Vision 2014: Big Data for Business Lending

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According to IBM, 2.5 quintillion bytes of data are created every day (enough to fill more than 531 million DVDs). Most bankers have no idea where to start when it comes to understanding their commercial portfolio in terms of Big Data. Sure, it’s easy to get information from the core, but what about all the valuable information that’s in spreadsheets, disparate systems and lenders’ file drawers? Learn how a top-performing bank is dealing with the need for customer-centric data for improved sales, underwriting and employee engagements.

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Vision 2014: Big Data for Business Lending

  1. 1. ©2014 Experian Information Solutions, Inc. All rights reserved. Experian and the marks used herein are service marks or registered trademarks of Experian Information Solutions, Inc. Other product and company names mentioned herein are the trademarks of their respective owners. No part of this copyrighted work may be reproduced, modified, or distributed in any form or manner without the prior written permission of Experian. Experian Public. Big Data for business lending Sharry Ditzler Washington Trust Bank Connie Miller Washington Trust Bank #vision2014 Didi Frohardt Experian
  2. 2. 2©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.
  3. 3. 3©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.  Big Data definition  Top-3 business lending strategies  Washington Trust Bank story  Getting started Agenda
  4. 4. 4©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Technical definition Business lending definition Big Data definition The definition of Big Data refers to groups of data that are so large and unwieldy that regular database management tools have difficulty capturing, storing, sharing and managing the information“ ”– Yourdictionary.com Data locked in silos and the lack of common customer identifier that could link accounts and services “ ” – Wall Street Journal
  5. 5. 5©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Loan growth  Internal and external 1: Top-3 business lending strategies
  6. 6. 6©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Risk management  Relationships and exposure  Regulatory compliance and “suggestion” ► Stress testing ► Concentration reporting 2: Top-3 business lending strategies
  7. 7. 7©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Top-3 business lending strategies Efficiency  Disparate systems  Redundant data entry 3:
  8. 8. 8©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Commercial trends 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 Billions Commercial and industrial loans
  9. 9. 9©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Commercial trends 1,020 1,030 1,040 1,050 1,060 1,070 1,080 1,090 1,100 1,110 1,120 Billions Commercial real estate loans
  10. 10. 10©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Commercial trends 0 100 200 300 400 500 600 Billions Construction loans
  11. 11. 11©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Commercial trends 56.63 65.56 59.68 62.19 70.82 72.79 73 72.26 80.69 87.25 0 20 40 60 80 100 >1T 100 - 999 B 50 - 99 B 5 - 49 B 1 - 4.9 B 500 - 999 M 250 - 499 M 200 - 249 M 50 - 99 M 0 - 49 M Efficiency ratio (as of 12/31/2013)
  12. 12. 12©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.
  13. 13. 13©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Washington Trust Bank So, how can you do it in real life? Q:
  14. 14. 14©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.  $4.37 billion in assets (as of 12/31/2013)  112 years old, privately held, commercial bank  Serving the following primary markets: ► Washington, Idaho, Oregon  $3.0 billion total loan portfolio ► 8-9% loan growth FYE2013 – expected again for FYE2014 Washington Trust Bank Spokane, WA C&I Agriculture CRE/C&D Residential Consumer $835 M $208 M $1.2 B $611 M $101 M 28% 7% 42% 20% 3%
  15. 15. 15©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.  Core system conversion ► Based on specific bank goals  Disparate systems converted or integrated into new platform ► Third party relationship ● Credit card ● Trust ● Cash management ● Investments ● Online banking ● CDARS ● Corporate contribution system ● Merchant Washington Trust Bank Disparate systems
  16. 16. 16©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.  Construction loans  Flooring – unit pricing  Many access databases and spreadsheets ► Auditing ► OREO ► SAD ► HLC ► Loan review ► Commercial incentive ► CRA tracking ► Market research – MCIF  Large data repository Washington Trust Bank Disparate systems
  17. 17. 17©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.  In house data warehouse ► Core to data warehouse balancing in place  Provides a more comprehensive and accurate data source  Data Integration to advisor platform  Everyone uses the same data points ► Consistency in reporting ► Same version of the truth ► Data naming standards/data use standards  Standard reporting package driven from senior management down through organization  Consistently deploy reports from one portal  Reduces custom report requests Washington Trust Bank Data warehouse
  18. 18. 18©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.  Converted access databases and spreadsheets now in advisor/originations ► Cash management ► Commercial incentive ► OREO ► Special assets ► Home loan center ► Compliance ● CRA ● SBA 504 reporting ► Loan review ► Market research – MCIF Washington Trust Bank Experian solutions – effected
  19. 19. 19©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.  Data consistency with Jack Henry  Custom report requirements ► Data at user fingertips – data queries on the fly ► Scheduled reports for historical – retention purposes  Relationship groups ► SBLF reporting ► Relationship and exposure reporting Washington Trust Bank Experian solutions – effected
  20. 20. 20©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.  Complete picture of client from prospect to special assets/payoff  Portfolio risk management ► Complete picture of borrower when trigger fires ► Run triggers across the bank portfolio – all consumer loans ► Small business loans Washington Trust Bank Experian solutions – effected
  21. 21. 21©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Continuing to bring data together in one place…  2014 and beyond ► Balance advisor platform to data warehouse ► Advisor data to data warehouse – for data not in Jack Henry ► Credit memo – with analysis – ability to pull key points out of credit memo ● FTE ● Revenue ► Stress testing data ► Appraisal data ► Pricing – current in house developed system ► ALLL Washington Trust Bank What is left to do?
  22. 22. 22©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. The results!
  23. 23. 23©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. The results… 59.02 64.57 65.84 75.48 63.82 67.58 68.1 71.12 50 55 60 65 70 75 80 2011 Q1 2011 Q2 2011 Q3 2011 Q4 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 Efficiency ratio Washington Trust Bank Peers
  24. 24. 24©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. The results… 2.65 2.72 2.71 2.64 2.68 2.84 2.9 2.9 2.94 3.08 3.16 3.18 0 0.5 1 1.5 2 2.5 3 3.5 11Q1 11Q2 11Q3 11Q4 12Q1 12Q2 12Q3 12Q4 13Q1 13Q2 13Q3 13Q4 Total outstanding loans
  25. 25. 25©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. The results… 79.2 56.7 54.2 56.8 43.5 39 35.8 39.3 36.6 33.8 34.5 31.6 0 10 20 30 40 50 60 70 80 90 11Q1 11Q2 11Q3 11Q4 12Q1 12Q2 12Q3 12Q4 13Q1 13Q2 13Q3 13Q4 Total non-performing loans
  26. 26. 26©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Strategies  Determine future state/vision ► Senior management buy-in  Disparate system data review ► Diagram/inventory of architecture of all systems/applications ● Understanding where data is residing and interfacing with key data stores ► Consolidate and/or eliminate systems/spreadsheets/databases that aren’t relevant Getting started!
  27. 27. 27©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Strategies  Prioritize data required to support business processes/vision ► Determine the data repository to hold the data  Integrate information ► All customer data in one system  Q&A Getting started!
  28. 28. 28©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. For additional information, please contact: Didi.Frohardt@experian.com Hear the latest from Vision 2014 in the Daily Roundup: www.experian.com/vision/blog @ExperianVision | #vision2014 Follow us on Twitter
  29. 29. 29©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Visit the Experian Expert Bar to learn more about the topics and products covered in this presentation.

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