Digitalizing corporate lending and risk management

Although many software applications cater to the corporate loan origination requirements of financial institutions in order to offer loans with less paperwork and more convenience, many lenders still use manual and paper-based loan approval procedures. With the right intelligent solution in place, financial organizations can benefit significantly from advanced automation and reduce risks in their credit risk calculations. Here’s how digitalization can have a positive impact on your bank’s corporate credit management process!

Analyze massive volumes of data  

While credit analysis has traditionally been performed by human analysts, software designed to support the corporate loan origination and monitoring process will help them in many ways. For example, only an advanced automation solution can analyze massive volumes of critical data in real time. Such a solution can help bring all relevant data together in an enterprise-wide 360-degree view of customers and the lending operation to make better business decisions.

Provide end-to-end monitoring 

Triggering alerts based on the bank’s early warning indicators (EWIs) provides insights into the health of a firm during or ahead of a crisis. Institutions should also monitor adherence to covenants and implementation of escalation processes. An end-to-end platform caters to not only these needs but also allows periodic review of exposures, collateral, and identifying deteriorating credit quality.

Integrate with external systems 

Traditional credit decisioning is usually based on a limited number of data points. To improve risk assessments, institutions need to seek and aggregate data from a broader range of sources in addition to data that they own exclusively. A digital corporate loan origination solution like VeriLoan serves as a “one-stop shop,” with native online integrations to many relevant data sources.

For example, you can connect to Moody’s Risk Analyzer to retrieve company financials, risk rating and financial ratios and automatically record them in the loan application. Dun & Bradstreet integration allows you to extract company details including any updates to address, shareholders, parent/subsidiary companies, company financials, and other information from the world’s largest commercial database.

Combat financial crime and fraud

A state-of-the-art software solution can natively connect to the Credit Bureau of the relevant country, search for the company and its shareholders and directors to retrieve their credit score and populate the application with that data. 

An advanced loan origination solution also serves financial institutions as a filtering mechanism for blacklists to ensure compliance with Anti-Money Laundering (AML) regulations. Banks and other financial institutions can natively connect to WorldCheck and other acknowledged platforms to search for a company and its shareholders to check on their background and fight financial crime.

Utilize data from a wide range of sources 

Lenders can utilize data from further sources by incorporating other regulation-permissible information like company’s relationship and products with other banks, company’s major buyers and suppliers and other related parties or collaterals details. This deeper insight into a borrower’s financial health can support faster decisioning, no matter whether the borrower is already a customer or a new applicant.  

The system will also perform a SWOT Analysis on the application, taking the client’s background and industry into account by blending information from different data sources. 

Define, execute, and manage business rules

VeriLoan uses InRule Business Rules Engine to automate credit policy rules and business processes that Risk Analysts, Risk Managers and other team members need to follow throughout the entire credit process. The sophisticated rule engine acts as a valuable complement to expert opinion and automates a large part of credit management processes with little intervention. If necessary, business users may easily update policy rules without the requirement for programming.

Automate credit policy, business logic and process flows 

The system can route the application for approval to different authorities depending on various parameters such as requested amount or company’s risk rating. 

For example, a digital platform with the ability to capture risk opinion by the Risk Analyst and forward it to the Risk Manager for approval will speed up the risk rating and approval processes and minimize manual data entry and calculation errors. Once approved by the line manager and analyst, the application is automatically sent to the Credit Committee for review by the rule engine considering factors such as risk rating and total requested limit of an application.

Prepare digital decision memos 

The committee members usually make a joint decision for approval of an application. They can conduct multiple meetings over the digital platform to approve a particular application. Then, it is possible to view the overall meeting outcome and either approve, reject, revert for additional documents, or conditionally approve the application.

Digitalize the complete loan lifecycle 

All in all, a corporate loan origination system empowers financial institutions to make fast, consistent and cost-effective loan decisions within predefined risk margins. By leveraging powerful algorithms, it automates the entire corporate (funded, non-funded) and commercial (small business loans, term loans) loan processes, covering everything from pre-screening, application and underwriting to disbursement. This not only provides a connected customer journey through all customer interactions but also helps deliver quick & paperless transaction processing with reduced risk.