7 Strategies for Achieving Balanced Loan Growth – Part 7

Sound Portfolio Monitoring is Critical

So far in this series, we’ve focused on the various ways to grow the amount of loans you have on the books. But once you have the loans, how do you manage them?

Portfolio risk management software can be used to increase the ROI that a financial institution can get on lending relations while simultaneously strengthening client relationships through strong risk monitoring, sound credit decision making tools, and perceptive profitability analysis. By combining effective risk monitoring capabilities with data and scores, banks can save time, alleviate risk and gain a full view of their loan portfolio with automated monitoring.

Uninterrupted, automated portfolio monitoring is important to keeping loan growth balanced. The system must monitor accounts on a daily, weekly, monthly, or quarterly basis – with significantly less manual intervention. It should flag high-performing loans for efficient renewals and cross-selling prospects while detecting and monitoring potentially troubled accounts. Remember, it’s about striking a balance in which the bank or credit union is minimizing risk while also uncovering opportunities for growth.

Portfolio concentrations and stress testing are also critical. Financial institutions should develop individual approaches using the data for origination and pricing. The system should drive concentration analyses either by specific regulatory requirements or even unique identifiers by the institution to determine a pool of risk within the portfolio. With the addition of statement spreading, stress testing can be conducted on a portfolio segment and for individual clients.

To run these types of tests, powerful data required. Financial institutions must be able to manage risk and augment practices with current and accurate bureau data; loan, deposit and collateral data; as well as financial statement data from internal and external systems. In doing so, they gain a complete, 360-degree view of their portfolio, thus enabling more strategic, data-driven decisions. Using complex score and behavioral logic on a daily, weekly, monthly and quarterly basis, the data should also identify problem loan indicators before delinquency occurs.

Finally, portfolio risk management software should be easily configured to import data from the bank’s core or from other external systems. Data must be updated daily and continuously analyzed in agreement with the institution’s policy, and standard reports should include delinquency of scoreboard, regularity of trigger and statue, and prompts by delinquency. 

Baker Hill NextGen® Portfolio Monitoring can be easily configured to import data from your core system or from other external systems, making it the ideal choice for your portfolio monitoring needs. Combine the power of Baker Hill NextGen® Portfolio Monitoring with your existing data and scores to save time, mitigate risk, and gain a full view of your loan portfolio with automated monitoring.

Check out the other posts in this series:

Part 6: Onboarding & Minimizing Friction: How to Get Customers In and Then Stick

Part 5: CECL as a Strategic Business Initiative

Parts 3 and 4: Deal Pricing and Efficient Loan Origination

Part 2: Efficiencies Needed within Accounting, Tax Returns & Financial Statement Processing

Part 1: CRM Systems Are Critical for Understanding Your Customers

You can also download the full eBook to find out all seven strategies today.

Author Bio

Baker Hill empowers progressive financial institutions to increase revenue, reduce risk, and drive more profitable relationships.

Streamline business, consumer direct and indirect lending with our common origination platform. Understand profitability and risk at every level with our sophisticated business intelligence and analytics. Monitor and maintain a healthy financial portfolio with our statement analysis, exception, and risk management solutions.

Explore our solutions below for more information on how to generate sustainable growth, minimize risk and increase profitability.