Invest in your loan review process and get value beyond compliance

3/18/2021
Invest in your loan review process

Many loan review and credit risk review departments at financial services companies know their loan review process has inefficiencies. But professionals within those programs are too focused on their day-to-day work to adjust and fully understand the impact of those efficiency issues. Loan review directors and analysts know the scope of this problem all too well – they’re the ones stuck reviewing loans while they deal with a mountain of manual reporting work and administrative tasks.

However, chief risk officers (CROs) and other decision-makers often end up removed from the day-to-day grind of a loan review department. So executive leaders don’t always understand the extent to which their best credit risk review specialists are bogged down by inefficiency – and how that inefficiency holds back the entire organization.

Loan review professionals can’t do their best work when they’re drowning in administrative tasks

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 Due to outdated architecture, limited integration with other systems, and lack of automation, these loan review platforms often fail to improve efficiency compared to simple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.

For too many loan review departments, lack of investment and lack of production become a vicious circle

Lack of investment and production for loan review departments

Many CROs and other decision-makers at financial services companies look at loan review and see a non-revenue-generating function within risk management. And when you look at loan review this way, it becomes difficult to justify investment in your program.

This attitude toward loan review is pervasive and even relatable, but it’s also misguided. And this limited perspective exists because business leaders at many organizations have never seen loan review generate the types of meaningful insights and reporting that highlight risk, inform strategy, and help the business grow.

Why not? Because the seasoned loan review specialists who could provide those insights spend all their time updating spreadsheets and database entries instead.

So, credit risk review programs don’t receive investment because they don’t create value for the organization, and they can’t create value for the business because they don’t receive investment. It’s the definition of a vicious circle.

With the right tools in place, your loan review program can deliver insights and information that go far beyond simple compliance

Loan review program

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

We couldn’t find the right loan review software in the market, so we created it

Loan review software

Crowe has years of experience delivering loan review services for banks and other financial services companies, so we not only understand the challenges loan review directors face but had to tackle those challenges ourselves. When we looked to the market for a loan review software platform, we didn’t find an option that met our needs and expectations, so we had to build one.

Our credit and loan review specialists worked with our technology team to create Crowe Credit360 for Loan Review Departments – the innovative, scalable loan review software that’s built by loan reviewers for loan reviewers. Before we brought this solution to market, our own loan review team spent a decade using it successfully and refining it. And we’re still making it better with continual updates and enhancements.

Learn more about our loan review software for banks

To learn more or schedule a no-obligations demo, visit the Crowe Credit360 for Loan Review Departments webpage.

Let’s connect

Get in touch to learn more about how you can benefit from our experienced team and cutting-edge loan review software.
Guilio Camerini
Giulio Camerini
Principal
Steve Krase
Steve Krase