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Home Uncategorized

5 Reasons Banks Must Modernize Their Credit Process

December 1, 2016
Reading Time: 3 mins read
5 Reasons Banks Must Modernize Their Credit Process

Sponsored Content From Moody’s Analytics

Today’s business borrowers demand a lot more than just good rates. They expect to communicate with their lender via a variety of channels at a time that suits them. They are too busy running their own business to prepare thick files of financial information. And they want to deal with partners whom they regard as having a modern, world-class business model and technology stack. Here are five steps to improve your loan origination process to meet the expectations of this new breed of borrower.

 


number-images-1Leverage new tech to boost efficiency and reduce the “time to money”

Today’s credit origination software can integrate a bank’s CRM database with limit and exposure reporting in addition to spreading, risk rating, facility structuring, collateral management, and covenant monitoring. This streamlining can cut “time to money” by as much as 30% to 40%, enhancing client service.

Raise the bar on transparency, consistency, and auditability

Many banks still employ manual procedures that result in inconsistent underwriting and lack of transparency. Modern loan origination systems standardize underwriting by putting consistent data on a common platform. The system also records each step in the process and generates an audit trail to facilitate compliance.

Get the most out of your risk data and improve compliance

Financial institutions generate vast amounts of client data, but most are not very good at managing it. How banks create, store, and make use of data, in particular risk data, will become more important with the advent of new regulations. Traditional issues such as duplicated, erroneous, and dirty data will all need to be addressed systematically to meet these new standards.

Make better lending decisions with a single source of truth

The inability to identify risk concentrations for connected borrowers was responsible for heavy losses during the financial crisis. Even today many banks still track positions with manually updated spreadsheets or adding up numbers from multiple systems. Having a 360-degree view of the credit relationship creates a golden record of client data under more accountable ownership.

Improve service and compete more effectively

A disjointed, drawn-out credit process is a disservice to borrowers. And those with a choice often walk away and try elsewhere. The success of “marketplace” lenders is largely due to customer service models built on new technology and faster response times. Banks can improve service and competitiveness by harnessing the efficiency gains of a modern origination system. Faster response times yield not just greater efficiency but higher win rates too.

Finally, at a macro level, the data analytics capability offered as a core component of many modern credit platforms provides an indispensable overview of portfolio composition, performance, and trending values. Instant access to this information in the form of dashboards and reporting is easier and more timely for risk managers – resulting in better loan decisions as well as more accurate risk management.

Click here to download the white paper and start modernizing your credit process.

 

 

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