Enhance credit origination efficiency with data intelligence

In commercial lending, origination is a critical phase for lenders to assess a potential borrower’s creditworthiness and make informed decisions about extending credit. Robust, timely data is essential in this phase, as it gives lenders the insights needed to evaluate risks, improve efficiency, and make sound credit decisions.

Strategic use of data

Strategically leveraging data in the origination process has significant implications for cost management, efficiency, and default risks. By integrating targeted data points and using advanced data systems, lenders can streamline their operations and elevate the quality of credit decisions.
 

Integrating firmographic and entity data to enhance credit origination processes

Firmographic details – like company size, headquarter location, branches, industry, and revenue – help lenders understand the business landscape and identify sector-specific risks. Integrating this data along with risk scores – like cyber risk, geopolitical risk and probability of default – into credit origination systems, allows banks to:

• Conduct targeted searches and select companies based on specific criteria
• Import relevant fields to streamline data entry and ensure accuracy
• Access comprehensive information that aids in evaluating the creditworthiness of borrowers

Firmographic data points allow users to perform searches, select companies, and import relevant fields into their systems. These capabilities simplify the data entry process and reduce errors while ensuring consistent, high-quality information.  A unique identifier attached to each entity ensures data integrity and supports seamless updates, allowing lenders to refresh records over time without losing consistency.

Detailed information – such as legal structure, ownership, and management – is crucial for understanding relationships and complex corporate hierarchies. Some key benefits of using entity data in the origination process include:

• Simplifying data entry of ownership details and shareholder data
• Keeping entity information up to date with regular refreshes
• Leveraging unique identifiers to enhance data consistency and reliability

With third-party data, lenders can import corporate group structure data, including beneficial owners and controlling shareholders, directly into their systems. Regular updates enable users to quickly create entities, populate fields, and import subsidiaries and shareholders through the legal structure screen. This minimizes manual data entry and ensures lenders have accurate and comprehensive group structure information.
 

Understanding creditworthiness

A clear view of the corporate group a customer belongs to is crucial for assessing creditworthiness. Reliable data sources help verify customer-reported data, giving lenders a more accurate foundation for credit analysis. This understanding is vital in the origination workflow to evaluate the overall context and risk associated with potential borrowers.

Leveraging comprehensive financial data from third-party providers enables lenders to access detailed financial statements and structured templates for entity-level analysis, which can then be spread automatically into a financial analysis tool. This allows for deeper data-driven insights, enhancing the origination process. The expected default frequency (EDF) and loss given default (LGD) scores are key examples of modeled third-party data that is crucial for credit assessment. These models use quantitative data to generate scores, and a qualitative overlay that can be applied to adjust the EDF value, leading to an adjusted probability of default (PD) score. This integration allows lenders to leverage these scores for credit assessment exercises, creating reports, and making informed lending decisions based on comprehensive risk metrics.
 

Conclusion

By focusing on specific use cases, selecting relevant data points, and leveraging unique identifiers, firmographic and entity data, banks can significantly improve the speed and accuracy of their credit origination workflows. These insights empower lenders to make informed decisions, reduce risk, and improve the overall quality of credit assessments.