Financing decision within the focus of optimization
The financial sector was flooded with new challenges in the last years. Not only is there a lowered demand on investment financings and a harsh situation in the refinancing market but also now one has to deal with stricter rules of supervision, imposed by the government. Cost-reducing steps as well as new markets are needed. An important starting-point is the optimization of the decision process for financing, which is an integral part for many banks and leasing-companies’ business.
It doesn’t matter if you have to work with simple standard-deals or complex financing requests; you start with checking your customer’s data. The supplied data is often not enough to make a decision. Often you will deal with missing values for the deposited collaterals, the needed enquiries, the current rating and the exact values of the object that is going to be financed.
Crucial for the processing of requests are not only the requirements of Basel II and MaRisk, but also the companies own rules to minimize risks. An important reference point for rating risks is the LGD (Loss Given Default), which represents the loss-quota in case of insolvency. This parameter and its influencing factors are suitable for measuring and exact controlling of the risk of loss.
Das Kreditentscheidungssystem KM3 eingebettet in die IT-Landschaft des Finanzierers
After the first check and the vote from a market employee, the processing starts through the middle office. If needed, this division either demands additional requirements or it will be rejected. On a successful pass, the offer will be transmitted to the customer. In case the deal gets accepted, the business data is transferred to the portfolio management system, which usually is used for monitoring and execution of the financing. The portfolio management system returns important information about single deals and, if applicable, their interruptions. This information plays an important role during requests from companies which operate in a network.
The risk of errors rises significantly during the analysis of complex network structures. Reasons for this are the very complex legal and economic relations, which are prone to erroneous ratings. It is important that all network partners of the beneficiary unit are rated correctly (exposure, rating, collateral, network collaterals, etc.). The partial results also need to be merged into a valid overall result.
With the help of the credit decision system KM3, complex financing decisions are backed up by a workflow, and if desired, run fully automated without manual interaction. Thus, deals can be processed at optimal costs. KM3 represents the credit decision process from trading to middle office. And depending on the exposure structure and the object that will be financed, it can run with or without manual interaction.
The system can be integrated seamless in the system and processing-environment of existing systems. It enhances the existing systems by transforming the old processes from manual to automated and standardized ones. From data collecting and processing over the checking (dual control principle) and up to the decision, KM3 delivers all required steps in compliance with legal regulations. The system determines and rates automatically the beneficiary unit and offers a complex, multi-level dissolution of the structures for a correct exposure and collateral-rating.
A manual calculation of collaterals in complex structures is almost impossible nowadays, especially in reasonable periods. What also needs to be taken into consideration is that while collaterals are being calculated, new financings could be added and other ones could end. The risk of a miscalculation is high due to the degree of complexity. KM3 does these calculations fast and reliable.