Westpac puts LOLA on the job

Challengers like OnDeck and ThinCats are not the only lenders using customer data and automated credit assessment systems to approve loans for small business borrowers. Westpac is getting into the act with a system called LOLA, which has pre-approved A$30 billion of small business loans since it went into a service late last year.

LOLA (Live Online Lending Application) crunches the numbers on small business customer transaction data and issues conditional approvals, which Westpac's local business bankers can use as ammunition in their sales calls.

Westpac general manager of small business, Julie Rynski, said that since December 1200 loans pre-approved by LOLA had gone through to approval.

Rynski has headed the bank's small business operation since it was established as a separate standalone business line 14 months ago. She said her team analysed the data from the Westpac Melbourne Institute Small Business Index and found that the number one problem in the sector was small business owners being overwhelmed by process.

Rynski said: "We decided to develop a system that uses customer data to make quick credit decisions."

LOLA's algorithm reviews how the customer's business is tracking. Because LOLA uses customer transaction data to get to pre-approval stage the customer may not have to provide any financial statements to get the loan approved.

Approval times have dropped to between one and three days (down from ten to 15 days), and customers now get their cash in around ten days.

"That time is critical for a business if it is looking to order stock or buy an asset," Rynski said.

Rynski has a team of 350 local business bankers, who have access to the bank's videoconference system to extend their reach.

She said the bank was now reviewing its products and looking to bring a new unsecured small business loan to market in the next couple of months.

Westpac is not the only big bank targeting the small business sector. Business lending has picked up over the past year and bankers see it as a growth market.

National Australia Bank appointed 150 new business bankers during the March half and will add another 70 during the September half. The bank said it was making its business banking operation more efficient by taking "operational roles" out of business banking centres and putting them into seven "fulfilment centres" in a bid to achieve lower error rates and improve turnaround times.

It is also simplifying its business lending process to reduce customer documentation requirements and move the "time to decision" to within two to four days for most applications.

ANZ chief executive Mike Smith said small business had been a highlight of its Australian performance during the March half, with 15 per cent growth in lending to the sector.

"Business is feeling more positive," Smith said.