However, a mere 15 percent of small businesses that bor-rowed from an online or marketplace lender were satisfi ed with their experience, according to the Federal Reserve’s 2015 Small Business Credit Survey. Th e same survey revealed that small banks have the highest satisfaction rating, at 75 percent, likely due to small banks’ focus on relationship banking and ties to their local communities. With a satisfaction rating fi ve times higher than marketplace lenders, it may seem like community banks can continue busi-ness as usual. Th is is not the case; small banks still have room for improvement. According to the Fed’s Small Business Credit Survey, 52 percent of small business loan applicants were dis-satisfi ed by their small bank’s diffi cult loan application process, compared to 21 percent of applicants that used an online lender. Moreover, 43 percent complained of a long wait for credit deci-sions from their small bank, while only 22 percent had the same issue with an online lender. Large banks did not fare much bet-ter, as 45 percent of applicants were not satisfi ed due to the long wait for a decision. Th e Fed’s report also showcased that a lack of transparency was an issue across large and small banks and marketplace lenders. For banks, the process of obtaining a small business loan is complex and time-consuming. It involves assessing a variety of lenders, determining the right credit product, completing three-inch thick loan applications, and fi nding and submit-ting supporting documentation, like bank statements and tax returns, most of which is done manually. Understandably, completing these steps takes a substantial amount of time, on average a total of 33 hours, according to the Federal Reserve Bank of New York. As a result, prospective borrowers often abandon the loan application. For those who complete the application process, there is still the chance of rejection. To determine whether an ap-plicant will be approved or denied, banks typically under-write manually by evaluating bank statements, tax returns, balance sheets, income statements and credit reports, often with a pen, pencil, calculator and spreadsheet. Consequently, underwriting takes a signifi cant amount of time and incurs added costs for the bank. Th e application and underwriting process for marketplace lenders is considerably diff erent. Rather than taking an entire day, completing an application can take mere minutes and can be accomplished online, sometimes via mobile. Furthermore, the approval time takes days, not months. Th is is due in part to online marketplace lenders’ use of electronic data sources, including real-time business accounting, payment and sales his-tory, along with other technologies such as business intelligence and big data analytics. Banks can significantly streamline the small business loan application process by offering a customized loan ap-plication online, ensuring that lending opportunities are not restricted to branch hours. By streamlining the process and enabling online applications, banks can minimize the amount of information that applications must supply. As a result, banks can determine the level of financial statement analysis required for loans and profile information to match its risk appetite. Marketplace lending has grown rapidly, largely due to the convenience factor, and this increased market competi-tion is forcing banks to rethink their processes and make the customer experience a priority. Th ere are several ways to accomplish this, including cooperation with marketplace lenders. Th is method requires little eff ort on the bank’s part, as the objective is not to build a new product off ering or expand the customer base, but to complement the bank’s cur-rent business model. Banks can take this route by investing with marketplace lenders and/or buying loans originated on a marketplace lender’s platform. A more promising strategy is to integrate new online lending services within the bank’s product line. By using technology to power an online application, as well as the underwriting and servicing of the loan, banks can close the gaps in their traditionally cumbersome lending processes. Th is entails more than just overlaying an updated digi-tal interface over existing processes. It requires taking a more customer-centric approach and ultimately, revamp-ing and automating processes within the bank’s operating model to meet market expectation for convenience, speed and simplicity. Understanding that small businesses are vital to their com-munities, the bank is dedicated to delivering local business credit services to support local economies. Bank of the Cascades illustrates this commitment through its ongoing eff orts to im-prove its services for small businesses. Additionally, banks can mirror marketplace lenders’ approach to underwriting by interpreting cash-fl ow data, such as demand deposit account or checking account data to determine credit-worthiness. Using DDA data would also enable banks to pre-approve their customers for lending products. Similar technology and processes employed by marketplace lenders are available to banks. By aligning process and technology to improve the customer experience, banks can compete against marketplace lenders, and ultimately, disrupt the disrupter at their own game. To meet the shifting demands of today’s customers, banks should begin by off ering a more accessible loan application and more responsive turnaround times, at minimum. Banks have excelled where marketplace lenders have not. Banks are trusted by small businesses as a source of fi nancial advice. By leveraging their ties to their local communities, and employing technology to off er a more attractive customer experience, banks can better capitalize on small business lending opportunities. Naseer Nasim is CEO of Baker Hill. For more information, visit www.bakerhill.com.