For many institutions the job of assessing loan risk is on autopilot with traditional tools, but fast- paced changes in big data science are driving a new breed of tools that can really advance the game for all. As we look ahead to known and unknown factors like new CECL reserve requirements and the potential for a market downturn we need these new tools to unlock deeper insights and help us lower risk and rebalance our lending portfolios strategically.

Change is in the air

Like ushering in a new season, impending CECL requirements are creating the need for every institution to assess what the impacts will be to their reserves, and how to maintain the complexity of the reporting. More importantly for you is how you rebalance your portfolios and begin using new tools that deliver more accurate predictability of loan defaults and delinquency. The smart thing to look at right now is what new technology solutions can help compensate for higher fluctuating reserve levels, so you arrive at the door of compliance smelling like a fresh spring breeze.

So, where do you begin your spring cleaning? Deep into the closets, under the bed, in the kitchen cabinets? The answer is all the above. Start with a full look at how you are currently assessing risk for new loan applicants. Are you using today’s best of breed tools from industry leaders, or are you still relying on older more traditional methods?

A sweep of new technologies and tools

The reality is that in today’s complex market, it’s harder than ever to assess loan risk, but the tools out there are also advancing quickly as we get better leveraging big data and newer technologies, such as AI and machine learning.

The time is now for you to evaluate how you manage your loan portfolio. Revisit your strategies and make sure you’re in the best position possible going into the next few years. Advances include a long list of significant changes from what many institutions still rely on for assessing risk with their most important revenue source. Consider where you are and where you’re going:

• Data – Are your risk tools skimming a shallow layer or digging deep into an exponentially growing big data universe?
• Automation – Are you taking advantage of automated technologies, such as AI and machine learning to harness to true potential of a vast amount of data?
• Technology – Do you have access to modern solutions, such as cloud-based technologies that make it easy and inexpensive to host historical archives of data?
• Expertise – Who are you relying on to mine the data and deliver the insights, and do they have the experience and background to be a subject matter expert?
• Past and Present – What kind of information are you basing your decisions on, past and present, or predictive scoring and modeling?

A new Ethos data ecosystem delivers

In the end every institution is going through the sweeping changes that will mean you either improve your risk performance and improve loan losses or your status quo position will increase the risk of exposure to more risk. The good news for small to mid-tier institutions is that FIS is bringing leading technology solutions that address all these areas to clients as part of our new Ethos data ecosystem. Solutions that give you options to stay ahead of complex market changes and remain competitive. As these tools and more emerge the time to begin planning is now. Spring is always a good time for some housekeeping and new investment. We hope you’ll take a close look at all the things available to you in the Ethos ecosystem as it begins to roll out this spring.