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© 2014 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient only and cannot be reproduced or shared without Fair Isaac.

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Presentation on theme: "© 2014 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient only and cannot be reproduced or shared without Fair Isaac."— Presentation transcript:

1 © 2014 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. Compete and Win with Technology Driven Loan Lifecycle Management Todd Classen Vice President Strategic Accounts, WebEquity Solutions David Smith Consulting FICO

2 Agenda © 2014 Fair Isaac Corporation. Confidential. ► Introductions ► Two Primary Themes ► Loan Lifecycle Management ► Technology—Helps Community And Midsized Banks Compete ► Along the Journey: Bust a few Myths 2

3 © 2014 Fair Isaac Corporation. Confidential. Why Is This So Important Now? 3

4 © 2014 Fair Isaac Corporation. Confidential. How does Loan Lifecycle Management technology assist with customer growth and retention? ► Helps streamline loan processes ► More efficiencies for new loans, renewals, and reviews ► Reduce bottlenecks so priority decisions/customers can be treated as such ► Can provide better management of covenants, ticklers, and communications ► Provides better analysis and data ► More effective decisions, often in a much quicker timeline ► Data can lead to better understanding of the customer and cross-sell opportunities ► Allows Relationship Managers more time to focus on relationships Loan Lifecycle Management 4

5 © 2014 Fair Isaac Corporation. Confidential. Loan Lifecycle Management—Example Contact Management (CRM) Secure online database tracks client demographic information and prior interactions, in addition to prompting applications when appropriate Credit Analysis Powerful toolset allows for storage of unlimited financial statement data as well as automated ratio, collateral, accrual/cash basis, enterprise and earned equity analyses Credit Presentation Use of single system standardizes credit presentation across an institution and is fully configurable to meet unique needs; paperless process eliminates physical constraints and allows for remote lending committee meetings Decisioning and Approvals Flexible program fits all types of credit requests but also utilizes standardized “credit action” and scoring/rating models Servicing and Monitoring Automated system tracks repayment patterns and produces alerts; also checks insurance and UCC filings Portfolio Risk Management Intuitive risk management toolset allows user to shock/stress test a single loan, a pool of loans, or an entire portfolio, as well as identify weaknesses and generate ad hoc reports All Loan Types CommercialCommercial Real EstateConstruction Commercial & IndustrialAgricultureSmall BusinessConsumer 5

6 © 2014 Fair Isaac Corporation. Confidential. Scoring and Analytics ► The Myth: Use of scores and auto-decisioning doesn’t work in a relationship banking environment 6

7 © 2014 Fair Isaac Corporation. Confidential. ► The Myth: Use of scores and auto-decisioning doesn’t work in a relationship banking environment ► Business Development leaders fear reducing long-term relationships to a score ► Loan Underwriters fear becoming obsolete ► Risk Officers fear becoming reliant on a score Scoring and Analytics 7

8 © 2014 Fair Isaac Corporation. Confidential. ► In reality, the use of models will enhance relationships ► Creates a more transparent and consistent relationship ► Treatment doesn’t change with change in personnel ► Enables Business Development groups to be proactive with high-scoring customers ► Can say YES more quickly by auto-decisioning the A+ relationships ► Possibly bypass application paperwork with A+ customers ► Provides performance improving strategies for low-performing customers ► Reason codes point to areas of improvement ► Allows the institution to educate marginal customers Scoring and Analytics: Relationship Banking and Scoring 8

9 © 2014 Fair Isaac Corporation. Confidential. ► The loan strategy that is automated is the intellectual property of the institution’s underwriters ► Policies and strategies have to be followed regardless ► Removes work from an underwriter’s desk—eliminates the easy decisions and leaves the difficult to decision Scoring and Analytics: Supports Underwriting 9 High Segment Applicant Population LowMedium Automated Decline Automated Accept

10 © 2014 Fair Isaac Corporation. Confidential. ► The score should never be the ONLY factor in a decision, automated or not ► Bank policy and strategies should always be evaluated ► Overrides should include a valid business reason ► Underwriters should point to data points to support the request ► Overrides should be tracked and reported ► Reason codes should be defined ► Overrides should support business goals Scoring and Analytics: Overrides and Score Reliance 10

11 © 2014 Fair Isaac Corporation. Confidential. ► Customer #1: ► $14B loan portfolio/mostly scored ► The score is not the only factor: “Don’t check your brain at the door.” ► However, remember the value of the score… ► Customer #2: ► Original solution need/focus was to better service large C&I and CRE deals Loan Lifecycle Management—Customer Stories 11 “74% of the bad accounts in our scored portfolio are where the underwriter overrode the suggested decision of the scorecard.” “Serving small business borrowers requires speed and objectivity. Using WebEquity with the FICO SBSS scoring enabled us to cut our underwriting time from 2 days to 2 hours, and we significantly decreased early delinquencies. We’re winning more business, much more efficiently.”

12 © 2014 Fair Isaac Corporation. Confidential. Technology—Modernization Drivers for Banks 12 Technology Drivers Revenue GrowthEfficiency Improvement Regulations Workforce Optimization Architectural Simplicity Drivers for Modernization Modularity SMEs Retiring Monitoring Product Innovation M&AGlobalization Operating Cost Time To Market Customer Centricity Business Drivers Regulatory Drivers Enterprise Leverage Asset Rationalization Shared Services SOA Compliance AuditingReportingFading Skills

13 © 2014 Fair Isaac Corporation. Confidential. Technology ► The Myth: Community Banks don’t have access to powerful and affordable technology 13

14 © 2014 Fair Isaac Corporation. Confidential. Remember Customer #2 ► Asset Size: $1.6B ► Original solution need/focus was to better service large C&I and CRE deals ► What the customer noted as realized benefits ► Increased operating efficiency ► Decreased Underwriting time from 2 days to 2 hours ► Cut overall decision turnaround time ► Increase in customer satisfaction/retention ► Standard and consistent approach to each credit application ► Early delinquencies (past due loans from 30–turn rates) Technology—Customer Stories 14 “Serving small business borrowers requires speed and objectivity. Using WebEquity with the FICO SBSS scoring enabled us to cut our underwriting time from 2 days to 2 hours, and we significantly decreased early delinquencies. We’re winning more business, much more efficiently.”

15 © 2014 Fair Isaac Corporation. Confidential. What are your thoughts on using the Cloud? 15

16 © 2014 Fair Isaac Corporation. Confidential. Cloud: Definition ► Cloud is a model through which products, services and solutions are delivered and consumed in real-time over the Internet Essential Characteristics Elasticity Pay as you use Multi Tenant Model On-Demand Service Cloud Applications Software as a Service (SaaS) Cloud Platform Platform as a Service (PaaS) Cloud Infrastructure Infrastructure Services (IaaS) IT Cloud Services Defining Cloud and Scope Source: MD&I Analysis, IDC Cloud Definition, 2013 16

17 © 2014 Fair Isaac Corporation. Confidential. Cloud: SaaS 17

18 © 2014 Fair Isaac Corporation. Confidential. ► Banking is the leading vertical in adoption based on dollars spend in 2014 ► Overall growth in these verticals is 22% (’12–’17 CAGR) ► Banking is 22% ► Highest is 27% (Retail) ► Lowest is 17% (Central Gov.) Cloud: Adoption 18 Total = $27,481 M Ranked by 2014 Size Values in US$ M Source: Cloud 2H13 Pivot_20131125_ACCC

19 © 2014 Fair Isaac Corporation. Confidential. Creating Sustainable Differentiation Cloud: Value Proposition 19 Business Outcomes

20 © 2014 Fair Isaac Corporation. Confidential. ► Speed and Flexibility Surpass Cost Savings for SaaS selection decisions ► Controlling Costs were very important, but still not the primary drivers Cloud: Selection Reasons 20 Source: Market Overview: Hosted Collaboration Services Providers, Forrester Research Inc., November, 2013

21 © 2014 Fair Isaac Corporation. Confidential. The Cloud ► The Myth: The Cloud is less secure than on-premise installations 21

22 © 2014 Fair Isaac Corporation. Confidential. The Cloud Is Less Secure than On-premise Solutions As an example: ► Many community banks have only a couple layers of security vs. ► Many SaaS Cloud solutions have multiple layers of security Myth 22 Also note: Cloud solution providers depend on that security…so they focus dedicated resources to it

23 © 2014 Fair Isaac Corporation. Confidential. Compete and Win with Technology Driven Loan Lifecycle Management ► Two Primary Themes ► Loan Lifecycle Management ► Technology—helps community and midsized banks compete ► Myths Busted ► Use of scores and auto-decisioning doesn’t work in a relationship banking environment ► Community Banks don’t have access to powerful and affordable technology ► The Cloud is less secure than on-premise installations Final Thoughts… 23

24 © 2014 Fair Isaac Corporation. Confidential. Questions? 24

25 © 2014 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. Thank You! 25 Todd Classen Vice President Strategic Accounts, WebEquity Solutions David Smith Consulting FICO

26 © 2014 Fair Isaac Corporation. Confidential. Learn More at FICO World Related Sessions ► Fuelling Growth with Centralized, Analytics-Based Credit Decisions ► Why a Hosted Credit Decisions System Makes Sense ► A Strategic Risk Infrastructure: Making Better Lending Decisions and Improving Customer Experience ► One World, One System: Global Originations Deployment ► Optimize Originations for Profit and Success Experts at FICO World ► Mark Ryan ► David Lightfoot ► Alan Pass Blogs ► www.fico.com/blog 26

27 © 2014 Fair Isaac Corporation. Confidential. Please rate this session online! 27 Todd Classen Vice President Strategic Accounts, WebEquity Solutions David Smith Consulting FICO

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