Ambit CommerCiAl lender Solution Suite

Ambit Commercial Lender Solution Suite
Optimizing commercial lending
Ambit Commercial
Lender Solution
Suite
Business overview
SunGard’s Ambit Commercial Lender solution suite provides
an end-to-end platform for all aspects of the commercial
lending lifecycle, including application processing, credit
assessment, approval, document preparation, loan boarding,
servicing and portfolio management. With Ambit Commercial
Lender, banks can capitalize on the opportunities offered by
the commercial lending space and rebuild their return on
equity (ROE) by making their commercial lending operations
more customer-centric, enhancing the efficiency of the lending
lifecycle, and proactively managing credit quality and the
portfolio while also ensuring regulatory compliance.
Commercial lending represents one of the few growth areas
still available to the banking industry, providing a potential way
to restore some of the lost profitability. However, commercial
lending has always been a very competitive industry and now,
with more banks wanting a piece of this growth pie,
competition has become even more intense. This has given
significant power to the customer base as banks compete for its
business. To attract customers, a bank must focus on the
attributes its corporate customers most value, and ensure
timely, convenient and prompt service with competitive terms.
Increasingly, in these market conditions, to build trust and
create loyalty with customers, the bank’s relationship managers
(RMs) must aim to be the customers’ trusted advisors rather
than mere frontline loan officers.
Since the financial crisis, the majority of banks are experiencing
diminished revenue streams due to a weak economy, growing
competition and changing customer behavior. In contrast, the
costs of doing business have increased due to stricter
regulatory requirements for greater capital and loan loss
provision, deleveraging and robust risk management.
Typical commercial lending lifecycle
CFO
CREDIT
COMMITTEE
SENIOR
MANAGEMENT
CCO/
CREDIT RISK
TREASURY
ATTORNEY
DOCUMENT
SPECIALIST
CREDIT
ANALYST
CREDIT
COMMITTEE
CFO
CREDIT
LOAN
OPS
ANALYST
SPECIALIST
ATTORNEY
TREASURY
DOCUMENT
SPECIALIST
LOAN OPS
SPECIALIST
MIDDLE OFFICE
RELATIONSHIP
MANAGER
RELATIONSHIP
MANAGER
RELATIONSHIP
MANAGER
RELATIONSHIP
MANAGER
FRONT OFFICE
Application
Loan
Approval
icing
OTIATE
RELATIONSHIP
MANAGER
APPLY
ACCEPT
Gather
Document
Customer
Prep
Data
PROVIDE FINANCIAL DATA
CUSTOMER INTERACTIONS
CREDIT ORIGINATION
1
Credit
Loan
Analysis
Closing
www.sungard.com/ambit
Risk Rating
Loan
Booking and
Funding
SIGN
Pricing
NEGOTIATE
Loan
Approval
ACCEPT
Document
Prep
DISBURSE
Loan
Closing
Loan
Booking and
Funding
SIGN
While a customer-centric approach to commercial lending can
bring in additional business, lending is also one of the
greatest sources of risk to a bank’s own financial stability. Loan
portfolio problems can have a significant impact on the bank’s
performance and ultimately its viability. As a result, banks
need to be able to accurately and consistently assess the
credit quality of their borrowers. This will enable them to
identify the opportunities that align with their business
strategy, while eliminating those relationships that do not.
However, for many banks, the current commercial lending
technology infrastructure comprises many disparate, poorly
integrated legacy systems, with the lingering need for manual
interventions. Besides being costly and inefficient, a fragmented
technology infrastructure makes data collection and risk
analysis extremely cumbersome, time-consuming and prone to
error, which in turn, can result in lost revenue opportunities,
poor lending decisions and lack of compliance – all of which in
combination put the bank’s viability at risk.
Beyond credit risk, it is also important to truly understand the
characteristics of the entire commercial lending portfolio. Banks
need the ability to assess the potential effects of both
macroeconomic and borrower level stress conditions, to see
the impact such changes will have on the health and
performance of segments of the portfolio – and the portfolio as
a whole. By carrying out such stress tests, banks can better react
to the risks to the health and stability of their business, keep
regulators satisfied and make risk management an integral part
of decision making.
So, to restore profitability to more acceptable and sustainable
levels, better service customers, effectively manage risk and
ensure regulatory compliance, banks need to address the
deficiencies in their commercial lending systems and make a
complete system overhaul an urgent priority.
LOAN OPS
SPECIALIST
CCO
CCO/CRO
PORTFOLIO
MANAGERS
RISK
MANAGERS
CREDIT
ANALYST
CCO/
CREDIT RISK
CCO
CCO/CRO
LOAN OPS
SPECIALIST
PORTFOLIO
MANAGERS
RISK
MANAGERS
DISBURSE
SERVICING
REQUEST
Portfolio
Risk
Gather
Management Management Customer
Data
PROVIDE
FINANCIAL
DATA
ONGOING CREDIT SERVICING & MONITORING
Ongoing
Customer
Review
CR
AN
RELATIONSHIP
MANAGER
RELATIONSHIP
MANAGER
Loan
Servicing
The typical commercial
lending lifecycle is very
complex and relies heavily on
human intervention and many
‘point’ solutions. This
compromises customer
service, operational efficiency
and control over the risks to
the portfolio.
Loan
Risk Rating
Servicing
CREDIT REVIEW SERVICING
REQUEST
Portfolio
Risk
Gather
Management Management Customer
Data
Ongoin
Custom
Review
PROVIDE
FINANCIAL
DATA
CREDIT R
ONGOING CREDIT SERVICING & MONITORING
[email protected]
2
SunGard can help
BECOME
MORE more REDUCE COSTS THROUGH
Become
CUSTOMER-CENTRIC
OPERATIONAL EFFICIENCY
customer-centric
SunGard’s Ambit Commercial Lender solution suite provides an
end-to-end platform for all aspects of the commercial lending
lifecycle, including application processing, credit assessment,
PROACTIVELY
MANAGEdocument
THE PORTFOLIO
approval,
preparation, loan boarding, servicing and
AND MANAGEportfolio
REGULATORY
COMPLIANCE
management.
Using a single, integrated system, Ambit
Commercial Lender enables banks to eliminate redundant
processing steps, reduce manual intervention and streamline
the credit approval process.
Ambit Commercial Lender goes beyond simply originating and
servicing a loan, to provide a consolidated view of all internal
and external information about the customer throughout the
lending process. This gives banks a better understanding of
their customer relationships.
REDUCEEnhance
COSTS THROUGH
PROACTIVELY MANAGE THE PORTFOLIO
the efficiency
At a portfolio level, Ambit Commercial Lender enables banks to
OPERATIONAL
EFFICIENCY
AND
MANAGE REGULATORY COMPLIANCE
of the lending lifecycle
better monitor and manage their largest source of revenue and
risk – the loan portfolio – by establishing a comprehensive and
systematic approach to analyzing credit quality while also being
able to quickly and reliably analyze the scale and dynamics of
portfolio changes.
CTIVELY MANAGE
THE PORTFOLIO
Proactively
manage credit quality
ANAGE REGULATORY
and the COMPLIANCE
portfolio and ensure
regulatory compliance
Ambit Commercial Lender helps banks capitalize on
opportunities in the commercial lending space and rebuild
ROE by helping them:
1.Become more customer-centric – attract the best-quality
credits and increase customer loyalty by providing timely,
prompt and convenient service at a competitive price – and
building stronger and more profitable customer relationships.
2.Enhance the efficiency of the lending lifecycle –
substantially reduce costs and improve long-term efficiency,
customer responsiveness and agility, by incorporating
higher degrees of automation and more streamlined
processes throughout the commercial lending lifecycle.
3.Proactively manage credit quality and the portfolio and
ensure regulatory compliance – better integrate risk
management into strategic business decision making by
increasing visibility and transparency for bank boards and
senior management, as well as regulatory and audit
committees, and improving control over the portfolio and its
associated risks.
DID YOU KNOW:
While the average return on equity for the US banking industry was
around 15% before the crisis, the average ROE today has almost
halved. 1
In 2011, commercial and industrial loans grew by over 10% even
while real estate loans and consumer lending declined. 2
Source 1 & 2: FDIC – Quarterly Banking Profile 2011 Graph Book
3
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Ambit Commercial Lender Solution Suite
KEY FUNCTIONS
CREDIT &
SCORING
AMBIT COMMERCIAL LENDER
PIPELINE
MANAGEMENT
& REPORTING
CUSTOM &
BENCHMARK
RATINGS
MODELS
ADVANCED
SPREADING
DECISION
RULES
ENGINE
CUSTOM
LEGAL
LANGUAGE
AUTOMATIC
LOAN BOARDING
& ADVANCES
EXPECTED
LOSS
ANALYSIS
CREDIT
WRITE UP
STRESS
TESTING
ELECTRONIC
CREDIT FILE
LOAN
CONCENTRATION
ANALYSIS
TICKLER &
TRACKING
KEY SOLUTION COMPONENTS
Customer
Relationship
Management
Application
Processing &
Underwriting
Credit
Assessment
Credit Risk
Rating
Legal
Document
Preparation
Loan Boarding
& Servicing
Portfolio & Risk
Management
Collateral
& Tickler
Management
WORKFLOW & BUSINESS PROCESS MANAGEMENT (BPM)
KEY DATA SOURCES
CENTRAL CREDIT DATA WAREHOUSE
THIRD PARTY & CREDIT REPORTING DATABASES
EXISTING BANK DATABASES
››Ambit Customer Relationship Management – provides a
complete 360 degree view of clients, linking multiple
communication channels to deliver a consistent and powerful
customer experience.
››Ambit Application Processing & Underwriting - provides a
systematic, comprehensive and standardized approach for
gathering customer information by implementing the bank’s
policies and rules and making calls out to third-parties for
gathering financial and credit data.
››Ambit Credit Assessment - provides a comprehensive and
standardized approach for analyzing customer credit quality
to facilitate loan approvals and on-going credit compliance
within the commercial lending book.
››Ambit Credit Risk Rating
››Ambit Risk Integration – allows banks to integrate any
proprietary or third-party risk rating models into their loan
origination process. It also allows banks to make qualitative
adjustments to the risk-ratings based on the relationship
manager’s input.
››Ambit Benchmark Risk Rating Models – SunGard provides
proprietary risk models for C&I, CRE Construction/LAD and
CRE Income Producing portfolios. Banks can utilize the
services of the Ambit Risk Advisory team to customize these
models, develop scorecards for other large portfolio types
and enhance existing models.
››Ambit Legal Document Preparation - utilizes the bank
attorney’s drafted language or documentation provided by
any third-party that is driven by document logic to generate
legal loan documentation for any credit products without
human intervention.
››Ambit Loan Boarding & Servicing - provides users with an
intuitive interface greatly improving the process of recording
transactions for all loan, deposit, G/L, and CIF systems and
assist in managing drawdowns, disbursals, and monitors past
dues and coming renewals.
››Ambit Collateral & Tickler Management - provides ticklers
and workflow enablement/routing driven to automatically
notify appropriate personnel and identify next steps for
tracking documents, renewing documents, financial
statements, proof of insurance, collateral exceptions, policy
exceptions, etc.
››Ambit Portfolio & Risk Management - provides advanced
risk analysis, credit quality reporting and watch lists, stress
testing, risk appetite and limit setting, monitoring and
provisioning to help banks understand the impact of
economic events or business decisions on their loan portfolio
as well as on the single obligor. Thus, allowing the bank to
better manage and monitor its credit portfolio while also
reducing costs by eliminating manual processes from
portfolio analytics.
[email protected]
4
1.Becoming more
customercentric:
focus on the
attributes
corporate
customers most
value to attract
and retain
profitable
customers
The commercial lending space has always been a buyer’s market.
However, since the financial crisis, the problem has been
exacerbated because, as underwriting standards have tightened
in the banking marketplace, so too the pool of high-quality,
credit-worthy customers has diminished. At the same time,
competition is rife with players from outside the industry, such as
large retailers, credit card providers and community financiers,
joining in the battle for customers’ business. With fewer attractive
borrowers and more players ready to lend to them, the
competition to attract the most profitable customers is intense.
While attracting the best credit is challenging in today’s
environment, retaining customers and potentially increasing
wallet-share is not easy either. With customers clearly in the
driver’s seat, banks will need to attune themselves even more to
the requirements and demands of their customer base. In
striving to become more ‘customer-centric’, banks must focus on
the attributes that corporate customers most value:
››
››
››
››
Timely and prompt service
Ease of doing business
Better relationships
Competitive and optimum pricing
1.1. Timely and prompt service
BECOME MORE
CUSTOMER-CENTRIC
In today’s competitive environment, business leaders cannot
afford to be hampered by a slow-moving loan approval process.
Banks that are able to reduce loan processing turn-around times
and provide faster loan approvals have a greater opportunity to
earn the customer’s business and retain existing relationships.
REDUCE COSTS THROUGH
PROACTIVELY MANAGE THE PORTFOLIO
By
creating
a
single
source
of data to ease
and speed upCOMPLIANCE
access
OPERATIONAL EFFICIENCY
AND
MANAGE
REGULATORY
to all information, increasing automation to reduce manual and
redundant data entry and using automated workflows to make
standard sequential processes more efficient, banks can
significantly improve their commercial loan origination processes
and provide more timely and prompt service to their customers.
1.2. Ease of doing business with the bank
Because banks lack a single, easily accessible repository for
the customer’s information, operational business lines are
restricted from gathering and sharing important customerrelated information. As a result, far too often, customers are
repeatedly contacted by the bank for information that should
already be on file. Customers also usually have no visibility
when it comes to the status of their loan application. While
legitimate delays do sometimes occur due to the complexity
of the loan, far too often banks fail to communicate the
reasons for such delays to the customer. This can result in
customer dissatisfaction and, worse still, customer attrition.
Banks that can streamline their loan origination process, giving
all departments access to a unified view of the customer
information and enable RMs to check and communicate the
status of the customer’s application, will be able to make it
easier for their customers to bank with them – and ultimately
enhance customer service and satisfaction.
5
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1.3. Building relationships
1.4. Competitive and optimum pricing
To further differentiate their offering from that of the
competition, frontline loan officers need to focus on building a
trusted relationship with customers and become their trusted
advisors. This strategy benefits both the customer and the bank,
helping the customer recognize the value of good advice. At
the same time, it gives the bank an opportunity to build strong
client knowledge, offering better terms to attract profitable
customers. Once the loan has been approved, the RM can
continue to ascertain opportunities for additional ways the bank
can help the customer – while proactively monitoring the
current loan for early warnings on potential issues, which could
lead to defaults and losses for the bank.
Price is a prime motivation for client loss. With rising levels of
competition from other banks, credit unions, retailers, and
convergent players, banks will need to be able to offer a
competitive price if they hope to attract and retain commercial
customers as borrowers.
At the same time, from the bank’s perspective, any decision on
pricing needs to be optimum, considering the risks and costs
of the deal. Pricing based on a risk-adjusted return will allow
the bank to acquire low-risk customers by granting them
attractive – yet profitable – conditions, and avoid relying on the
higher-risk customers. On the flip side, the banks that don’t
appropriately account for the risks of the deal will lag behind
competitors – and be left with low-margin and low-quality loans
that destroy the long-term value of the bank.
An effective and profitable approach to pricing also needs to
account for the impact of the deal on the overall customer
relationship. For example, the bank could give certain existing
profitable cystomers a preferential rate to retain them and
more aggressively price the relationships that drain the
bank’s profitability.
My day is so busy I just want systems
that help me to do my job quicker and
improve the way I serve my customers.
Tom Jefferson, 36
commercial relationship manager
DID YOU KNOW:
Corporate customers reward those banks that invest in
making it easier to do business with them. 3
Executives at smaller banks say they are losing business
because bigger banks are willing and able to cut interest
rates low enough to entice the best customers of smaller
banks. 4
Source 3: TowerGroup - Analytics for Commercial Loan Origination: The Secret Weapon for Competitive
Advantage
Source 4: American Banker - Small Banks Say Big Rivals Are Poaching Their Best Clients
[email protected]
6
SunGard can help
SunGard’s Ambit Commercial Lender solution suite provides an
end-to-end platform for all aspects of the commercial lending
lifecycle, including application processing, credit assessment,
approval, document preparation, loan boarding, servicing and
portfolio management. Using a single, integrated system, the
bank can eliminate redundancies, reduce manual intervention
and streamline the credit approval process to service customer
requests faster and more efficiently.
Ambit Commercial Lender enables banks to systematically
embed and deploy their rules and policies into the analysis
process for customer credit. This will facilitate more rapid loan
decisions, and so help banks offer timely and prompt service to
their customers.
Ambit Commercial Lender also provides an aggregated, single
source of all customer information that allows bank personnel
to further log, update and track all interactions with the
customer. As a result, commercial lending bank staff will gain a
complete and consistent view of the customer, making their
interactions with customers both better informed and more
efficient, so that it’s easier for the customer to do business with
the bank.
Ambit Commercial Lender further enables relationship
managers to go beyond simply servicing and originating a loan.
Built-in functionality such as graphical financial trending, one
page scorecard, what if scenario analysis, goal seek, and
interactive dash boards enable relationship managers to
engage in a more meaningful dialogue with the customer and
become trusted advisors.
By bringing the entire process onto a single platform, the bank
is able to significantly reduce origination costs and therefore
offer a more competitive price without compromising
profitability. With a consolidated view of all internal and external
information about the customer from across the lending
process, the bank has a better understanding of the risks and
profitability associated with the deal. Ambit Commercial Lender
also enables banks to deploy their specific methodology for
risk-based pricing and offer a competitive price on a riskadjusted basis.
Integrated with Ambit Relationship Manager, Ambit Commercial
Lender provides a complete view of the customer, bringing
together all sources of revenue such as deposits, fees, and
expenses, as well as allocated costs, non-bank sub-accounts and
capital. This helps enhance profitability and performance by
instilling relationship pricing strategies that encourage pursuit of
the highest value of the customer relationship
Although banks have difficulty quantifying the benefits of
shortening the loan origination life cycle and minimizing
client frustration with the process, it is indisputable that
such improvements offer a competitive advantage.
Susan Feinberg
senior research director at TowerGroup
Customer analysis dashboard
A one page dashboard to view
the key risks and trends inherent
to the customer’s business.
7
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2.Enhance the
efficiency of
the lending
lifecycle:
incorporate
higher degrees
of automation
and streamline
processes
throughout the
commercial
lending lifecycle
REDUCE COSTS THROUGH
OPERATIONAL EFFICIENCY
Regulators today are asking banks to deleverage and hold more
capital against their lending activities which is having a direct
impact on the costs of doing business. With price being one of
the biggest motivations for client attrition, banks must look to
reduce the costs of originating, underwriting and processing new
loans, to maintain profitability. However, strategic cost
management requires banks to focus on continued long-term
cost-effectiveness without compromising support for ongoing
growth and high performance during future upturns.
To enhance the cost-effectiveness of their commercial
lending operations, banks will need to:
››
››
Automate manual processes: improving staff efficiency
Integrate disparate systems: improving IT and
infrastructure efficiency
PROACTIVELY MANAGE THE PORTFOLIO
AND MANAGE REGULATORY COMPLIANCE
DID YOU KNOW:
It is not unusual for large national banks to have more
than 50 applications in commercial loan origination
operations alone. 5
Banks have carried out more waves of cost-cutting than any
other industry surveyed, reducing their expense by 6% on
average. Even with all these cuts, most banks’ costs still
remain between 20% and 40% too high. 6
Source 5: Gartner - Three Ways to Improve Commercial Loan Origination
Source 6: Accenture - The Point. Strategic Cost Management
[email protected]
8
2.1. Automate manual processes: improving staffing
efficiencies
2.2. Integrate disparate systems: improving IT and
infrastructure efficiency
The commercial lending operations of banks continue to be
characterized by outdated, manual, paper-based processes that
are inefficient and time-consuming and lead to clumsy handovers from department to department, redundant data entry
processes, manual errors caused by mistyping and omission of
information. These operational inefficiencies burden the bank
with unnecessary costs. Worse still, manual processes limit access
to a complete picture of the customer, thus slowing down the
lending process and leading to poor customer relationship
management. Manual processes are also rigid and inflexible,
making them expensive and time-consuming to modify or scale
up so as to capitalize on new growth opportunities.
Typically, most banks use a large number of internally developed
and disparate third-party point solutions within their commercial
lending operations. This makes it extremely challenging for the
bank’s IT department to keep pace with the integration, support
and maintenance requirements of a growing number of systems.
Not only is this more expensive, but poorly integrated and
redundant applications, processes and data can also put revenue
and profitability at risk.
By making IT investments to consolidate and simplify their
commercial lending application and origination processes,
banks can significantly improve operational efficiency, therefore
reduce costs.
By driving deeper levels of automation in commercial loan
origination through business process management and
workflow-based applications, banks can substantially improve
their long-term efficiency, customer responsiveness and agility to
capitalize on new growth opportunities. What is more, banks will
be able to support a significant increase in volume without raising
fixed costs such as staff, thereby reducing unit-processing costs.
Automated workflow and business process management
Consolidate customer information
and cycle status and prioritize loans
and processing steps to increase
efficiency.
9
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SunGard can help
SunGard’s Ambit Commercial Lender solution suite brings the
entire commercial lending process onto a single platform. By
rationalizing the number of systems the bank uses in its lending
process, Ambit Commercial Lender simplifies banking
infrastructure to provide greater agility, transparency and
efficiency. The bank is also able to reduce the overall burden on
IT for integration and maintenance, which reduces overall costs
whilst enhancing the reliability of the system.
Ambit Commercial Lender consolidates data from the disparate
applications and data repositories of the bank to provide an
integrated view of customer information to commercial lending
staff. With a single system to refer to for all customer
information, Ambit Commercial Lender considerably reduces
manual effort and its associated cost – by getting the right
information to the right staff member at the right time.
Ambit Commercial Lender’s inherent business-rule-based
workflow capabilities and setup wizards allow banks to
automate business processes in their lending cycle. By
minimizing the level of manual intervention and driving a
deeper level of straight-through processing in the lending
cycle, banks can significantly improve staff efficiency while
reducing the number of days to close a loan, the incidence of
errors in the loan package and the overall costs to originate
and service a loan. It also allows banks to easily scale up their
portfolio without having to proportionally increase staff.
Ambit Commercial Lender is highly flexible and configurable,
allowing the bank to streamline the commercial lending
process while retaining its unique approach to the credit
lifecycle and how it serves its customers.
In today’s competitive environment, I need to make
sure that we are responsive to customer needs,
especially for processing new loan requests.
Diane Jackson, 44
loan operations specialist
DID YOU KNOW:
Banks that have incorporated greater level of automation of
manual processes and consolidation of disparate systems
have seen an estimated reduction of costs of 5% to 15%, a
reduction in the number of errors per 100 loans from 75%
down to 5% and an increase in the number of new
applications by 60% with only a 2% increase in staff. 7
Only 10% of large institutions and about 15% of smaller
institutions are satisfied with their existing commercial
lending solution. 8
Source 7: Gartner - Three ways to improve commercial loan origination
Source 8: IDC Financial Insights - Commercial Lending: Investing to Build a Stronger Bank
[email protected]
10
3.Proactive credit
quality and
portfolio
management
and maintaining
regulatory
compliance:
improve the
visibility and
transparency of
the portfolio
and control
over its
associated risks
Lending is the principal business activity for most commercial
banks, making the loan portfolio typically the largest asset and
the predominant source of revenue. As such, it is one of the
greatest sources of risk to a bank’s safety and soundness.
Whether this is due to lax credit standards, poor portfolio and
risk management, or weakness in the economy, loan portfolio
problems will have a significant impact on the bank’s
performance and ultimately its viability. As a result, bank
boards and senior management teams, along with the
regulatory and audit communities, are requiring greater levels
of visibility and transparency, as well as more control over the
portfolio and its associated risks.
To ensure a proactive approach to portfolio management
and regulatory compliance, banks will need to:
››
››
››
Consolidate commercial lending data onto a single
system for portfolio and compliance reporting
Instill a more sophisticated approach to credit risk
management
Apply more rigorous portfolio management and
stress testing
ROACTIVELY MANAGE THE PORTFOLIO
ND MANAGE REGULATORY COMPLIANCE
Portfolio & risk analysis
Quickly segment your portfolio, assess concentration
levels and perform stress tests to proactively strategize
on conceivable outcomes.
11
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3.1. C
onsolidate commercial lending data onto a single
system for portfolio and compliance reporting
Regulatory agencies are in the process of defining new
regulations for the future of banking. Some of these
requirements have been defined already, although most have
not. At the same time, bank boards are becoming more aware of
the risks inherent in the lending book and are demanding more
frequent, detailed and granular levels of portfolio reporting. For
any kind of analysis, whether it is what the regulators are asking
for or what bank boards and senior management are
demanding, getting all the data into the right place and in the
right format is critical. However, the extraction and aggregation
of key data from multiple siloed systems and applications is
difficult, requiring a considerable amount of manual intervention,
which is often prone to inefficiencies and errors.
What banks need is a technology solution that can create a
central warehouse or repository for data and be used for all data
references, to in turn perform various analyses and portfolio and
risk management reporting.
3.2. Instill a more sophisticated approach to credit risk
The need to understand and manage the credit quality of
commercial and small business portfolios is greater than ever.
Losses due to customer credit problems have taken an
enormous toll on the banking industry. Banks need to address
deficiencies in their credit assessment practices by establishing
a more sophisticated, analytical and objective methodology for
assigning borrower risk rating and collateral risk rating and
reduce over-reliance on qualitative credit analysis and the
subjective judgment of the loan officer.
With well thought-out risk rating models that also incorporate
macro-economic links, RMs will be better-equipped to assess
credit quality, by being able to not only see customers’ current
risk ratings, but also the grade they would get if conditions
changed slightly.
If banks can integrate these risk-rating models throughout the
loan origination process – i.e. covenant setting and tracking,
collateral setting and so on – they will be able to gain a more
accurate view of the quality of credit they are taking on and its
impact on the entire portfolio of the bank, as well as ensuring
greater consistency across the bank’s lending practices.
My job is to make sure there is greater
visibility, transparency and control over
the portfolio and its associated risks.
Darrell Parker, 42
portfolio risk manager
[email protected]
12
3.3. Apply more rigorous portfolio management and
stress testing
Bank boards, senior management teams and regulatory bodies
overseeing the banking industry have emphasized the
importance of truly understanding the characteristics of the
commercial lending portfolio, to measure and manage the risks
associated with it.
Today, banks must become even more sophisticated in their
efforts to analyze and report on portfolio concentrations, watch
lists, covenant monitoring, credit quality, limit monitoring, loss
provisioning etc., as these are essential for measuring the
associated risks and having a greater understanding of the
customers within the portfolio.
Banks are not only required to increase their reporting and
analysis capabilities across the portfolio as it stands today, but
also, more importantly, to know how the portfolio will look
under different stressed macroeconomic and borrower
conditions. The banks that can best understand the impact of
these conditions on their portfolio will be those that can best
manage the risks to their performance and health – by
developing strategies for reducing, diversifying, or otherwise
mitigating the associated risks. Furthermore, stress-testing
results should not only be used by risk management teams but
also by bank businesses on a day-to-day basis, helping them to
improve their strategic decision-making processes.
13
www.sungard.com/ambit
With risk now playing a major strategic role in business
decision making, improving internal transparency of
information has become a significant area of focus for
both the industry and the regulators.
Making strides in financial services risk
management, Ernst & Young
SunGard can help
SunGard’s Ambit Commercial Lender solution suite brings the
entire commercial lending process onto a single platform. In
doing so, Ambit Commercial Lender consolidates data from
the different steps in the commercial lending lifecycle and
creates a data repository for the commercial lending line of
business. With a single source of information for all
commercial lending staff, the bank is able to establish a
greater level of consistency of information on record for its
customers and the portfolio of the bank.
Ambit Commercial Lender can incorporate either off-the-shelf
benchmark risk-rating models or a bank’s own customized
risk-rating models into the assessment/underwriting process,
allowing the bank to make better credit decisions and
ultimately price the expected risk more accurately. Furthermore,
Ambit Risk Advisory consultants can work with banks to
develop, calibrate or validate their risk rating models, helping to
incorporate more granular-level information on borrower,
collateral and loan segment (CRE and C&I) into the risk rating
models. The risk-rating models can be linked as well to macrofactors like unemployment rates, interest rates, housing prices
and gross domestic product, allowing the bank to understand
the impact of external factors on the bank’s loss forecast.
Ambit Commercial Lender also enables banks to perform credit
and portfolio analysis across the entire portfolio or any subset
of the portfolio, filtered by geography, industry, product, or any
other relevant dimension to help the bank quickly and
accurately meet risk reporting requirements, identify
concentrations and take appropriate remedial action.
In addition, Ambit Commercial Lender provides the ability to
perform portfolio stress tests, a key requirement for all chief
credit officers today. It enables users to define stress scenarios
based on borrower, credit or macroeconomic variables and
analyze their impact on the portfolio. Based on the parameters
selected for the defined scenario, the system automatically
recalculates all borrower level financials, risk metrics and
portfolio metrics and then allows further reporting and analysis.
For more information:
email: [email protected]
visit: www.sungard.com/ambit
DID YOU KNOW:
Only 43% of responding banks give the quality of their data
for supporting operations a high rating and only 33% gave
the quality of their data for supporting business intelligence
and management decision making a similarly high rating. 9
Enhancing commercial loan monitoring solutions to
improve portfolio management will be among the top 10
technology initiatives for wholesale banking in 2012. 10
Source 9: Gartner - Big Data and Agility Demands Threaten to Overwhelm Financial Institutions
Source 10: TowerGroup - Commercial Banking Top Ten Technology Initiatives for 2012
[email protected]
14
About SunGard’s Ambit Commercial Lender Solution Suite
SunGard’s Ambit Commercial lender solution suite provides an end-to-end platform for
all aspects of the commercial lending lifecycle, including application processing, credit
assessment, approval, document preparation, loan boarding, servicing and portfolio
management. With Ambit Commercial Lender, banks can capitalize on the opportunities
offered by the commercial lending space and rebuild their ROE by making their
commercial lending operations more customer-centric, enhancing the efficiency of the
lending lifecycle, and proactively managing credit quality and the portfolio while also
ensuring regulatory compliance.
About SunGard’s Ambit
SunGard’s Ambit is a banking suite for retail, commercial and private banks. Ambit
provides banking professionals worldwide with integrated, mission-critical transaction
processing, analytical and customer management solutions. Ambit helps banks become
more competitive by helping them retain and acquire profitable clients, improve staff
efficiency and more effectively allocate their capital. We focus on building trusted
relationships and a commitment to continued innovation and delivery excellence.
Find out more at www.sungard.com/ambit
email: [email protected]
About SunGard
SunGard is one of the world’s leading software and technology services companies.
SunGard has more than 17,000 employees and serves approximately 25,000 customers in
more than 70 countries. SunGard provides software and processing solutions for financial
services, education and the public sector. SunGard also provides disaster recovery
services, managed IT services, information availability consulting services and business
continuity management software. With annual revenue of about $4.5 billion, SunGard
is the largest privately held software and services company and was ranked 480 on the
fortune 500 in 2012.
Look for us wherever the mission is critical.
For more information, please visit www.sungard.com
For more information:
email: [email protected]
visit: www.sungard.com/ambit
Americas
Australia/New Zealand
Western Europe
BOSTON, MA
NEW YORK, NY
PARSIPPANY, NJ
WAYNE, PA
SAO PAULO, BRAZIL
MELBOURNE, AUSTRALIA
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SINGAPORE
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DUBAI, UNITED ARAB EMIRATES
North Africa
TUNIS, TUNISIA
©2012 SunGard.
Trademark Information: SunGard, the SunGard logo and Ambit are trademarks or registered trademarks of SunGard Data
Systems Inc. or its subsidiaries in the U.S. and other countries. All other trade names are trademarks or registered trademarks
of their respective holders.