Mastering Credit Management in Banking: Last-mile Adoption

Successful Adoption is Key to Unlocking Value

Traditionally, credit officers across banking organizations have worked with multiple legacy models and systems to perform their credit scoring and underwriting functions. However, in line with the changing times, banks are now migrating their credit management functions to new-age, cloud-based credit platforms. As critical as they are in catalyzing growth and innovation, these platforms pose several adoption challenges for credit officers. The inability to embrace the new features and functionalities adversely impacts the day-to-day performance of credit officers while limiting the value banks realize from their transition to a modern credit management platform.

In light of these challenges, banks increasingly rely on last-mile adoption partners. A last-mile adoption partner is a domain expert that combines industry intimacy with a granular understanding of tools and platforms to seamlessly deliver the desired change. Critically, unlike a technology partner, a last-mile adoption partner views the technological change through the lens of an end-user – credit officer in this case – to enable enterprises to successfully adapt to the altered operating landscape.

Case Study

Intelligently Transforming Credit Operations for a Banking Major

How a leading US bank transformed its credit operations, re-structuring and standardizing the commercial credit operating model.

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Tackling the Common Barriers with a Last-mile Adoption Partner

Backed by insights from real-world collaboration, this article highlights some of the typical last-mile challenges that enterprises encounter as they migrate to a new credit management platform. It also emphasizes how a last-mile adoption partner can help navigate these teething issues.

• Updating customer profile: While technology partners can help banks with the automated routing of customer profile details from the backend, there is always an inherent risk of the automated process not factoring in all data points or returning a null / void result.

  How a last-mile adoption partner can help: Backed by a nuanced understanding of the missing data points, source documents and / or resources, the partner creates a detailed process document to drive consistency in data point definition and source referral. Highly recommended in this scenario is a phased-up approach – rather than a one-go approach – based on geography, portfolio and client preference. This approach helps avoid any unpleasant surprises.

• Tagging financial spreading: The migration to a new spreading platform calls for a new spreading methodology and unambiguous tagging in terms of input fields and output reports. However, this is challenging considering that the tagging could be configured as ‘multiple points to a single line item’ and / or ‘single point to multiple line items’ – based on factors such as the granularity of the legacy and new spreading platforms, and type of platforms.

  How a last-mile adoption partner can help: The partner can perform detailed line-item and output-driven tagging to ensure there is no variance in outputs. This is underpinned by a detailed consideration of legacy and off-the-shelf spreading bundle, impact of spreading on cash flow, risk rating scorecard and any specific quantitative analysis.

  Where there is variance due to business-specific requirements or disparity in platform input and output, the partner captures this in the new methodology document to ensure all end users have a common understanding.

• Evaluating the efficacy of credit analysis: While the IT team usually performs User Acceptance Testing (UAT) to evaluate platform migration and check the efficacy of the business rules, equally important is to ascertain if the output generated is in line with the expectations from credit analysis. For example, a change in platform, tagging and methodology could trigger an altogether different credit ratio even when there isn’t any movement in the customer’s finances.

  How a last-mile adoption partner can help: The partner can leverage its consulting expertise, bringing together experienced credit management specialists to develop a detailed report that captures the outcomes and the underlying factors. This report sheds light on the cascading impact to better contextualize the implications and remediation.

• De-risking migration: A change in the credit management system and other working platforms can pose a risk to business-as-usual operations and business acquisition / mergers that demand a single source of truth. Consistency in credit analysis fundamentals – spreads, risk ratings and covenants – across the enterprise is key to driving improved decision-making.

  How a last-mile adoption partner can help: The partner can bring into play its industry expertise and experience in change management to support these highly sensitive and time-bound activities.

• Addressing process gaps: The migration to a new credit management system can understandably result in teams grappling with issues and bugs. The risk is that some of these problems get identified only at a much later stage – when the credit officer has already started using the new system.

  How a last-mile adoption partner can help: It is important to constantly monitor and share feedback on process gaps – across workflow mechanisms, case assignments and approval. The ideal partner, equipped with a practical understanding of the platform, could leverage industry best practices and experience to establish an effective, standardized and integrated process.

In summary, as paramount as it is for banking organizations to take advantage of new-age credit management platforms, they should not lose sight of the potential challenges that a change of this nature brings – especially from the perspective of the credit officer. Collaborating with a last-mile adoption partner can help nip the challenges in the bud and prevent them from snowballing into major hindrances.

Are you grappling with the last-mile adoption of your new credit management platform? Contact us