Future of Credit

Credit is still the core business of financial institutions. Measuring and managing credit risk, typically the most important type of risk, is one of the decisive factors for the economic and sustainable success of an institution.

The front office, back office and risk controlling functions are involved and should act in a coordinated manner. IT technology in connection with models and methodology is also of particular importance with regard to efficiency and quality goals. The regulatory requirements for the credit business, such as the EBA guidelines on lending and credit monitoring. Future of IRB, CRR III or the MaRisk amendment, have become increasingly extensive and complex in recent years. They typically lead to increased process efforts and thus reduce efficiency gains already achieved by the banks.

Our holistic advisory approach in the lending business segment enables us to take into account and map the highly relevant dependencies. The following are some examples of this.

• In the development of credit risk measurement procedures or rating models, the integration of front and back office is essential for the quality of the result. These units operate close to the processes of data generation and therefore know the respective risks from the user perspective. 
• When professionalising and subsequently optimising the credit processes from an end-to-end perspective, all regulatory requirements for the credit business must be taken into account according to the size and risk profile of the institution and the business segment. In addition, potential adjustments in creditworthiness assessment or rating must also be examined with a risk-oriented view in order to realise all efficiency gains. Redundancies can be minimised through technological support. The introduction of an integrated workflow tool optimises and automates the entire credit process - from the front office to the back office.

The institutions are currently working intensively on the measurement and management of ESG risks. We are developing special scores for measuring the climate risks of borrowers, their exposures and collateral, which enable comparability in the portfolio. We integrate this assessment into credit decision-making and monitoring. In addition, we offer solutions for the analysis and integration of climate risks in relation to single-address risk parameters, such as Probability of Default (PD) and Loss Given Default (LGD).

Our network and project portfolio in Germany and Europe gives us a comprehensive overview of the market, which we use as a basis for benchmarking both national institutions under the supervision of Bafin and the Bundesbank (LSI) and major institutions under direct ECB supervision (SI). 

In our advisory services to credit and financial services institutions for the credit business, we pursue a customer-oriented, holistic 360° approach and focus in particular on innovation, efficiency enhancement and high customer value. In the table below you will find our range of services. 

We would be happy to support you in preparing for the new challenges in the lending business in the best possible way. For further information, please contact us.