Non-performing loans are an area of concern for banks especially in tough economic times. NPL portfolios will impact profitability in two areas: 1) loss of the value of the loan not recovered and 2) ongoing management using labor intensive and manual workflows.
By digitizing the management using Crowd Valley’s back office, we have seen institutions improve portfolio performance nearly overnight by directly addressing:
1. Correct Segmentation and Client Profiling
Higher quality segmentation means you can take better risks. Homogeneous groups within the portfolio can be easily collected and segmented by:
Moving this process online allows the reduction of costs by applying predefined actions to each client segmentation (low, medium, high value) significantly lowering manual processes and time to recovery.
2. Data consolidation
Collateral data is a good example of how managers of non-performing loan portfolios can better reduce losses. Using analytic algorithms, consolidating source data from client profiles, digitized agreements and sources such as changes in collateral value allow for overall better management leading to reductions in unexpected devaluations.
3. Collaboration
Data collaboration between teams ensures there is no value leakage. This can include incomplete or missing documents, issues with non compliance, lack of track record information and problems with collateral data. Having your team use a single centralised admin portal, these gaps can easily be identified and resolved. It also solves the problem of access to data if a team member is unavailable.
Product collaboration between commercial units is a direct byproduct of data consolidation and collaboration. By offering the correct product for each client segment, performance, primarily repayment rate is directly increased.
4. Early Warning Triggers
Combining data sources and internal underwriting policies, early warning systems and forward looking models are created to provide portfolio managers with visual insight into portfolio quality. Using modular communication triggers, managers can analyze and react to portfolio changes in real time. Strategies can easily be monitored, tested and changed in-house within hours. Quick response through visualization and the ability to rapidly adjust give clients an inherent advantage over traditional more manual methods.
We at Crowd Valley are committed to future changes in financial services with a proven track record in helping our clients identify opportunities and enter new markets in a very meaningful way.
If you are looking to capitalise on operational efficiencies within the fintech space, get in touch with us at Crowd Valley to leverage our industry leading Cloud Back Office.
Sources:
Non-performing loans management: 7 initiatives to extract value, Accenture:
http://fsblog.accenture.com/banking/non-performing-loans-management-7-initiatives-to-extract-value/
Best Practices for Effectively Managing Non-Performing Loans, Alvarez & Marsal:
https://www.alvarezandmarsal.com/sites/default/files/sidebar-callouts/am_nplpublication_f_pages.pdf
1. Correct Segmentation and Client Profiling
Higher quality segmentation means you can take better risks. Homogeneous groups within the portfolio can be easily collected and segmented by:
- Loan Type
- Location
- Historical Performance
- Identification of collateral
- Characteristics
- Investment requirements
Moving this process online allows the reduction of costs by applying predefined actions to each client segmentation (low, medium, high value) significantly lowering manual processes and time to recovery.
2. Data consolidation
Collateral data is a good example of how managers of non-performing loan portfolios can better reduce losses. Using analytic algorithms, consolidating source data from client profiles, digitized agreements and sources such as changes in collateral value allow for overall better management leading to reductions in unexpected devaluations.
3. Collaboration
Data collaboration between teams ensures there is no value leakage. This can include incomplete or missing documents, issues with non compliance, lack of track record information and problems with collateral data. Having your team use a single centralised admin portal, these gaps can easily be identified and resolved. It also solves the problem of access to data if a team member is unavailable.
Product collaboration between commercial units is a direct byproduct of data consolidation and collaboration. By offering the correct product for each client segment, performance, primarily repayment rate is directly increased.
4. Early Warning Triggers
Combining data sources and internal underwriting policies, early warning systems and forward looking models are created to provide portfolio managers with visual insight into portfolio quality. Using modular communication triggers, managers can analyze and react to portfolio changes in real time. Strategies can easily be monitored, tested and changed in-house within hours. Quick response through visualization and the ability to rapidly adjust give clients an inherent advantage over traditional more manual methods.
We at Crowd Valley are committed to future changes in financial services with a proven track record in helping our clients identify opportunities and enter new markets in a very meaningful way.
If you are looking to capitalise on operational efficiencies within the fintech space, get in touch with us at Crowd Valley to leverage our industry leading Cloud Back Office.
Sources:
Non-performing loans management: 7 initiatives to extract value, Accenture:
http://fsblog.accenture.com/banking/non-performing-loans-management-7-initiatives-to-extract-value/
Best Practices for Effectively Managing Non-Performing Loans, Alvarez & Marsal:
https://www.alvarezandmarsal.com/sites/default/files/sidebar-callouts/am_nplpublication_f_pages.pdf
About the author - Pete Woodard
Pete has worked within Fintech since 2013 across a broad range of security applications serving multiple verticals. He has scaled Google Venture backed startups in the AdTech space before joining Crowd Valley. Originally from Canada with a education background in Mechanical Engineering and Marketing. Pete has helped to open up new global markets in the digital investing and lending space. When not firmly rooted in the London FinTech scene he enjoys travelling, always mixing business with pleasure. He has spoken to over 1000 digital investing entrepreneurs, which makes him a valuable resource for trends in new security models.
Pete has worked within Fintech since 2013 across a broad range of security applications serving multiple verticals. He has scaled Google Venture backed startups in the AdTech space before joining Crowd Valley. Originally from Canada with a education background in Mechanical Engineering and Marketing. Pete has helped to open up new global markets in the digital investing and lending space. When not firmly rooted in the London FinTech scene he enjoys travelling, always mixing business with pleasure. He has spoken to over 1000 digital investing entrepreneurs, which makes him a valuable resource for trends in new security models.
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