 Subscribe
RSS Help
After years of strong profits, many lending institutions are struggling to deal with the fallout from the subprime mortgage meltdown and ensuing credit crunch. For US banks, in particular, the cycle of borrower defaults followed by mortgage write-downs will continue to play out. With few new revenue-producing products in the pipeline and an uncertain economy looming, the growth outlook is cloudy. Banks are at a crossroad. They must continue to grow revenues and decrease costs while keeping a tight rein on portfolio risk. For the first time in a decade, banks find themselves in a credit-driven market, which demands a return to traditional credit practices such as stricter underwriting. Shaving costs through tactical efficiencies may be a short-term strategy, but beating the competition long term requires more significant change. Eventual winners will be those that seize the chance to stabilize and build for the future by adopting flexible operating models that enhance profitability. As the industry transitions away from easy credit, banks need agility to thrive in a more disciplined credit environment and under greater regulatory scrutiny. In short, lenders need to industrialize their credit services operations to achieve competitive advantage in the next growth phase. That industrialization can take many forms: combining multiple lending systems across lines of business, standardizing and automating processes across credit products and creating a co-sourced model that utilizes outsourced services for non-core processes. Whatever form the credit services industrialization might take, the opportunity to gain competitive cost and performance advantages has never been greater. Executive Summary:
Read the online version. Subscribe to receive e-mail alerts when we publish new issues, with hot-links to exclusive subscriber Web pages offering an in-depth version of each article. |