ABA Banking Journal - August 2008 - (Page 53) SPECIAL ADVERTISING SECTION ABA Banking Journal’s White Paper for August 2008: Risk Management Tools EXECUTIVE SUMMARY For the full article go to http://www.ababj.com It’s Time to Streamline the Credit Origination Process and Eliminate Data Silos By Orren Peled VP of Research & Development—Global Risk Solutions Harland Financial Solutions Worldwide orren.peled@harlandfs.com • 800-815-5592 • www.harlandfinancialsolutions.com asel II has spurred financial institutions to transform their regulatory capital reporting capabilities and retrofit the new regulatory calculation and reporting systems onto existing legacy infrastructures. As a result, credit origination processes that feed the regulatory capital requirements have remained a patchwork of systems and disparate data silos, reducing business process efficiencies and increasing the IT cost of ownership. The result: financial institutions are managing their most important asset—customer credit risk information— in many systems and data silos. Clearly, these heterogeneous environments impose a strain on end users. They spend more time searching for data, workflows slow down, frequent training is required to keep users adept across all systems, and rekeying information increases the possibility of operational errors. Furthermore, the IT departments face equally demanding challenges. To improve matters, financial institutions will need to rethink and then re-engineer their credit origination systems and processes. This course of action starts with evaluating the current situation, and then developing a roadmap to attain longer-term objectives. The following concepts offer some guidance and useful discussion points: • Identify the stakeholders; their input will help you under stand how integrated and overlapping their needs are. • Together with the stakeholders, define the key metrics to measure exposure levels, risk ratings, profitability, and regulatory and economic capital usage and performance management. • A superior credit risk management system must have a long memory. Accumulated data is vital for risk modeling and back testing. • Avoid a piecemeal approach. Disparate systems will never deliver an efficient and streamlined solution. • A comprehensive solution may require a staged implementation; therefore, the solution should be modular. • Credit origination systems require several important integration points with external systems. These include the following: • Host loan processing system(s) and central customer information file • Risk data B Links to external providers Single sign-on mechanism to administer user access rights • Reuse existing infrastructures when possible. • Select systems that employ loosely coupled Web services or a service-oriented architecture (SOA) to integrate with other systems. • Credit origination systems must be flexible and meet a broa set of functional requirements. • Learn whether the system can tailor checklists, analyses and workflows to specific deal types. • Are reusable templates available to pre-populate narrative and worksheet areas? • Does the system automatically and fully archive all historical credit applications? • If customization is necessary, verify that there are well-developed APIs and that any customization will survive future version upgrades. • Can the financial institution safeguard its proprietary models, templates and processes? • Ensure that granular functional level security exists throughout the systems. • Hand off the business logic administration to the business users. • Look for systems that efficiently use the user interfaces, are intuitive for users and promote a fast learning curve. • The solution should also support peripheral support teams within the bank. • Choose vendors with domain expertise and proven experience. Credit origination technology has matured. Systems are finally bringing together all the key processes and delivering the benefits that lenders have sought. Financial institutions can now start executing strategies that will lead to improvements in productivity and develop sounder enterprise risk management. • • About the Author Orren Peled is Vice President of Research and Development with the Global Risk Solutions unit of Harland Financial Solutions Worldwide. For more information about how to streamline your credit origination process, visit www.creditquest.com. ABA BANKING JOURNAL/AUGUST 2008 53 http://www.ababj.com//content/category/11/21/132/ http://www.harlandfinancialsolutions.com http://www.harlandfinancialsolutions.com http://www.creditquest.com
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