Summary
A top-five Canadian bank needed to manage the seasonal surge volumes associated with its commercial lending experience while meeting regulatory requirements on time.
They needed a vendor with an in-country presence that could offer a strong risk evaluation analytics solution and a team that could scale on demand. Evalueserve’s analytics solution executed credit risk evaluations on an as-needed basis and met national regulations. Because the model was priced on transaction volumes and not seats, the solution reduced surge labor costs by 20 percent compared to other solutions providers. The solution met volumes of more than 50,000 loan reviews.
The Challenge
The bank needed extra resources to provide credit reviews and risk evaluation support during high periods of surge requests, including quarterly and annual demands, seasonal needs, new borrower credit review, and special cases like government-funded stimulus packages. They needed end-to-end credit decision analytics capabilities that would scale on-demand at any of their locations based on need.
The bank had two core problems it sought to resolve:
| 1) Struggling to ramp up staffing to meet quarterly and seasonal changes as needed without having full-time employees on board. Seasonal volumes created heavy flow moments that required staffing. | |
| 2) Containing the costs associated with having idle employees and low utilization rates during slow periods. This was expensive and unprofitable. |
The credit approval work would provide a first-level review to ensure trades and credits were completely covered within timelines before loan approvals. A second level of risk protection – or a second line of defense – was also needed to ensure risk compliance by auditing 10% of all loans through an independent review. We provided independent oversights on valuation and credit measures for relative valuation and discounted cash flow (DCF) models.
An ideal solution would perform the work to support different divisions of the bank for underwriting and data quality as needed. The bank needed performances that met needs with relative speed, leveraging the strengths of AI, machine learning, and automation to address all aspects of the commercial lending value chain, including spreading, risk ratings, covenant testing, credit review, and data quality assurance. To meet regulatory requirements, the optimal solution would also have an in-country geographic presence.
Our Solution
Given Evalueserve’s existing work with the bank in similar use cases, they turned to us to create a decision-ready analytics architecture and end-to-end capabilities that would meet the bank’s needs on-demand, regardless of volume.
Evalueserve was selected because we had already been vetted by the bank due to longstanding relationships, we created an offshore delivery center (ODC) that was customized to the client’s data compliance needs, and offered appropriate talent that brought in credit domain expertise to provide support across the bank’s credit lifecycle.
Evalueserve’s team provides two core levels of support across the bank’s credit life cycle:
- First line of defense: financial spreading, risk rating update, covenant & trigger testing, credit memo/annual review, financial modeling
- Second line of defense: enterprise valuation, review of risk ratings and credit parameters
Business Impact
Evalueserve executed credit risk evaluations on an as-needed basis. Because the model was priced based on demand and not seats, the solution reduced surge labor costs by 20 percent compared to other solutions providers. Our team handled volumes of more than 50,000 loan reviews while meeting regulatory requirements and managing risks.