New Applications for Commercial Lending May Help Banks Increase Profitability

The commercial lending business has always been a quiet -- but large -- profit generator for banks, but recent pressures have narrowed margins and banks are searching for ways to improve returns. Challenges, including increased regulatory scrutiny as well as mandates to improve credit lending criteria, have impacted profitability.

During the past couple of years, banks have made significant moves to improve data quality, increase STP capabilities, find new business in a tough market, and differentiate the customer experience. Although most commercial lending systems are home grown, many technology providers have improved their offerings, making it increasingly attractive for banks to move off of legacy systems.

For instance, today Misys launched a new version of its commercial lending solution for financial institutions, which allows for more cost-effective operations, as well as increased transparency and analysis of the data most critical to sound credit and asset management decision-making.

According to Misys, the global commercial lending industry is undergoing a transformation and improving the cost efficiency of operations appears one of the few available avenues toward restoring return on equity. Misys has partnered with several existing clients, various industry utilities and market standards organizations to create a solution that improves cost-efficiencies and eliminates costly error-correction by reducing manual entry.

With the inclusion of the new Misys solution for managing loan collateral -- as well as numerous new business-line specific features for collateralized lending business lines, such as commercial real estate -- Loan IQ now allows institutions to streamline their systems, which could potentially provide cost savings. The new Advanced Collateral Management module for Loan IQ allows users to create, track, maintain, and analyze collateral and guarantees -- and their relationship to covered loan obligations. Configuration of the collateral catalogue and process flows ensures that the platform can be tailored to match the needs of each business line while delivering the right combination of efficiency and control, according to Misys.

"Financial institutions are ultimately focused on pushing up their return on equity," states Ken Katz, Director, Misys Loan IQ Product Management, in a press release. "In the current environment, reducing costs by consolidating systems is one of the most powerful levers our clients have. Implementing a unified commercial lending platform is an important first step towards increasing transparency and reducing operational costs to a level that is unimaginable in fragmented lending system environments. In addition, by centralizing and storing standardized data, and by sharing a unified set of global processes and common infrastructure, clients will gain economies of scale as well as greater insight into the needs of their customers and the efficiency of their operations."

The updated solution includes the first version of the Loan IQ Software Development Kit (SDK), designed to empower Loan IQ clients to customize the product to suit their individual organizational and client needs. The new release of Loan IQ is delivered on a JEE Architecture and it is also the first release to include support for Microsoft SQL Server.

"Customers can maximize their IT investment in Loan IQ when deployed on Microsoft SQL Server," says Jim Long, Misys Loan IQ Head of Development, in a press release. "By simplifying IT complexity with a next-generation platform, financial institutions can take advantage of a powerful … and future-proof solution for lending." Greg MacSweeney is editorial director of InformationWeek Financial Services, whose brands include Wall Street & Technology, Bank Systems & Technology, Advanced Trading, and Insurance & Technology. View Full Bio