Basic modernization for commercial loans

THE convergence of customer self-service, along with advances in technology, makes the case for a basic modernization of commercial lending.

Relationship Managers (RMs) have been the heart and soul of commercial lending. Historically, banking success relied on the skill of RMs to acquire new customers, build strong relationships, and cross-sell products and services to other parts of the bank. Much of this role dependency has changed for future-ready banks.

Converging customer expectations for self-service as well as advances in technology have made the case for a basic modernization of commercial lending. The result is a bank that relies less on the insight and skills of individual RMs and more on the ability to leverage advanced data and analytics capabilities within a digital delivery model.

Leveraging these new skills elevates the role of RMs and allows commercial banking services to be delivered in a more personalized way. Lenders’ ability to build trust and loyalty through personalized customer interactions is enabled by capturing and integrating data across all customer touchpoints to ultimately generate personalized insights.

However, replacing your lending platform should only be done as part of a larger transformation effort, because modernizing commercial lending isn’t pure technology play. It involves transforming people, processes, operations and risk, as well as technology, to meet customer expectations and achieve profitable growth.

Changing customer expectations

There has been a tremendous increase in customer demand for self-service opportunities. Customers want to download statements, make payments, view loan rates, complete online applications, and check loan status, among countless other self-generated actions. Customers are demanding more access points across the entire value chain, from sales to creatives to service. The RM is no longer at the heart of current customer routines.

Banks must meet the demand for digital capabilities not only to optimize the customer experience, but also to bring efficiency to their processes.

Offer a better return on risk

The modernization of the CORE platform provides opportunities to improve risk management and ensure regulatory compliance through automation. Automating key compliance controls and activities enables earlier detection and prevention, adding to the measurable ROI benefits of platform modernization.

Security, in the form of authentication (authenticating individuals, documents, and organizations) in addition to role and transaction-based controls (e.g. who has access to what opportunities and what data fields), leads auditing, escalations and notifications, further optimizes a secure environment.

As an added value, as regulators and auditors now require more information about the data involved in a lending decision, modernizing your lending platform helps deliver the necessary information in the required format.

Leverage technology

NEW underwriting approaches leverage advanced data analytics techniques to improve commercial lending. For example, the extensive use of machine learning models that consume a variety of non-traditional internal and external data allows lenders to intelligently extend credit without significantly increasing their overall risk profile. Another example of improved technology is the use of ethical AI models that withstand higher levels of regulatory scrutiny.

Which platform is right for your bank?

THE first step in evaluating platform alternatives is to consider business needs. This means going beyond a functional perspective so that there is a seamless set of demand generation, acquisition, onboarding and service experiences, all delivered in the way the customer prefers. .

Factors to consider when evaluating platforms:

  • The entire value chain, from sales to creations and service
  • Data integrity and integration in every process for data reuse
  • Workflows for every banking process, product and customer type
  • Capabilities for integrated customer experiences
  • Risk and regulatory compliance
  • Technical adjustment

By placing core modernization at the center of your commercial lending strategy, you position your bank to fundamentally increase sales and service while achieving new levels of efficiency and profitable growth.

KPMG in the Philippines will host its annual virtual Innovation Summit in July to keep professionals up to date on emerging technologies and trends. Join Day 4 to learn more about customer experience from top industry leaders.

The excerpt is taken from the KPMG Thought Leadership publication: https://advisory.kpmg.us/articles/2022/core-modernization-commercial-lending.html

RG Manabat & Co., a Philippine partnership and member firm of the global KPMG organization of independent member firms affiliated with KPMG International Ltd., a private English company limited by guarantee. All rights reserved. For more information about KPMG in the Philippines, you can message via social media or visit www.home.kpmg/ph.

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