In the banking sector, the process of granting credit is essential. Business Banker has developed a rigorous decision workflow that is both easy to use and to configure to manage this critical aspect, effectively evaluating credit applications, minimizing financial risks, and ensuring fail-safe regulatory compliance.
Foundations of the Decision Workflow:
- Client Information:The process begins by categorizing clients (individuals, SMEs, large enterprises, financing entities, cooperatives), with each segment requiring a tailored approach strategy. Integrating the client into our systems necessitates identity authentication and the collection of specific information through a comprehensive KYC (Know Your Customer) process.
- Financing Request:Tailored to the client’s specifics, the request includes:
- Credit facilities,
- Collateral securities,
- Disbursement terms,
- Obligations to be met.
- Specific Risk Model: Each client segment benefits from an adapted risk model, assessing the likelihood of failure and associated risk exposure.
- Project Analysis: Each requested financing undergoes a thorough analysis to verify its viability and compliance with the strategic objectives of both the client and the bank.
- Decision Circuit: Decision-making, coordinated by committee levels, considers the client’s profile, the anticipated amount, and the nature of the financial product. It involves close collaboration among sales, credit, and operations departments to ensure a comprehensive evaluation.
- The interaction between information is crucial depending on the type of client, industry, credit facility, amount, guarantees, and the risk model is adjusted accordingly. Moreover, default probabilities are finely tuned, including risk exposure. These interactions are vital for ensuring accurate evaluation and optimal risk management.
Credit Proposal Request:
At the heart of this approach, the credit proposal is tailored to the specific needs of the client:
- For an individual wishing to purchase a house, this includes a detailed analysis of the applicant, a long-term credit solution with a mortgage guarantee, specific disbursement conditions, and a commitment, all based on a risk model that incorporates predictive criteria (employment stability, repayment capacity, financial situation).
- For an SME looking to purchase equipment, the offer involves an in-depth study of the business, medium-term financing, movable guarantees, tailored disbursement terms, and commitments (covenants, receivables management), supported by a risk model focused on business performance and strategy.
Regulatory Compliance and Predictability:
- The crucial aspect of the workflow is its ability to produce reliable and predictable outcomes. The relevance of the risk model and the valuation of guarantees depend on rigorous data collection and analysis. This methodology allows for a more accurate risk assessment, positively impacting capital requirements. It thus facilitates a reduction in the capital reserves required by regulators for banks demonstrating effective risk management.
In Conclusion:
- The integrated and collaborative decision workflow implemented by Business Banker facilitates optimal credit portfolio management, ensures regulatory compliance, and meets the diverse needs of the clientele. This structured system demonstrates Business Banker’s commitment to combining financial security and customer service excellence, strengthening its strategic positioning in the financial industry.