Providing Credit Approval Support for a Leading Canadian Bank
A top-five Canadian bank wanted to manage the seasonal surge volumes associated with its commercial lending experience while managing regulatory requirements on time.
They needed a vendor with an in-country presence that could offer a strong risk evaluation analytics solution and a team that could scale on demand. Evalueserve’s analytics solution executed credit risk evaluations on an as-needed basis and met national regulations. Because the model was priced on transaction volumes and not seats, the solution reduced surge labor costs by 20 percent compared to other solutions providers. The solution met volumes of more than 50,000 loans.
The bank needed extra resources to provide credit reviews and risk evaluation support during high periods of surge requests, including quarterly and annual demands, seasonal needs, new borrower credit review, and special cases like government-funded stimulus packages. They needed end-to-end credit decision analytics capabilities that would scale on-demand at any of their locations based on need. The credit approval work would provide a first-level review to ensure trades and credits were completely covered within timelines before loan approvals.
A second level of risk protection – or a second line of defense – was also needed to ensure risk compliance by auditing 10% of all loans through an independent review. Providing independent oversights would provide relative valuation on discounted cash flow (DCF) models, too.
An ideal solution would perform the work to support different divisions of the bank for underwriting and data quality as needed. The bank needed performances that met needs with relative speed, leveraging the strengths of AI, machine learning, and automation to address all aspects of the commercial lending value chain, including spreading, risk ratings, covenant testing, credit review, and data quality assurance. To meet regulatory requirements, the optimal solution would also have an in-country geographic presence.
The bank had three core problems it sought to resolve:
|1) Struggling to ramp up staffing to meet quarterly and seasonal changes as needed without having full-time employees on board. Seasonal volumes created heavy flow moments that required staffing.|
|2) Containing the costs associated with having idle employees and low utilization rates during slow periods. This was expensive and unprofitable.|
|3) Meeting material non-public information (MNPI) regulations, which state that all customer financial data must stay in Canada. This forced the bank to use a vendor with an established in-country presence.|
Why Evalueserve & How We Helped
Evalueserve already had prior experiences with the bank in similar use cases. With a need to meet surges, the bank turned to Evalueserve to create a decision-ready analytics architecture and end-to-end capabilities that would meet the bank’s needs on-demand, regardless of volume.
Evalueserve’s team provides two core levels of support across the bank’s credit life cycle:
|–First line of defense: financial spreading, risk rating update, covenant & trigger testing, credit memo/annual review, financial modeling|
|–Second line of defense: enterprise valuation, review of risk ratings and
The design executed credit risk evaluations on an as-needed basis. Because the model was priced based on demand and not seats, the solution reduced surge labor costs by 20 percent compared to other solutions providers. The solution met volumes of more than 50,000 loans.
Evalueserve was selected because the organization:
|-Had already been vetted by the banks’ compliance, procurement, and information security teams due to longstanding relationships.|
|-Created an operational data center (ODC) that was customized to the client’s data compliance needs, including access control and CCTV.|
|-Met the bank’s in-country requirements already with staff in location.|