Teamwork Makes the Dream Work: Ways to Empower Credit Teams & Loan Officers

Consistent lending strategies enable financial institutions to provide needed capital to consumers and businesses within their communities.

The banks that are positioned to grow their portfolios in 2024 are the ones with strong credit cultures that empower relationship managers and credit teams to work together most effectively. When these vital roles can work together like a well-oiled machine, the bank can accelerate loan growth without losing control of risk.

Below are some ways your financial institution can foster better teamwork as well as a strong risk culture.

Align Policies & Processes

A financial institution’s policies and processes govern daily activities in both sales roles and credit risk management roles, and the activities and deals that these roles pursue influence the direction of the bank. That’s why ensuring policies reflect the bank’s risk tolerance and those policies are backed up by the right business processes.

Financial institutions that lack a strong credit culture backed by effective processes typically make most credit decisions at or near the top of the organization, leading to inevitable bottlenecks.

By contrast, financial institutions with thoughtfully planned and implemented credit policies can balance risk management while still empowering lenders to drive growth for the bank. This starts from the top down, with management instilling clear expectations regarding policies and processes. Although natural tension exists between growth functions (i.e. lending and sales) and risk management functions, creating a collaborative environment where incentives are aligned for both sales and credit risk management activities is key. Not only can this help create a larger pipeline of viable lending opportunities, it also helps financial institutions grow while controlling exposure to credit risk.

In addition to supporting greater collaboration between teams, a strong credit culture and clear policies help empower the team members who are closest to the customer, oftentimes the relationship managers, to make decisions. This approach can support more informed credit decisions and shorter response times for the customer.

Strong Relationships Start with a Deep Understanding of the Customer’s Business

Understandably, relationship managers want to feel like the go-to partner for their customers’ financial needs. At the same time, credit analysts need to have all the required information upfront to make solid credit decisions. This is understandably easier said than done, especially for more complex commercial deals and CRE loans.

Charlie Dougherty, a New York-based economist with Wells Fargo said in a recent article published in The Financial Brand, “The CRE market has come under strain as the Federal Reserve raised interest rates in response to higher inflation pressures.”

Despite the challenging last few months, it’s still possible to find success in CRE lending – it simply takes knowledgeable relationship managers and credit teams who know their market. For example, a bank’s team may recognize a certain property is undervalued given its location, which signals the property needs the right owner to turn things around. A local bank can underwrite the loan with consideration for the property’s location and the borrower’s skillset, and whether it’s enough to help the storefront or property succeed. When lenders and credit analysts are aligned on policy and informed on the deal at hand, better decisions can be made, benefitting both the financial institutions and the prospective borrower.

Encourage Knowledge Sharing

Last but certainly not least, effective teamwork between lenders and credit functions hinges on a culture of knowledge sharing. Sustained success, especially through varying economic cycles, hinges on experience and a strong skillset. However, this is challenging given the ongoing struggle to hire and retain talent, as many experienced lenders are approaching retirement while new hires may lack the expertise to navigate certain markets or shifts in the economy, like higher interest rates.

This is where training and development can help. Consider engaging senior lenders and risk managers in active coaching and mentoring programs. These seasoned team members can be paired with junior lenders and credit analysts on the job, helping transfer their skills and knowledge to the next generation.

If there’s a tendency for credit analysts to transition to a sales or relationship management role and vice versa, this can be especially impactful. This gives team members greater freedom to find ways to contribute to the financial institution’s bottom line. Taking the opportunity to share learnings and make insights available to more junior or less experienced employees goes a long way toward creating a culture of productive and fulfilled team players.

Even though teams at financial institutions are smaller than they once were, the basics still apply when building a culture of teamwork. Aligning policies and business processes, while maintaining a pulse on the customer base, and empowering mentorship opportunities are three ways financial institutions of all sizes can succeed in 2024 and beyond.

Author Bio

Baker Hill empowers progressive financial institutions to increase revenue, reduce risk, and drive more profitable relationships.

Streamline business, consumer direct and indirect lending with our common origination platform. Understand profitability and risk at every level with our sophisticated business intelligence and analytics. Monitor and maintain a healthy financial portfolio with our statement analysis, exception, and risk management solutions.

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