Credit is very slow to adopt new technology in this one area

B2B credit departments are steadily embracing new technology and automation. But one area where companies are steadfastly sticking to the past is new credit applications.

More than half of credit professionals report 25% or less of their credit applications are online, according to a poll conducted by the National Association of Credit Management (NACM). Just 18% of creditors say their application processes are fully digitized and no longer accept paper applications.

Credit managers who’ve upgraded their application processes shared the benefits of ditching paper on the NACM podcast Extra Credit. Going with an all-online application process helps credit managers and their staff members:

• keep track of all the related documents from a prospective customer so nothing gets lost
• get a real-time look for multiple credit staffers of the application process, and
• attract prospective customers who want to save time and not fill out paperwork.

The struggle is getting the system up and running. Like most tech upgrades, it takes time and money to change tried-and-true practices. Getting employees up to speed (and to buy in, in some cases) can also be a challenge.

Could sticking with paper applications lead to customers going elsewhere?

Extra Credit heard from credit managers who still rely primarily or entirely on paper applications but hope to move to the digital realm in the near future.

Among the advantages they look forward to are the ease of looking at an electronic application and not having to decipher sloppy or tiny handwriting on written forms. Also: If an applicant is concerned about privacy, it’s possible to redact info like Social Security numbers on an electronic document as opposed to paper.

One reason why some credit managers may be reluctant to go all-digital? Loss of the “human touch” – the opportunity to judge if an applicant is worth taking a risk on or might be fudging the numbers to appear less risky.

Experienced credit managers learn to rely on their gut feelings after they’ve read hundreds to thousands of manually filled-out credit applications. An electronic process which typically includes automatic fill-in capability for some fields changes the game as it’s always been played, for both the creditor and applicant.

As with any tech change in finance, we’ll see a migration to all-digital credit applications once it makes too much sense not to!