Banking Industry Challenges
Many institutions are trying to grow through more efficient and profitable lending while also aiming to minimize risk to the institution. These objectives are often made difficult by common obstacles. Explore the resources below to see how banks and credit unions can solve some of these banking challenges.
Exams have become more rigorous over time as bankers strive to keep up with regulatory changes and appropriately implement new processes. Bankers may find themselves spending more time deciphering these regulations than on conventional banking activities which they must perform to stay profitable.
For capital planning and portfolio review, bankers are making stress testing analysis a priority. But the aggregation and management of portfolio data can be sources of frustration, given disparate systems and outdated loan and appraisal information on the core processing system.
When a bank or credit union has multiple analysts or lenders evaluating credits or when there are new employees put in charge of risk management procedures like the ALLL, then there is little guarantee that everyone at the institution is uniformly utilizing consistent methodologies. Inconsistency in data or processes leads to inconsistent and less defensible results.
Considering its impact on an institution’s bottom line and the importance it has with regulators, the estimation of the allowance for loan and lease losses is one of the most critical functions at a bank. Even if a bank or credit union has a sound process in place, it has to make sure the estimation is well documented and defensible in order to satisfy regulators.
Business and personal cash flow may be combined in many ways. Confusion about when and how to apply a global cash flow can result in inaccurate analysis due to overstated debt or income. As a result, a bank or credit union could make a faulty loan decision.