Softjourn

Credit Offer Generator

January 08, 2019



Softjourn has developed a proof-of-concept solution for financial institutions and other traditional lenders to standardize and streamline their back-office credit offer and review process, simplify document creation and maintenance, and provide business intelligence to evaluate their portfolios and make better lending decisions. 

Potential users of this POC solution are the individuals who comprise the organization’s lending team (e.g., lending associates, line lenders and credit officers), along with system administrators, who use the solution to extract data from the underlying credit system for reports and analysis. 

Although the POC as developed offers the features described in this case study, the Credit Offer Generator can be easily adapted to our Client's banking software. 

Background

The credit function—offering loans of all types to consumers and businesses—continues to be the revenue-generating backbone of financial services. And, underwriting is the key—appraising the credit worthiness of potential customers and deciding whether to offer loans and under what terms. Underwriting, traditionally, has been a complex business—a mix of art and science, further complicated by heavy documentation and regulatory requirements, all in the name of creating custom lending offers with near certainty of repayment.   

Although traditional financial institutions have introduced a level of automation to facilitate the credit offer-and-acceptance process, most are significantly behind the capabilities of the new class of online lenders, which have perfected digital interfaces that can lead to fast loan approvals—some in just 24 hours. 

Our Credit Offer Generator addresses this discrepancy in service level capabilities to help financial institutions and other traditional lenders compete better and smarter. 

The Need

Despite automation progress in other areas, many financial institutions and traditional lenders are still in the Dark Ages when it comes to the automating their back-office credit processes. Through our Credit Offer Generator, we can assist lenders in addressing their most pressing needs to enable them to make better loans faster, based on historical data and paperwork automation.  The Credit Offer Generator meets users’ needs to: 

  • Systematize the most time-consuming, paper-driven aspects of credit offers 
  • Collect data on all credit offers—win or lose 
  • Provide market and portfolio intelligence for the lending officers making and reviewing offers

The Solution

The Credit Offer Generator solution supports the internal credit process at four points in the flow:

Initiation and Input 

After determining a potential customer’s needs, the credit staff uses the Credit Offer Generator to electronically create a credit offer, a package of documents including: 

  • A term sheet, which identifies the details of the offer to be made to the potential customer
  • A concept memo, the rationale for lending to be provided to those making the approval decision
  • The supporting lending documents in PDF format

During the credit offer creation process, the staff member automatically receives relevant historical and analytical prompts for relevant fields based on the lender’s past loan data, such as the amounts, rates and number of similar loans made within the last 90 days. These prompts ensure the new credit offer is consistent with the structure of the lender’s recent past deals and considers the current competitive environment in the offer terms. 

Analysis

The system automatically passes the completed credit offer to the Credit Risk Scoreboard, a model that presents as a single Python call, which returns an algorithmically created Credit Risk Rating. If the lending staff disagrees with the CRR, it can challenge the score to learn which fields increased or decreased the CRR and revise the offer in advance of further internal review. 

Review

The credit offer is then available for review by those with authority to authorize the loan. A dashboard shows these individuals the credit offers created by the loan generating staff, including the data, analytical guidance and CRR they considered in developing the offer. The reviewer can then authorize the credit offer or—if additional work or review is needed—modify the offer, send it back to the loan-generating staff or forward it to additional reviewers. 

Artifact Creation, Negotiation and Finalization

When a credit offer is authorized, high-quality PDF documents are generated, electronically filed and provided as electronic or physical assets to be delivered to the customer and included with any required regulatory documentation or filings. 

Then, it’s up to the customer to decide on the offer and for the system to act based on that decision:

  • Customer accepts offer. The lender marks the accepted term sheet as “accepted.” The system then automatically updates its records with the accepted deal, exports files to transfer the deal to the system of record.
  • Customer soft-rejects offer. The lender has the option to mark the term sheet “soft reject” and generate a new credit offer with revised terms and repeat the approval process.
  • Customer hard-rejects offer. The lender marks the entire transaction “hard reject” and the system prompts for competitive intelligence if terms of the accepted offer (e.g., from another financial institution) are known. 

Conclusion 

Much of the financial industry’s conversations about digital transformation revolves around customer-facing interfaces—improving the UX. Although UX is critically important, we at Softjourn also believe in the importance and value of digital transformation of our clients’ back offices. 

With our POC of the Credit Offer Generator, we’ve created an opportunity for all types of lenders to improve their processes with significant advantages for their businesses and customers. 

We invite you to contact us to learn more about how your lending business can use the Credit Offer Generator to digitize your lending operation. And, we’re happy to work with you to discuss how to customize the Credit Offer Generator to address your specific needs. 
 


Softjourn, Inc. is a technology services provider. The world’s leading experts that take pride in developing creative solutions for Fintech, Cards & Payments and Media & Entertainment applications. Contact us to give life to your ideas!