Achieving Credit Risk Decisions in Milliseconds

Businesses move from manual to digital solutions to achieve a range of goals. Having recently masterminded Estonian bank Bigbank’s own digital transformation, Agur Jõgi, chief technology officer says that credit and lending providers are striving to deliver a better experience to customers, with speed a primary goal.

“Old manual processes can take days – or more - to deliver a credit risk decision,” says Agur. “This can be slashed to under a second. Not only that, advanced technology and risk analytics can also deliver improved customer insight and the flexibility to make updates to credit risk management models without development.”

Agur offers this advice to businesses embracing a digital transformation:

1. Think about the customer experience and service – with a single digital platform that automates data inputs and streamlines application and underwriting processes, if a customer fits the profile, the automated yes or no answer can take just milliseconds
2. Make best use of analytics to know your customers - scoring models and decision rule sets can become complex. When manual processes execute the rules, it’s hard to achieve a business-wide view of decision-making. And this is important, not only for consistency but also to reveal where opportunities might lie. The transparency of a digital solution allows businesses to do much more with data. Not only to manage risk but also to provide insight for customer segmentation. This insight helps refine existing models, scope new ones, make customer predictions and design propositions. Refinements, changes and new additions can be simply added to the model
3. Gain the freedom to make changes - in Estonia, developers are at a premium. Estonia has wholeheartedly embraced the digital revolution – it was the first country to introduce online voting in a general election ten years ago and 98 percent of banking transactions are now conducted through the internet. IT is the fastest growing sector in the country, generating up to 15 percent GDP and while Estonia is proud of its progression, for businesses it means that developers are in high demand. A digital credit risk management solution that doesn’t require IT experts every time an update is needed is ideal in Estonia and everywhere else for that matter, for the time and cost savings it provides. Risk managers taking care of the models themselves can implement rule changes quickly.This isn’t only efficient, it also means the underwriters – the people with the insight, knowledge and expertise – are in control. If a fix is needed, with a visual solution they can see where the model needs attention and react immediately. No lengthy analysis and referral to a committee for resource approval to make updates. They simply develop, test, implement and launch amendments themselves, then monitor and adjust as necessary. It’s a whole lot more agile
4. Nurture teams through the change – with digitization comes a change in culture, skills and routines. It’s a new way of working and this will impact on individuals and the working environment. Teams need to be supported as they adapt, through effective training and communications.

Technology can transform credit risk management to help meet today’s customer expectations of simplicity, speed and reliability. Through the right solution choice, effective implementation and a supportive rollout, it can also improve customer segmentation and alleviate the time and cost pressures of model changes, ultimately equipping the business for growth.