Vision 2014: Growth-efficiency-and-compliance-with-a-dash-of-automated-decisions

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Vision 2014: Growth-efficiency-and-compliance-with-a-dash-of-automated-decisions

  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. Growth, efficiency and compliance with a dash of automated decisions — Umpqua Bank small-business case study Beth Ziegler Umpqua Bank Joel Pruis Experian #vision2014
  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. Execution Ideas are easy. It’s the execution of ideas that really separates the sheep from the goats… “ – Sue Grafton, American Novelist …or maybe the Seahawk’s from the Broncos. ”
  4. 4. 4©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Changing conditions 95.00 100.00 105.00 110.00 115.00 120.00 2010Q1 2010Q3 2011Q1 2011Q3 2012Q1 2012Q3 2013Q1 2013Q3 Experian / Moody’s Analytics Small Business Credit Index
  5. 5. 5©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Region map West South Midwest Northeast
  6. 6. 6©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Delinquency trends 5% 7% 9% 11% 13% 15% 17% 19% 21% Q1 2013 Q2 2013 Q3 2013 Q4 2013 West South Midwest Northeast Total Source: Experian Metro Business Pulse
  7. 7. 7©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. App volume index (number of apps) All credit types 0.60 0.70 0.80 0.90 1.00 1.10 1.20 1.30 1.40 1.50 1.60 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 IndextoQ42012 West South Midwest Northeast Total
  8. 8. 8©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Approval percent All credit types 40% 50% 60% 70% 80% Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 West South Midwest Northeast Total
  9. 9. 9©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. 40% 50% 60% 70% 80% Q4 2012 Q2 2013 Q4 2013 Approval percent All credit types West South Midwest Northeast Total Approval vs. delinquency 5% 7% 9% 11% 13% 15% 17% 19% 21% Q1 2013 Q2 2013 Q3 2013 Q4 2013 Delinquency trend
  10. 10. 10©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Typical decline in small business since 2008 High charge-offs Fewer applications approvedFI response: Require financials on all applications Result: Slower response times FI response: Increase % of approved applications. ”Make it work” Result: Slower response times Fewer applications submitted FI response: Customize product terms and conditions Result: Lower Quality Applicants No change in portfolio performance FI response: Small business? FI = Financial institution
  11. 11. 11©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.  Application requirements  Product terms and conditions  Service level agreements  Risk management Critical factors in execution
  12. 12. 12©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Umpqua (Sterling) Bank Case Study Beth Ziegler Consumer and Small Business Underwriting
  13. 13. 13©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.
  14. 14. 14©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Organizational alignment  Retail banking – 175 stores delivering consumer and small business loans ► Personal bankers ► Branch managers  Centralization of credit and origination teams  Separate consumer processing lanes for real estate and non-real estate loans / lines of credit ► Real estate: ● Application  underwriting  title and appraisal  documents  funding and boarding  file review and imaging ► Non-real estate: ● Application  underwriting  document  funding and boarding  file review and imaging  Separate small business processing lane Retail banking and lending operations
  15. 15. 15©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Systems utilized  Core system is FIS IBS Insight  Applink and B2C Origination for consumer lending ► Experian  Applink & B2B Origination for small business lending ► SBSS  Harland Laserpro for loan documents ► Interface from B2C / B2B  DocStar is currently used for imaging, moving to VisionContent/FIS  BHOS Daily Download Access Database for reporting Lending systems
  16. 16. 16©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Small business term loan  CD secured loan  Equipment / vehicles / general assets Secured Business Expressline  CD secured LOC  Evergreen up to $100,000  Three-year maturity in excess of $100,000 Commercial real estate loan  Owner-occupied CRE  15-year fully amortized or 10-year with 25-year amortization Unsecured Business Expressline  Evergreen up to $100,000  One-year maturity in excess of $100,000 Loan products Small business
  17. 17. 17©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Application volume
  18. 18. 18©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. B2B and Applink differentiators  Experian-hosted  CKE lookup from core system  Auto decisioned products  NADA integration  Reporting ► Un-submitted applications ► Approval / decline letters ► Credit memo  Product selection automatically populates collateral  Hint text appears as fields are completed  Simplified HMDA  Doc prep tab Baker Hill® Applink and Origination
  19. 19. 19©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Applink Testimonial
  20. 20. 20©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Automated decisioning on all small business products up to certain dollar amounts, setting credit criteria utilizing data from our database and industry standards  Ability to evaluate risk and adjust accordingly using quarterly reports ► Vintage analysis ● Consistent comparison of payment performance based upon the time since underwriting / origination ► Origination score to payment performance ● Comparison of score at origination to the subsequent 12-24 month payment performance ► Population stability ● Consistency of score distribution within application/product population submitted Strategy
  21. 21. 21©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Automated decisioning on all small business products up to certain dollar amounts, setting credit criteria utilizing data from our database and industry standards  Appropriate monitoring and automatic renewal of lines of credit ► Preparing to implement portfolio risk monitoring ► Allows us to be proactive vs. reactive with our customer base ► More customer friendly renewal process ► Monitor relationship for potential cross sell  Build in regulatory quality and without adding excessive resources  Imaged file from beginning to end  Custom letters and documents with Autotag Strategy
  22. 22. 22©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. For additional information, please contact: Joel.Pruis@experian.com Hear the latest from Vision 2014 in the Daily Roundup: www.experian.com/vision/blog @ExperianVision | #vision2014 Follow us on Twitter
  23. 23. 23©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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