Credit is at the heart of most customer relationships, and digitizing it offers significant advantages to banks and credit unions alike. Successful transformations enhance revenue growth and achieve significant cost savings.
Lending institutions are often weighed down by manual processes or too rigid legacy systems. BBA's agile team establishes the parameters of the transformation, determines the target IT architecture and implements the solution. Our domain experts and software engineers team up to automate credit processes for all aspects of the credit lifecycle, across different segments and asset classes.
The main elements of our assistance are as follows:
- Defining a credit-risk strategy based risk appetite and overall risk-return profile
- Designing credit lifecycle processes to improve operational efficiency and the accuracy of credit decisions
- Developing Basel II/III–compliant credit origination and pricing processes and tools (including obligor and facility scoring systems)
- Improving credit monitoring and business reporting at both the deal level and the portfolio level
- Refining the loss-mitigation techniques, using early warning system, with a focus on covenant compliance and collateral valuation
- Implementing asset distribution and loan securitization
- Rolling-out an end-to-end credit process automation software
By automating key processes, BBA's team helps clients speed up loan application and processing without sacrificing the quality of business decision-making. Key benefits of working with BBA are:
- Gain competitive advantage through enhanced customer satisfaction
- Increase origination volume and turnaround times
- Optimize performance by raising transparency, flexibility and consistency
- Enhance risk assessment by providing credit risk managers with a single consolidated view
- Reduce operational risk by introducing single version of truth, thereby reducing manual processing and bringing tighter integrity to documents and data
- Adhere to regulatory requirements in terms of processes, risk assessments and portfolio management
DIGITAL LENDING TRANSFORMATION ROADMAP
While the challenges in digital-lending transformations are formidable and the path to ultimate success can be bumpy, experience proves that the efforts expended are more than fully repaid in competitiveness and profitability. Success means much faster credit decisions, with customers getting cash up to 80 percent sooner; lower costs, with 30 to 50 percent less time spent on decision making; and better-quality risk decisions, which translate into greater profitability down the road.
Here are the guiding elements of roadmap design that we recommend:
- Current state analysis: Current state analysis helps us measure the lead and approval times in the credit process (touch time, time to cash, and time to yes/no). It also helps identify target-state, potential pain points in credit journeys;
- Target state for automation: For establishing the target state, BBA considers factors such as material gains, ease of eliminating pain points, and overall complexity in execution. Supported by compelling value analysis and clear performance targets, BBA's team of experts defines goals to motivate real progress; and
- Benchmarking: BBA's proprietary research database helps develop performance benchmarks based on leading banks' automation journeys and lending practices. The innovative ideas often become the foundation of a high-level blueprint for our clients’ credit journeys.
CORPORATE LENDING AUTOMATION
Corporate Lending Automation (CLA) solution brings powerful functionality to lenders and is designed to more effectively automate and manage the credit management value chain for commercial, mid-market and corporate asset classes. It streamlines the whole credit lifecycle from client onboarding to facility sanctioning, all the way through origination, adjudication, rating, approval, administration & disbursement and post- disbursement performance monitoring, including covenants compliance.
Corporate Lending Automation is developed to handle an unlimited number of funded and unfunded products and can host complex facility structures, offering obligor and facility loss rating functionality, integrated with risk based pricing engine.
In order to more effectively manage credit risk, BBA's solution automates limit-setting using risk-based limits framework and also interfaces with core banking system for on-going limits monitoring and escalates if there is a limit breach.
In addition, portfolio, concentration limits, e.g., sector, country, related party and large exposure limits are also managed in real-time.
At origination and through the life of a loan, CLA’s Collateral Management module supports the creation and administration of collateral files, their initial, subsequent valuations and terminal value in the event of default. All aspects of collateral management are addressed, including a number of advanced features, such as, workflow design and interface with back-office operations.
RETAIL/SMALL BUSINESS LENDING AUTOMATION
Retail/Small Business Lending Automation (RSLA) brings together powerful workflow and rule based engine to automate and fully control the activities related to the processing of residential mortgages, HELOCs, credit cards, automotive and small business loans.
RSLA provides our clients a platform to exploit the latent demand for credit by:
- Implementing credit scoring;
- Designing scalable credit process; and
- Re-engineering the process to align costs with risks.
Our clients are able to push differentiation and develop capabilities to capture disproportionate share of high value customers.
COLLECTION & PROVISIONING WORKFLOW AUTOMATION
Collection & Provisioning Workflow Automation is a solution for creating and managing recovery and collection processes. As soon as default is signaled, remedial workflows are triggered for doubtful and non-performing credits, with transfer of the relevant data for recovery actions.
Finally, the loss data can also be collected for the development and refinement of LGD and recovery models.
CREDIT UNIONS PERSPECTIVE
Each quarter, we review the public financials of leading Canadian credit unions, diagnosing the state of the credit union industry and illustrating the leading practices and characteristics of industry winners. To receive a copy of our perspective, email us.
BranchScape can help the management team establish goals for enhancing performance. The financial institution can look at its individual branches to determine how to best align the day-to-day activities within each branch with the overall objectives of the franchise.
MortgageRetainer uses a build-up approach for mortgage pricing by taking into account default, prepayment and funding volatility risks for each mortgage transaction in the renewal pool. Using advanced Rest API technology, MortgageRetainer platform also helps managers develop business plans on the fly.
If an organization offered the same “average” price to every customer applying for a loan, low-risk customers would secure better rates with other organizations, while lower- quality customers would not. To increase share and stay competitive in a tight market, banks require a strong analytical foundation of RetailEdge.