Intelligently Transforming Credit Operations for a Banking Major

This is our story of re-structuring the commercial credit operating model for a prominent bank – standardizing the end-to-end process, delineating roles and responsibilities, and technologically integrating operations to reduce the cycle time.

As we know…

For banks, effective credit lifecycle management is crucial. It involves assessing and mitigating credit risks, optimizing lending strategies, ensuring regulatory compliance and maintaining overall financial stability. However, without a streamlined approach to handling commercial credit portfolios, banks can encounter inconsistent and delayed risk assessment, poor data quality, high operational costs, regulatory non-compliance risk, inefficient underwriting processes, portfolio management difficulties, credit losses and a compromised customer experience.

To mitigate these challenges, banks must embrace standardized and centralized credit risk assessment models aligned with industry best practices and regulatory guidelines.

The challenge for the client was…

The absence of a well-defined and standardized commercial credit operating model, leading to operational inefficiencies and hindered credit lifecycle management. The prolonged turnaround times for credit processes resulted in elevated overdue credits.

A notable issue was the lack of a clear and logical division of credit analysis responsibilities between the Relationship Manager (RM) and the Credit Analyst (CA) / Portfolio Manager (PM). This ambiguity led to inconsistent review documents, multiple handoffs, increased time spent by the Credit Officer (CO) and a longer end-to-end cycle time. Furthermore, both RMs and CAs / PMs found themselves mired in non-judgmental tasks, exacerbating the strain on operational efficiency.

This constrained bandwidth of the RMs impeded the bank's ability to attract new business opportunities. Inconsistencies in the review papers due to non-standardized processes further deteriorated the overall quality of credit assessments. Moreover, inadequate database management practices resulted in numerous inefficiencies across operations.

Stepping in as a strategic advisor…

WNS leveraged its deep industry expertise and credit management capabilities to thoroughly analyze the client’s existing credit lifecycle processes. Subsequently, we proposed a meticulously re-structured operating model aimed at standardizing the overall process. We advocated adopting a Center of Excellence (CoE) model, segregating roles and responsibilities, harnessing credit management platform expertise and outlining a technology roadmap to facilitate integrated and best-in-class operations.

As part of the end-to-end operating model re-design, we undertook the following steps:

We introduced, piloted and successfully executed the PM support model, segregating and defining responsibilities in the overall value chain to improve efficiency and quality.

• Complex Periodic Activities:

  Facilitated seamless support for periodic complex activities, including annual, half-yearly and quarterly reviews. Deployed dedicated WNS PMs directly aligned with onshore PMs. They were pivotal in load balancing, proficiently handling additional volumes or activities within the PM buckets. Their flexibility and expertise were instrumental in addressing diverse needs across different buckets, ensuring minimal overdues well within the acceptable limit and effectively managing risk across the portfolio. This strategic assistance enabled onshore PMs to focus on portfolio growth and overall bank development.

  

  Figure 3: Post-WNS Operating Model

• Routine Daily Activities:

  Oversaw daily activities, including document collection, financial spreading and covenant calculation, among others.

  • Monitoring & Controlling CoE

    Designed a centralized monitoring and control function to meticulously manage all daily activities. WNS CoE streamlined the daily elementary activities, creating a value chain that initiated with collecting and storing reporting documents, extending to financial spreading and covenant testing for all documents. This approach ensured ample bandwidth for onshore PMs to focus on more complex activities.

  • Transforming Document Collection & Spreading with Intelligent Automation

    • Employed Optical Character Recognition (OCR) to meticulously extract information from diverse financial documents, transforming it into a structured format.

    • Harnessed Artificial Intelligence (AI) to intelligently align keywords with corresponding sections in Excel, enhancing the precision and efficiency of the data organization process.

• Ad-hoc Activities / One-time Remediation:

  Led strategic initiatives for ad-hoc / one-time remediation efforts, addressing longstanding challenges related to legacy data management issues.

  • Transitioning to nCino Banking Platform:

    Acted as the “last-mile” implementation partner, facilitating the client’s transition from multiple legacy platforms to nCino.

    • Analyzed nCino platform requirements on commercial credit underwriting

    • Reviewed policies and procedures for credit underwriting

    • Analyzed variance on outcomes of credit scoring against legacy and new platforms

    • Updated 215K null data points for 15K customers within three months

    • Ensured seamless migration of one spreading model to four distinct models on nCino

    • Strengthened controls across spreading, risk rating and credit memos

    • Facilitated faster ROI through accelerated adoption

  • Covenant Cleanup:

    We transitioned the end-to-end covenant monitoring process from the legacy SharePoint platform to nCino. Simultaneously, we migrated the covenant data from a newly acquired bank, previously managed on a separate platform, into the nCino system. This involved meticulously aligning all data in a standard format to meet nCino requirements. The project team ensured the cleanup and setting up of all covenants within nCino in line with the loan agreement.

The re-structured operating model enabled…

The client to transform its credit operations, driving enhanced operational efficiency, reduced turnaround times and improved credit quality. The innovative PM support model enabled RMs to dedicate more time to customer-centric activities, leading to higher-quality credit papers due to clearly defined responsibilities at every stage of the credit lifecycle.

Tangible benefits included:

Reduced cycle time – from

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Streamlined cycle time led to a significant drop in overdue percentage – from

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