Although credit processes can still be manually labour-intensive to originate and execute, the consumer credit process is becoming increasingly user-friendly. Generally, retail credit products are more standardised, while most corporate credit systems still tend to come under the customised or tailor-made category.
It’s important when analysing credit origination flow to be able to distinguish between standardised credit products – for which most demands can be handled by straight-through processing (STP) – and customised products, which may require a number of interventions by bank employees.
As Thomas Pintelon, co-founder of Capilever, noted recently on the Finextra website: “In the case of a manual decision, a risk portrait of the customer and their demand should show the decision-taker the most relevant information from the credit analysis step in order to take the best-informed decision in the least possible time.”
There are a number of processes in credit origination – including authenticating the customer, simulating their credit needs, introducing the demand element, and the credit analysis process (i.e. screening). The aim is to make an initial credit decision, which usually results in one of three outcomes – acceptance, refusal, or further required action.
The credit decision can be made automatically if the loan is standardised, or it might be manually created if it’s case of a customised credit. Once the decision is taken, the offer is generated for the customer and when agreed, the contract generated, signed either manually or digitally, the file completed, and the funds disbursed.
All the above steps are supported by a number of engines at different stages of the process. The Pricing engine configures a differentiated pricing model for the bank, based on a range of criteria and should be able to calculate a price and provide it to the credit origination tool. The Authorisation/Role management engine has to be able to manage the authorisation levels for bank personnel managing credit requests and escalation paths for employees in the bank managing credit origination requests.
A Workflow engine – with real-time Business Activity Monitoring (BAM) – manages the sending of manual, or semi-automated, tasks to the right people and also determines the right process orchestration and prioritisation. That also allows the credit process to continuously monitor certain KPIs and generate alerts upwards to management, for example when volume increases in excess of employee capacities.
Thomas Pintelon notes that very few banks have a credit origination system that meets all those criteria. “Banks have already made good progress in increasing the Straight-through processing (STP) level of simple credit products, like consumer credits,” he says. “But for more complex products there are still a lot of efficiency gains to be found.”
Pintelon suggests reviewing the bank’s credit origination architecture in order to ensure it can move towards a holistic approach, rather than adopt a product-by-product siloed application architecture.
“That can not only make the IT landscape simpler, cheaper and more agile, but can also significantly increase revenues for the bank – due to faster credit through-put times – and reduce costs by a more optimal use of the credit specialists at the bank.”
At Credisense, clients can save time, money and the environment by utilising our fully digitised end to end origination process, with a decision, scoring, pricing and workflow engine driving automation and efficiency across the customer origination process.
As an entirely no-code product, the flexibility and extensibility of the Credisense platform means it can adapt to your way of doing business and allows for self-administration and improvement without vendor lock-in.
Get in touch to organise a chat so we can find out more about how you do business and show you how you can rapidly accelerate your digitisation strategy.