Selecting your Commercial Lending Platform

Selecting your Commercial Lending Platform Your vendor selection guidebook from Newgen Selecting Commercial Lending Platform Partner | www.newgens...
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Selecting your Commercial Lending Platform

Your vendor selection guidebook from Newgen

Selecting Commercial Lending Platform Partner

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The Digital Commercial Lending Imperative is upon Banks. It’s not about ‘whether’ or ‘when’… Now, It’s about ‘what specifically’, and ‘how exactly’…

The Five Dimensions of Digital Commercial Lending These five dimensions govern how effective your digital commercial lending initiatives are. Customer Centricity and Process Efficiency drive the revenue objectives. Risk Management drives the financial stability and robustness of business. Compliance has been a key requirement, and will continue to remain one of the key success factors. Human element, hitherto relatively overlooked, becomes a key success factor in ensuring that you achieve the aforesaid goals in the growth, profitability and stability areas. Details in white paper: The Five Dimensions of Digital Commercial Lending

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What are the Priorities of Commercial Lenders Today?

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Automate end-to-end commercial loan lifecycle Disjointed Processes banks are struggling to keep pace with growth opportunities due to disjointed commercial loan origination process. In an effort to tackle growing business demands and to automate various processes of commercial lending lifecycle, banks have been deploying diverse applications for handling specific functionalities—loan tracking, loan origination, spreading, rating, documentation and so on. However, banks, in their single minded pursuit of automating individual processes have ended up creating gaps and missing links. Banks need to automate the end-to-end commercial loan lifecycle and achieve -

Focus of automation effort is shifting from transactional approach to endto-end credit lifecycle.

Seamless Process across functions E2E Process Visibility & Tracking Workflow Automation Straight-through Processing Selecting Commercial Lending Platform Partner

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Enable your people to help prospects/customers Provide people with Information in-time for them to be able to serve your customers and help the business. Empower them to make decisions through authorizations and by freeing up their time from the mundane.

Relationship Manager

Credit Analyst

Reduced Data Entry

Single Interface for all data

One-time data capture

Integrated spreading systems

Quality time for customers

Auto-calculated ratios

Credit Head

Collateral Manager

Automated Documentation and Disbursement

Seamless Flow of Information between CAD & Collaterals team

Automated Covenant Monitoring

Management of Deferred Documents

Risk Manager Built-in Risk based pricing Risk Rating System Integration Peer Group Analysis

Legal & Compliance Any-time Anywhere Document Access Exception handling mechanism for missing documentation

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Improve Turn-around Time for Your End-customers and Build Revenues The need for faster disbursal

Asset booking of $1bn with improved Turnaround time of a month and interest spread of 3% brings additional revenue of $2.5mn!

Customers today expect your organization to be efficient and responsive. Business organization need to be able to focus on “what’s needed” and “when needed”, and they need the right technology infrastructure to be able to do that. Make process transparent with real-time availability of status of credit proposal to RMs and customer Guarantee timeline and SLAs for credit approvals Save on time losses due to the lag in physical movement of documentation Save on time losses due to lack of access to the required information Earn Revenues with booked assets, improve turnover Reduce paper and manual documentation to effectuate overall turnaround

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Manage Risks Better and Be Compliant with Regulations Building for Flexibility and Agility Risk Management is critical for Banks’ overall financial health and business profile. Additionally, compliance regulations are very dynamic with regulators periodically reviewing the scenario and coming up with new regulations. Implementation of requirements for new regulations in time is critical for Banks, and this needs to be done in line with the other business demands. Building processes for flexibility is key. This is even more important since it’s difficult to foresee and establish a regulatory direction with consistency.

Business Uncertainty Operating Leverage

Risk Management and Regulatory compliance should become integral part of Credit Process Design.

Financial Risk financial Leverage

Lenders need to look for ways to better equip themselves on monitoring and risk measurement. Recognize risks at initiation and use those as counter-balancing force in risk-based pricing Control and manage exceptions Access to accurate data for assessment, exposure, collateral and pricing Prioritization of risk reduction as per credit policies Selecting Commercial Lending Platform Partner

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Manage ROI and Leverage Existing Investments The need for an Optimum Solution

Banks are today looking for most adaptable rather than ideal architecture; solutions that can support ever changing business and process dynamics.

The process requirements are typically unique for the institution, which means that you would want to build what you need grounds-up. However, you have decades of legacy and core banking systems in investments across CRM, Underwriting, Risk Management, Documentation, Collaterals Management, Credit Monitoring, Funding, Restructuring, Servicing, and Collections. What’s needed is to tie in these silos rather than to forcefully replace them. This means that integration with existing core banking systems in a seamless fashion is key. It’s also important to be able to deploy changes fast to enable faster time to market. Integration with existing legacy and core banking systems Faster Time to Market for changes in processes and lending products Fast and seamless reconfigurability of credit policies and business rules

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Selecting your Commercial Lending Platform

10 Questions You need to ask…

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Does it automate your end-to-end commercial lending process? What does it mean? You need a platform that orchestrates your business processes through workflow automation. You need to consider a platform that allows you to design, deploy, execute, track, and administer your lending process from prospecting to sales to credit analysis to documentation to disbursement to servicing.

Why should you consider this? Broken and disjointed commercial lending process is the key technological bottleneck for banks. A centrally orchestrated workflow allows you to follow-through a prospect from lead to disbursement and then to servicing. A BPM based framework allows you to define specific tasks and responsibilities across your functions and builds accountability among your relationship managers, credit analysts, loan officers, credit heads, collateral managers and risk managers. Workflows allow people to focus on their tasks, as dictated by the SLAs and respective configured authorizations. This relieves them of manual hand-offs, email based collaboration, and task delegation & forwarding. Officers and Credit heads can review the open applications and lending organization can configure routing based on certain priorities, credit value and risk characteristics.

Keywords BPM, Workflow Automation, Process Monitoring, Configurable Policies & Routing, Process Lifecycle

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Does it unify all your lending requirements in one platform? What does it mean? A unified platform brings together all lending process functionality under one umbrella, enhancing the operational efficiency of business users. Disparate point solutions create duplication and redundancies in the system, apart from causing undesirable process gaps.

Why should you consider this? A unified and single interface in the front-end allows for a consistent and user-friendly interaction and task performance. This brings down manual errors and operational lags caused by swivel-chair syndrome, which in turn is a result of disparate systems. Your customers can expect a consistent and standardized single face of your lending organization, with guaranteed SLAs and TATs, as well as consistent processes across your lending products, be it C&I, CRE, Multifamily, Equipment Financing, Infrastructure Leasing or SBA. A unified process orchestration allows for repeatable and efficient process management. This also enables better utilization of your business and IT resources involved in commercial lending process implementation and deployment. It allows you to formulate and implement consistent pricing and credit analysis solutions across the organization, leading to a more consistent and effective decision making. Unified approach across lending products allows you to focus on specific regulatory requirements and implement consistently across the organization wherever applicable.

Keywords Unified Process Platform, Process Orchestration, Single Face to Customer, Operational Consistency, Process Standardization

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Does it let you build your own functional differentiators? 3 What does it mean? Traditional lending point solutions are inflexible. This lack of configurability-from workflows to approval matrices, to credit/deviation policies, to data models and product definitions—is the main bottleneck for lenders. Ability to customize the platform, as if building your own commercial lending process, and being able to do that fast, is the key.

Why should you consider this? Commercial Lending processes are complex. Additionally, every commercial borrower is unique. An inflexible and siloed process that rigidly works on the same standard models across the industry is a key bottleneck today. You should be able to customize the base lending process model to suit your business strategy and product design. You should be able to define workflows as if you built the process from scratch for your own organization. You should be able to plug in sub-processes—prospecting or lead management, or third party appraisals, for instance. Credit Policies and Deviation Policies are critical for lending. At the same time, rigidity of these policies is a huge bottleneck in servicing customers from broad backgrounds and contexts in this fast changing environment. These policies should be pluggable, automated as well as easily configurable by your own organization without vendor dependency. A customizable Data model is a critical consideration. A business user friendly master data management (MDM) interface is critical for you to be able to design products at speed as per your organization’s product strategy.

Keywords Organizational Agility, Change Management, BPM Framework, Process Modeling, MDM, Business Rules Management System (BRMS)

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Does it digitize your manual and paper-heavy processes? 4

What does it mean? Manual and Paper based processes are the biggest source of delays and errors. Using electronic documents helps reduce manual errors, overcome regulatory nightmares as well as reduce the credit lifecycle. To support this, a platform needs to have an in-built Document Management (DMS) and Enterprise Content Management (ECM) capability.

Why should you consider this? Commercial Lending processes are paper-heavy by nature. By capturing information in digital form right at the source, your organization achieves better control, traceability, retrievability and archival. More importantly, these documents need to be attached to a specific credit opportunity or customer in order for a seamless process level control and access. Employees shouldn’t be required to carry documents, attach them to emails, store and access through files and cabinets, and dispatch to loan officers or credit analysts at different geographical locations. Workflows should be able to carry the documents on access/authorization basis through the process for whoever needs it on real-time basis. The electronic documents need to be accessible through any channel, be it PC, laptop or a mobile device. The storage and retrieval should be sizeoptimized for efficient network and infrastructural resource management. Automation of manual and paper based processes drastically reduces the cycle time, and at the same time reducing manual errors. A well designed DMS that is integrated into your lending workflows helps achieve auditability and compliance to your regulatory reporting requirements.

Keywords Document Capture, Image Processing, Document Storage and Retrieval, Electronic Documents, DMS, ECM, Mobile based Document Capture, Content Management

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Does it accelerate deployments for faster time to market? What does it mean? 5

Time to market is critical. Buying an off-the-shelf point solution is ineffective due to the rigidity and overly standardized processes. Their inflexibility is a bottleneck to coping with fast changing market and compliance needs. Banks need to be able to make changes fast, without having to undergo large TCO of build approach.

Why should you consider this? Buying a readymade point solution can sometimes lend you an immediate fast deployment, however, it comes with baggage of standard feature set, reliance on vendor, and overall technical burden of change. This becomes counter productive to the overall objective of speed, and is the key bottlenecks for lenders today as they are stuck with those siloed and rigid point solutions. A framework based approach, especially based on BPM platform, with the ability to model-implement-deploy-execute in faster cycles provides that flexibility that is much needed for agility today. A commercial lending domain model built on top of such a framework provides you a base to cut-short the initial implementation time as well as to provide you the long term benefit of flexibility and time-to-market. You should also consider the commitment and professional services capability of the vendor organization to make the solution work in your own context and environment, rather than imposing a standard feature set. A BPM framework based approach works in an Agile implementation model, which provides the lending business owners a direct involvement as well as faster cycles to re-enforce quick wins in the right direction.

Keywords Time-to-Market, TCO, Flexibility, Change Management, BPM Framework, Platform-driven Development, Configurability, Pro-Agile Methodology, Professional Services, Development Lifecycle

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Does it allow automation and configurability of credit policies? What does it mean?

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Credit Design is becoming involved and sophisticated. Expertise of your Credit analysts needs to be translated to larger throughput, rather than getting wasted in mundane repetitive tasks on case after case. Automation of repetitive credit scenarios provides you efficiency, while fast configurability provides you flexibility and agility.

Why should you consider this? Credit Policies and Deviation Policies typically start with guidelines and become standard through the repetitive occurrence of similar cases over and over again. However, using the expertise of your knowledge workers on such repetitive tasks not only wastes their time but also leads to loss of other opportunities that they could have serviced. A business rules management based automation helps process repetitive scenarios in a straight-through fashion, resulting in immediate processing. What also helps is that these business rules are loosely coupled with the rest of the process and can be configured independently so as to allow that speed of change whenever a policy needs to be revised quickly. Such straight through processing (STP) frees up the time of your credit analysts and credit heads, and allows them to focus on higher priority and higher value transactions where human intelligence is required. Better motivated and more empowered workforce is an added advantage that can help you deliver better customer experience and more innovative products over time.

Keywords Automation, Business Rules Management System (BRMS), Straight-through Processing (STP), Credit Policy Automation, Empowered Workers

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Does it integrate seamlessly to core banking & legacy systems? What does it mean?

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Integration is critical for any effective automation. For workflow automation and straight-through processing to yield the intended results, seamless integration with all your participant systems, point solutions and core banking systems is key. Platform should be able to integrate using any of SOA, APIs, standard adaptors, and most importantly using standards.

Why should you consider this? A Lender organization is replete with systems and applications that have been working in disjointed and siloed fashion. An end-to-end Process lifecycle cannot be achieved without robust and seamless integration. What’s important is that integration should be achieved with standard mechanisms and without custom-coding. You should be able to automate various parts of the process—lead management, third party appraisals, credit score validation, credit policy / deviation policy based calculations, business rules based routing, blacklist checks, conditional auto-approvals, internal and external email communication—for effective lending process. Integration enables all that. Integration also makes it efficient for business users, who don’t have to switch between various screens and applications any more. A poor integration results in loss of time and increase in manual errors, and lack of traceability in audits and compliance. For a commercial lending process, it is an added advantage if the process orchestration has in-built integration with document management, which allows for automated document tagging with the transactions and customers.

Keywords Integration, Web services, Service Oriented Architecture (SOA), API based integration, Integration Adaptors, GUI based Integration

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Does it enable compliance through proactive management? What does it mean?

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Transparency is one side of compliance coin. Fair business practices is another. For both, lenders need visibility into their operations, and timely control over processes through monitoring. The best way to handle compliance is to be proactive and make it a natural part of process management, and not as an add-on counter-productive measure.

Why should you consider this? When you orchestrate processes centrally through workflow automation, you also create a trackable process record for every credit opportunity. More integrated the process is, the better the traceability and auditability. With integrated document management, the document trail and linked records become automatically available for compliance requirements, without additional effort. Automation means lesser human intervention, and a process based solution means that exceptions are handled through the system. This allows the lenders to track the routine versus exceptions and take proactive measures to ensure compliance. All the people accessing the system—Relationship managers, credit analysts, loan officers, legal—should be configured based on roles, authorizations and their part in the process. The actions and task performance should be automatically recorded and tracked and reported in the system, creating the required transparency & audit. A process management based approach allows you to proactively manage the compliance rather than as an additional responsibility that kills time, energy and effort of all involved.

Keywords BPM, Process Monitoring, Integrated Document Management, Workflow Automation, Role-based participation, Process Tracking, Audit Trails.

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Is Mobility a seamless interface in the lending process platform? What does it mean?

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Mobility provides you an interface, but for it to be effective, it should be a natural extension to the lending process. Ability to capture information and documents through mobile or any other interface should be seamless. Reviews and approvals should be possible on the go. Monitoring dashboards should be available on mobile.

Why should you consider this? It’s one thing to build a mobile-friendly UI for an existing application, and an altogether another to treat mobility as a productivity enhancer and a key aspect of a great lending process. An omni-channel and cross-channel experience is critical for mobility to be effective. Your Relationship managers should be able to expedite the process by capturing customer information and documents on-the-go for a smooth credit origination. Ability to capture documents through mobile, and seamlessly attach them to the credit opportunity, with integrated document management in the backend is critical for a seamless mobile experience. Your people should be able to access their tasks through mobile as easily as they would perform them on a laptop or a PC interface. Credit heads should be able to review and approve seamlessly on a mobile on the go. Similarly, it should be possible to track various transactions over a mobile based dashboard for quick and timely decision making.

Keywords Enterprise Mobility Framework, Seamless Mobile experience, Omni channel, Cross channel, Responsive User Interface, Integrated Document Management

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Does it empower people and enable better decision making? What does it mean?

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Lending is a complex and people-intensive process. People in your organization are responsible for making decisions that involve variety of factors. In order to be effective in their job, they need all the relevant information in time and in the required form. And they need to use their time to do what they do best, and not on mundane repetitive tasks.

Why should you consider this? Straight-through processing, workflow automation, Credit Policy check automation, third party appraisals, automated document retrieval and collateral management are some of the functionality that frees up significant amount of time and effort for people in lending organizations. Credit Analysts need the customer information as well as all the relevant documentation in a single unified window, in order to make timely decisions. Underwriters should not be required to spend their time creating credit review templates. Similarly, your relationship managers need to be able to automate the data entry and document capture so as to be able to focus on their valuable time on building relationship with their customers. Executive Teams need to be able to access and track all the opportunities through a dashboard at one place with the status of every application across the unified process from prospecting to disbursement. Cases need to move electronically between Loan officers and portfolio teams for efficient customer service, but also indirectly freeing up lot of valuable time for people to do their jobs better.

Keywords Empowered Knowledge Workers, Case Management, Straight-through processing, Assisted Decision Making, Electronic Documents

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What next? We hope the information we have culled together based on our more than two decades of experience working with banking clients across geographies helps you in your commercial lending automation program and helps you make right decisions in selecting a partner. We would be glad to be of help in your selection process and to discuss your requirements.

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About Newgen Newgen Software is a leading global provider of Business Process Management (BPM), Enterprise Content Management (ECM), Customer Communication Management (CCM) and Case Management, with a global footprint of 1300+ installations in more than 61 countries with large, mission-critical solutions deployed at the world's leading Banks, Insurance firms, BPO's, Healthcare Organizations, Government, Telecom Companies & Shared Service Centers. Newgen's Quality Systems are certified against ISO 9001:2008 and Information Security Standard, ISO 27001:2013. Newgen has been assessed at CMMi Level3.

Write to us: USA & CANADA: [email protected] INDIA: [email protected] APAC: [email protected] EMEA: [email protected]

For sales enquiry, dial: USA & CANADA: +1 (202) 800 7783 INDIA: +91 11 40773769 APAC: +65 3157 6189 EMEA: +44 (0) 2036 514805, +973-1-619-8002

www.newgensoft.com

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