Diving Deeper

Leveraging Credit Expertise to Forecast Customer Hardship and Minimize Bank Charge-Offs

When the COVID-19 pandemic slowed the world’s economy to a crawl, many banks relied on models and forecasting to anticipate customer delinquencies and hardship and to efficiently staff its call centers.

Case Study:  The recoveries and customer support group at a Top 25 bank found itself facing a turbulent economic landscape in 2020 when the COVID-19 pandemic slowed the entire world’s economy to a crawl. When the COVID-19 pandemic slowed the world’s economy to a crawl, many banks relied on models and forecasting to anticipate customer hardship and efficiently staff its call centers. Appropriate staffing is critical for banks to effectively assist customers who have fallen behind in payments or who needed assistance with forbearance or deferral programs. This assistance helps customers get out of delinquency and avoid defaults, and helps...

Consumer Loan Defaults: Should Banks Continue to Hold Elevated Reserves?

Allowing for loan losses during COVID: Banks prepared for delinquencies during COVID uncertainty, but the expected wave of losses has not come. Will it?

Allowing for loan losses during COVID: Banks prepared for delinquencies during COVID uncertainty, but the expected wave of losses has not come. Will it? As states locked down, retail businesses were shuttered, and office workers who still had jobs learned to work from their kitchen tables via Zoom, credit analysts in the banking sector rushed to project the swell of consumer defaults on the horizon that would be driven by the COVID-19 pandemic. The reality is that, nine months later, chargeoff rates are stable and delinquency rates are down more than 15%. If the anticipated defaults never materialize, the result would...

Implementing CECL Part 2: Turning CECL Compliance into a Competitive Advantage

This post is the second in a two-part series on CECL. Part 1 explains the rationale for CECL and its implications on financial allowance practices.

NOTE: This post is the second in a two-part series on CECL. Click here for Part 1, which explains the rationale for CECL and its implications on financial allowance practices. As financial institutions prepare for the 2020 and 2023 implementation of CECL guidance regulations, most institutions have the same hurdles to overcome. We view these hurdles as strategic opportunities for the institutions that put the time and energy into understanding and developing the best solutions. Institutions are required to develop forward-looking approaches based on the materiality of their portfolios. While they might be able to rely on simple approaches for...

Implementing CECL Part I: Impacts for Institutions Big and Small

Implementing CECL: How changes to modeling and accounting processes bring change to financial services.

Part 1: How changes to modeling and accounting processes bring change to financial services. The new Current Expected Credit Loss (CECL) standard could have substantial and far-reaching impacts to the bottom line for many banks, but, outside of the accounting community, many financial services leaders don’t fully understand its implications. Financial institutions that approach this new challenge as a business opportunity will find that CECL mitigates existing loan accounting headaches, giving them better insight into their portfolio. Done the right way, the strategic implementation of CECL has the potential to become not only a compliance success, but a competitive advantage....

BLOG > EXTREME AUTOMATION

The Process Behind Process Automation

From EUCs to structured, automated data, we walk you through the process, best practices and change management to ensure you’re leveraging analysts’ skillsets to the fullest.

Since its introduction in September 1987, Excel has been the go-to resource in an analyst’s toolkit due to its versatility and capacity to quickly translate complex formulas into illustrative tables and charts. Over the ensuing years, a typical financial services analyst would build elaborate, interwoven spreadsheets, simple models, assumptions and calculations, all in Excel, creating end-user computing (EUC) applications. And while these EUCs built the foundation for modern automation, generally speaking, they lacked traceability or documentation, making model adjustments challenging and presenting serious challenges for governance, risk and regulatory compliance functions.