When Woodforest National Bank made the strategic decision to grow its commercial loan portfolio in 2015, it wanted to leverage the latest technology to take full advantage of that opportunity. Woodforest is a privately held bank based in Woodlands, Texas, with over 740 branches across 17 different states, and also in-store branches with WalMart and Kroger. At the time, Woodforest management realized that the bank’s lending portfolio was heavily weighted towards commercial real estate. The commercial lending operation was based out of—and primarily managed by—its Houston office. Rates and pricing were based strictly on what the market would bear, with no system in place to tailor rates to different markets, industries or clients. Woodforest then sought out a technology partner to help implement a more intelligent pricing model and methodology for the commercial side.
After establishing five different commercial lending business lines, Woodforest partnered with Charlotte-based PrecisionLender to help relationship managers (RMs) win better deals that aligned with the bank’s strategy, in terms of profit, risk and growth. The cornerstone of the PrecisionLender platform is “Andi,” an AI-powered virtual assistant. Andi works with relationship managers as they price each opportunity, showing them multiple ways to structure deals that will reach their targets, while also highlighting ways to expand the relationship.
Part of what made PrecisionLender an ideal partner was the ease and speed of which Woodforest could implement the platform across relationship managers in multiple states. The firm worked closely alongside the Woodforest business and IT teams during the implementation, and the platform was launched in March 2016. The commercial banking team now uses the system to input pricing for all opportunities that require approval. To help ensure the RMs price deals that work for both the borrower and the bank, Andi considers a multitude of factors, such as fixed versus adjustable rates, fee structures, duration and deposits the applicant already has with the bank. This flexible, data-powered approach empowered Woodforest’s RMs to better tailor deals by client, industry and region, helping the bank rebalance its portfolio and put a greater emphasis on middle market banking.
Woodforest and PrecisionLender conduct a quarterly return on equity (ROE) meeting to discuss performance trends of products, branches and even individual relationship managers. PrecisionLender also reviews ROE targets set for each region during these sessions. And at last year’s third quarter ROE analysis meeting, the firm surfaced several key issues from the system that Woodforest could not have found without this rich data set.
PrecisionLender continues to seek feedback from Woodforest to optimize and improve on its use of Andiand the overall platform. Currently, the firm is working to create a “Promise versus Delivery” dashboard, which will give management a snapshot of lending opportunities in progress in comparison to what’s been forecasted for each region, branch and relationship manager. This will create real-time visibility into each potential deal, and ensure that relationship managers are providing accurate forecasts.
There’s also a “performance scorecard” in the works to evaluate each relationship manager as if they were running their own mini business, taking into consideration not just new loan generation but also income generation and risk management.
“PrecisionLender helped us grow from a Houston commercial banking organization into a national presence with five new locations from coast to coast while generating the return needed for the expansion, while also providing flexibility to our relationship managers and great relationship pricing for our clients,” says Derrick Ragland, president of commercial lending at WoodForest.
This is one of 10 case studies that focus on examples of successful innovation between banks and financial technology companies working in partnership. The participants featured in this article were finalists at the 2017 Best of FinXTech Awards.