Mending Lending: Trends &Best Practices to ImproveLoan ProcessingDeb Miller, Director of Industry Marketing@DebsG360      ...
Today’s Discussion     Industry     Executive    Best Practices    Trends in   Survey Says…   in Operational     Lending  ...
What’s Impacting the Market?Lenders are facing significant challenges andincreasing complexity… Multiple sophisticated cha...
Loan Processing Performance  Complexity impacts cost, efficiency and cycle  times…                                        ...
The Regulatory Fog Continues Dodd-Frank hurdles will unfold throughout the decade…                             Category  ...
Loan OriginationCosts Remain High and are a Concern…                                                                      ...
Summary: Lending Institutions Face StrongMarket Forces  Uneven growth prospects across loan products and   country market...
Lending Institutions Are Using Technology to Respond to their ChallengesTop 10 Technology Initiatives for Consumer Lending...
Today’s Discussion     Industry     Executive    Best Practices    Trends in   Survey Says…   in Operational     Lending  ...
Survey Results:Trends inOptimizing LoanProcessingMay 2012 Peer SurveyConducted by GatePoint Research                      ...
Why do a survey?Get a snapshot of the challenges and the responses…                                          BPM          ...
Who participated in the survey?  Line of   Information     Loan        Branch        Other Business   Technology    Operat...
Survey Demographics: Institutions          Credit Union   Other              5%          9%     Community  Global Bank    ...
SurveyQuestion      PerformanceSurvey Question:How would youdescribe your currentloan processingenvironment?              ...
Loan performance environment                         8%   Excels    12%                                          Lagging t...
InitiativesSurvey Question:Do you have a currentinitiative to improveloan processingworkflow?                             ...
Do you have a current initiative to upgrade or improvethe loan processing workflow?              39%                      ...
ConcernsSurvey Question:In what lending areasare you mostconcerned aboutcurrent performance?                              18
In what lending areas are you most concerned aboutcurrent performance?(Check all that apply)                              ...
PrioritiesHow did the surveyresponders rankpriorities for improvingloan processing?                           20
Priority #5          Improve    managementvisibility into the           process                      21
Priority #4   Remove paperfrom the process               22
Loans 5¢      Priority #3Reduce the cost of processing a loan                     The Loan Processor                      ...
Priority #2     Reduce loanprocess cycle time                     24
Priority #1Optimize and continuously improveprocesses across the business                                    25
Today’s Discussion     Industry     Executive    Best Practices    Trends in   Survey Says…   in Operational     Lending  ...
Leaders are effectively controlling cycle timeand costs…                    Loan Origination Cost Benchmark               ...
Case Study: A Major National Bank                          Cost of processing a loan > benchmark  Problem                ...
Focus on Achieving 3 Key Goals                          Improve                         Customer                         E...
Loan Processing Solution                                                                    Where is my loan              ...
Deliver Productivity Results For KeyPersonas                    Automate for data                                         ...
Loan Processor Workbench Data specific                                        Document    to the                          ...
Thank you. Learn more about OpenText Business Process Solutions    for Financial Services   www.OpenTextBPM.comParticipate...
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Mending Lending: Trends & Best Practices to Improve Loan Processing

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Results of survey of North American bank executives reveals how to simplify, streamline and continuously improve the loans, credit and financing processes within their organizations. Visit http://www.OpenTextBPM.com for more information.

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  • regulatory framework in the U.S. through Dodd-Frank will unfold through the end of the decade. The same is true when you go to Europe and look at Basel III and the insurance industry Solvency. The rules are unfolding through the end of this decade. Up until 2020, standards will come in place, hurdles will have to be met, and that’s hurdles for both financial ratios and for reporting capability
  • Its all about the customer and the regulator
  •   
  • What we didStarting in April 2012, Gatepoint Research invited selected executives in North America to participate in a survey themed Trends in Optimizing Retail Bank Loan Processing. Candidates were invited via email and 100 executives have participated to date.More than 50% of responders rate their loan-processing environment as either lagging the competition or merely adequate.Continuous process improvement and reducing loan processing cycle times top the list of priorities among responders. More than 25% of responders see their loan processing personnel increasing.When considering current loan processing performance, responders most worry about commercial loans, followed by small business loans and mortgage loans.28% of responders are currently evaluating or planning an upgrade or improvement to their loan processing workflow.
  • Do a poll question here?
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  • Mending Lending: Trends & Best Practices to Improve Loan Processing

    1. 1. Mending Lending: Trends &Best Practices to ImproveLoan ProcessingDeb Miller, Director of Industry Marketing@DebsG360 1 Copyright © Open Text Corporation. All rights reserved.
    2. 2. Today’s Discussion Industry Executive Best Practices Trends in Survey Says… in Operational Lending Excellence 2
    3. 3. What’s Impacting the Market?Lenders are facing significant challenges andincreasing complexity… Multiple sophisticated channels Social Regulatory changes Mobile rising risk Multiple brands M&A Legacy systems Margins shrinking Consumer fears escalating Currency values fluctuate Silo’ed business structure Information and paper overload Complex products & customer relationships 3
    4. 4. Loan Processing Performance Complexity impacts cost, efficiency and cycle times… Drivers of complexity: Corporate Clients  Regulation  Internal processes Commercial Client  Number of players/actors  Number of channelsComplexity  Level of integration (a Mortgage Loan double-edged sword)  Existing IT architecture Consumer Loan  Existing application portfolio  Number of business Checking account partners Time Source: CEB TowerGroup 4
    5. 5. The Regulatory Fog Continues Dodd-Frank hurdles will unfold throughout the decade… Category Number of Rules Only 26% of these 281 rules are final Derivatives 36 44 13 2 95 38% of rules Consumer missed deadlines Protection 24 3 36 63 Finalized Consumer Banking protection rules are Regulations 4 36 4 44 Missed Deadline: on time   Proposed Mortgage 43 The “best” of Reforms 33 37 Missed Deadline: Not mortgage reform is Proposed yet to come Credit Rating Future: Proposed Agencies 3 14 4 22 Compliance change ABS Future: Not Proposed is a long-term 2 12 14 issue; so should Offerings FSI strategy, relying on automation for 0 20 40 60 80 100 cost efficiency Source: DavisPolk; Dodd-Frank Act Rulemaking Progress in Select Categories (March 1, 2012) 5
    6. 6. Loan OriginationCosts Remain High and are a Concern… 40% increaseU.S. Origination CostPer Loan 15% increase 7.5% increase 2007 2011 2007 2011 2007 2011 Automobile Home Equity MortgageSource: Federal Reserve Bank of New York; CEB TowerGroup.Note: Mortgage origination costs per loan are scaled at 10 times that of other costs to fit on graph. 6
    7. 7. Summary: Lending Institutions Face StrongMarket Forces  Uneven growth prospects across loan products and country markets  Impact of sovereign/banking crises on lending  Regulatory pressure on revenues and process  Declining consumer employment/income growth  Ongoing legal, delinquency and credit risks  Trust and high customer expectationsSource: CEB TowerGroup. 7
    8. 8. Lending Institutions Are Using Technology to Respond to their ChallengesTop 10 Technology Initiatives for Consumer Lending (2012)Compliance Integrated credit, Redefining and Data Enterprise-widetechnology to collateral, and restructuring management customer-centricreduce fraud risk core processing and foundation decisioning -regulatory risks assessment to IT and alignment for “next best manage risk and operations business action”) revenue goals intelligenceEnterprise Customer Optimized IT and business Channelcontent and lifetime product process experienceprocess profitability bundling, pricing, outsourcing for alignment andmanagement for measurement and positioning strategic cost personalizationcost takeout and and analysis managementefficientprocessingSource: CEB TowerGroup. 8
    9. 9. Today’s Discussion Industry Executive Best Practices Trends in Survey Says… in Operational Lending Excellence 9
    10. 10. Survey Results:Trends inOptimizing LoanProcessingMay 2012 Peer SurveyConducted by GatePoint Research 10
    11. 11. Why do a survey?Get a snapshot of the challenges and the responses… BPM Optimization of “broken” processes is driving BPM adoption in Financial Services 11
    12. 12. Who participated in the survey? Line of Information Loan Branch Other Business Technology Operations Operations Functions 27% 24% 14% 4% 31% 87% of survey responders are VP Level or above 12
    13. 13. Survey Demographics: Institutions Credit Union Other 5% 9% Community Global Bank Bank 12% 43% Regional Bank 31% 13
    14. 14. SurveyQuestion PerformanceSurvey Question:How would youdescribe your currentloan processingenvironment? 14
    15. 15. Loan performance environment 8% Excels 12% Lagging the Competition 33%& Smooth 45% Adequate EfficientOpenText Confidential. 15
    16. 16. InitiativesSurvey Question:Do you have a currentinitiative to improveloan processingworkflow? 16
    17. 17. Do you have a current initiative to upgrade or improvethe loan processing workflow? 39% 67% Actively involved or expecting a near term improvement initiative 18% 19% 14% 10% 17
    18. 18. ConcernsSurvey Question:In what lending areasare you mostconcerned aboutcurrent performance? 18
    19. 19. In what lending areas are you most concerned aboutcurrent performance?(Check all that apply) Student loans 73% Commercial loans Automotive 5% 19% 22%Small business loans 47% Personal lines of credit 30% 42% Mortgage Credit cards When considering current lending performance, responders worry most about commercial loans. 19
    20. 20. PrioritiesHow did the surveyresponders rankpriorities for improvingloan processing? 20
    21. 21. Priority #5 Improve managementvisibility into the process 21
    22. 22. Priority #4 Remove paperfrom the process 22
    23. 23. Loans 5¢ Priority #3Reduce the cost of processing a loan The Loan Processor 23
    24. 24. Priority #2 Reduce loanprocess cycle time 24
    25. 25. Priority #1Optimize and continuously improveprocesses across the business 25
    26. 26. Today’s Discussion Industry Executive Best Practices Trends in Survey Says… in Operational Lending Excellence 26
    27. 27. Leaders are effectively controlling cycle timeand costs… Loan Origination Cost Benchmark Low Avg High Laggard $5,600 $2,865 $750 $250 $75 Industry $53 Average $1,936 $505 $168 $3,405 $1,007 $260 $85 $31Best in class $1,210 Commercial Mortgage Home Consumer Credit Cards Equity LoanSource: CEB TowerGroup and OpenText BPS 27
    28. 28. Case Study: A Major National Bank  Cost of processing a loan > benchmark Problem  Cycle times are twice customer expectations  Need to manage error rates & improve customer satisfaction  BPM and Case Management to streamline the process and ensure compliance OpenText  Orchestrate and simplify loan Solution processor validation and exception handling  Dashboards for real-time visibilityOpenText Confidential. 28
    29. 29. Focus on Achieving 3 Key Goals Improve Customer Experience Enable Efficiency and Line of sight to Compliance business goals 29
    30. 30. Loan Processing Solution Where is my loan application? Have I balanced Customer the workload? Account Info What is happening in my dept?CaptureDocs Loan Application Loan Application Processor Underwriter is scanned and reviews loan reviews loan indexed Approved? Book Loan Rejected? Notify Customer Other Automate Docs Tasks 30
    31. 31. Deliver Productivity Results For KeyPersonas Automate for data quality and process compliance Support Staff Loan Proactively Processors address issues with non-value add Dashboards value-add Focus on enabling human judgment 31
    32. 32. Loan Processor Workbench Data specific Document to the viewerdocument and the case NotesIntegration to back end List of actions systems to be completed Alerts (e.g. for missing required documents within the package) 32
    33. 33. Thank you. Learn more about OpenText Business Process Solutions for Financial Services www.OpenTextBPM.comParticipate in the Global Lending Survey today! www.opentextbpm.com/lendingsurvey2012 33
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