Invest in your loan review process and get value beyond compliance

At most financial services companies, loan review professionals operate in one of two situations: They either have no dedicated loan review technology and perform their work using a mix of spreadsheets and databases, or they use some form of credit risk review software, often internally developed.

Loan review analysts who are stuck using simple spreadsheets might spend enormous amounts of time aggregating information, figuring out what work has already been done, and preparing reports. This highly manual and repetitive work not only taxes loan reviewers’ patience but also creates countless opportunities for inevitable human errors to compromise information – all at a time when regulators and financial statement auditors increasingly look to loan review work as a critical control.

However, loan reviewers who have access to dedicated software don’t necessarily have it much better. Both custom-built software programs and solutions purchased in the marketplace rarely receive regular updates. So loan review professionals often rely on systems that haven’t been refreshed or meaningfully maintained over the years – or at all. Due to outdated architecture, limited integration with other systems, and lack of automation, these loan review platforms often fail to improve efficiency compared to simple spreadsheets.

Because loan review analysts spend so much time on administrative work, often they can review only one loan per day – or maybe two on their best days. That pace isn’t fast enough to keep up with the risk management demands of a growing loan portfolio or periods of increasing credit risk. Successful credit risk review departments should review their entire portfolio quarterly if not monthly – and the more dynamic the market, the more often they should reassess risk.

Loan review directors generally aren’t satisfied with this rate of production, but many lack the resources to improve their tools. In some cases, they might be forced to justify a lower loan review coverage or reduce the depth of review to increase productivity and meet loan coverage goals, all without compromising quality. But reduced depth and lower coverage inevitably compromise quality, so this amounts to an impossible demand on directors.

The way to break out of this circle is to invest in loan review technology that:

• Generates immediate and drastic reductions in the time required to compile data, sample loans, and generate reporting
• Provides data visualization capabilities that let analysts move beyond static reports and manipulate information in real time to identify risks
• Incorporates all your loan review team’s day-to-day needs, including planning, communication, and production monitoring, in a single integrated platform
• Harnesses the power of cloud computing to enable seamless remote work and collaboration

When your best loan review specialists have time to apply their expertise and experience, you’ll start to see what your loan review program can bring to the business beyond baseline regulatory compliance. Some of the most valuable benefits for the business can include:

• Enhanced reporting that gives your organization a deeper view into the nature and extent of risk in your loan portfolio
• Reduced regulatory and auditor pressure based on improved sampling, fewer compilation errors, more consistency in work product, and increases in the percentage of your portfolio reviewed, especially in areas of higher risk
• Insights into areas of your portfolio that previously went untouched due to your loan review team’s production limitations
• The ability to identify and correct recurring underwriting, loan structuring, and loan monitoring issues before they become systemic