Process Optimization

Challenge: In an economic environment where margins are being squeezed due to higher than anticipated charge-offs and loan growth is shrinking due to much tighter underwriting standards, many banks are forced to re-examine their cost structure. More often than not there are usually large inefficiencies in a bank’s origination, servicing, and collections processes that result in unnoticed and unnecessary cost drains. The challenge is for banks to identify where this is happening and to extract possible cost savings.

Solution: ERisk provides a comprehensive solution to process optimization. We will work with the bank’s staff to obtain a thorough and detailed knowledge of its loan origination, servicing, and collections functions. Equipped with this comprehensive view, we will quantify the value and cost of any and all processes that exist and provide recommendations on what can be done to maximize the value for cost. This will include a view of organizational restructuring, systems replacements, and a more efficient set of policies and procedures. The origination and servicing processes will be evaluated for redundancies and gaps that can create cost drains. The collections process will be evaluated to ensure that collections activities are targeted at those borrowers for whom the expected recovery exceeds the cost of the intervention.

Benefits: A process optimization project will allow you to efficiently and effectively deploy your resources, reducing your underwriting and servicing costs per loan and maximizing the recoveries and minimizing the costs associated with defaulted borrowers.

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