Today, commercial lenders are facing a number of pressing and complex challenges, including the remaining effects of COVID-19, constantly evolving regulatory requirements, increased competition and the high demand for talent.

To better position themselves to meet these challenges, commercial lending leaders should seize opportunities to transform their processes. These solutions range from new loan and sales platforms, integrating automation and/or complex artificial intelligence, and data strategies (including big data) to redesign or reconfigure lending operating models.

KPMG surveyed executives at more than 100 financial institutions globally to learn how lenders view, benefit from and prioritise efforts to continue transformation.

Transformation, redefined with technology

Transformation can mean different things to different organisations. According to our survey, commercial lenders are more likely to prioritise data optimisation, technology and automation as very important areas of transformation over operating models and people/workforce. Organisations are likely to allocate a significant portion of their operating budget for transformation on technology-related initiatives.

Rethinking the operating model

New technology and methods of engaging with customers typically entail new risks for lenders. Organisations that refine their operating models to better align their business strategy and risk appetite and enhance the ways that credit risk is monitored and controlled are positioned to improve efficiency and successfully scale their lending businesses.

Key survey findings

Where do our people fit in transformation efforts?

When organisations focus on transformation, it is often people who are impacted the most. Those that can assess the impact of operational and technological change on their people will be better suited to identifying ways to empower their people, giving them the right skills to ensure their transformation efforts are successful.

Clean and reliable data is key

The ability for lenders to utilise data is limited by their ability to collect clean and reliable data. This is integrally linked to core review processes, which many respondents deem inefficient. Our survey takes a pulse on what lending functions are doing to better manage data. For instance, lenders will need to deploy clear frameworks and processes to facilitate data collection and ensure proper governance.

Technology and automation

Technology plays a pivotal role in the transformation of a commercial lending organisation, from financial statement spread to collateral monitoring and risk rating. More recently, advancements in areas such as robotic process automation, natural language process, machine learning and artificial intelligence are prompting lenders to evaluate the possibility of automating portions of review, analysis and reporting procedures. 

ESG and its effect on consumer lending

Environmental, social, and governance (ESG) concerns are a rapidly evolving topic, and how they will ultimately affect commercial lenders remains unclear. Commercial lenders are not only being challenged to understand the expectations of the marketplace and shareholders, they are also evaluating optimal ways to institutionalise policies and processes to comply with forthcoming requirements.

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