01 December 2015


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Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.

New Year Resolutions for Prudent Lending

08 January 2013  |  1796 views  |  0

2013 holds tremendous promise to the financial institutions that appreciate the difference that technology can make in risk management.

Here at Scorto we have put together a list of New Year’s resolutions for lenders. The five commitments below will help leaders re-think their tactics for loan origination and take loan application processing to a new level.

1. Enhance decisioning with analytical and scoring models. 

Prudent growth and disciplined risk management in lending is impossible without custom scoring models. A robust loan origination solution should not only allow you to upload scorecards in PMML format, but it should also support research-driven tuning and maintenance of the scoring models, enabling you to monitor scorecard performance and ensure the highest accuracy of the models.

2. Use visual editor to build and manage the decision flow.

Amid increasing demands from regulators and pressure from competitors, lenders need to become more agile, and learn to adopt and instantly respond to changes. You need to be able to test different credit policies in order to identify the best one.

Automated loan application processing is becoming increasingly complex. Maintaining the perfect decisioning and operational flow can become an intricate journey, unless you’re provided with a simple visual interface for managing your own decision flow.

3. Ensure seamless connection with third party data; avoid dependence on a single data source.

Despite the hype surrounding “Big Data”, enhancing decisioning with information from multiple sources is still perceived as a luxury by certain executives. Looking ahead to 2013, success awaits those lenders who will use diversified data sources to achieve a 360-degree view of their customer while avoiding over reliance on any one particular data source.

4. Develop the right balance between human mind and advanced intelligence.

Augmenting analytics with human intellect poses a great challenge. Rod Nelsestuen, Research Director for CEB TowerGroup, stresses that it’s ultimately important to simplify the use of statistical models in the decision processes: "As we account for the behavioral factors, banks have to figure out how to actually deliver better decision-making. It's not about the models or a raw set of information …the institutions want to ensure that users that don't have to understand [the complex scoring techniques] to be able to use them."

5. Team power: implement flexible and efficient connections between those involved in the decision process.

Accurate business analysis is essential to design the ideal loan application processing flow. However, it’s equally important to streamline decision flow and to encourage team collaboration and interactions across departments and roles.

L. T. (Tom) Hall, CEO & Transformational Change Leader at Resurgent Performance, Inc. is giving a lot of wonderful recommendations on improving an operational culture: reward sound values and behaviors, establish a cultural framework and corporate ideals, and deepen the emotional connection within your team.


About 45% of people will have New Year’s resolutions this year, according to a recent study published in the University of Scranton’s Journal of Clinical Psychology. The top three are losing weight, becoming more organized, and better managing their finances.

Very often, the things we struggle to improve are just a consequence of certain behavioral patterns. It is always wiser to address the causes, rather than the symptoms.

This principle applies to business and risk management as well as all other aspects of life. Instead of implementing new tweaks and improvements, make a commitment for 2013 to introduce a new, forward thinking and intelligent approach to lending.

TagsRisk & regulationRetail banking

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