didn’t realize that even though the McAllister’s have left for Paris, Kevin was left behind. When they go to check the house out, Kevin scares them off, but he overhears them say that they’ll be back that night at 9pm. Kevin gets back home later that day and closing the door says, “This is my house. I have to defend it.” He lays out a map of his house labeled “Battle Plan” in blue and red block letters with drawings of all the traps he’s setting to ward off The Wet Bandits.

Kevin needs to have a plan and execute it to be successful against Harry and Marv. The same is true in commercial lending. When you have a plan and a clear vision of how you can execute it, you can sustainably grow and protect your commercial loan portfolio. A great plan for growing a commercial loan portfolio is implementing a loan origination system. Not only does it make it easier for borrowers to do business with your institution, but it also empowers your teams with the data they need to make the best decisions for your bank or credit union.

Is your financial institution ready to protect and defend its commercial loan portfolio in 2023? Taking Kevin’s advice from Home Alone and applying it to commercial lending can keep you from screaming in the new year.

*Baker Hill does not own the rights to these quotes.*

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Author Bio

Mitch is Baker Hill's Growth Marketing Strategist. With over 10 years of experience in banking before joining Baker Hill, he brings creativity and industry experience to Baker Hill's marketing team.