When you?re a banker with a customer seeking a multimillion-dollar business loan, you don?t want to keep that customer waiting any longer than necessary.
As Bank of the West broadened its commercial banking business while simultaneously expanding geographically, its loan process began to bog down. Headquartered in
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Transmitting that information electronically would be more efficient, but the question was how to do it most effectively. ?It took us a good part of a year just to define the scope of what we were trying to get done,? Begovich says.
The commercial credit authorization system was developed by the bank, with help from consultants at Brickwalk, a San Francisco-based company that combines business process management and document management technologies from
The system, which began as a pilot project during summer 2007, was fully deployed by late September, according to bank officials, who say they?ve cut credit authorization times from three to five days down to just a few hours. By streamlining the process, bank executives also expect to save about $1.5 million over the next five years.
Given that the commercial loans handled by the system start at about $5 million and range up to about $100 million, the bank must make sure its loan officers understand the health of the businesses requesting loans. So Bank of the West has loan specialists in agriculture, real estate and other fields.
This hands-on approach is in contrast to consumer lending, where pre-approved credit cards are often issued based on a simple credit-score calculation. Bank of the West is one of a handful of lenders using the consumer-focused
For Bank of the West, which has some $60 billion in assets, the value of the new lending system is in automating routine decisions within the process while ensuring that the same rules are followed across all the bank?s branches. Changes in rules, such as lowering the required credit rating for a loan, can be simulated to test impact prior to deployment.
One advantage of using a separate business rules-management system is that the rules are segregated from other programming code and spelled out in a syntax that reads like English, making them easier for business managers and auditors to review. A typical business rule for compliance would apply a series of ?if-then-else? rules to determine whether a critical regulatory issue had been detected or should be logged as a non-critical deviation from bank guidelines.
While loan officers retain most of the responsibility for lending decisions and have the authority to make exceptions to some rules, the tracking of those decisions is an important benefit of the new system, Begovich says.
?We need to be able to document the fact that an exception was made, and the frequency of it,? he says.
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