The Evolution of Commercial Lending
©2024 FIS FIS and the FIS logo are trademarks or registered trademarks of FIS or its subsidiaries in the U.S. and/or other countries. Other parties’ marks are the property of their respective owners. 2912186
The landscape of commercial lending has experienced significant shifts in recent years, marked by a rise in interest rates and regulatory demands. These changes have exerted pressure on borrowers and intensified cost pressures on banks, squeezing profitability as they face increasing bad debts. To maintain positive financial performance, lenders have had to explore strategies to increase efficiency and manage their resources more effectively. The call for technology to boost productivity and manage regulatory burdens has been a consistent trend, with banks looking to leverage technology for better talent utilization and improved delivery of products and services.
Past challenges
Currently, banks are firmly focusing on adapting to the evolving market through innovation and technology integration. Key areas include enhancing decision-making capabilities to select high-quality customers intelligently, exploiting technology for productivity and adjusting balance sheets to distribute loan origination more effectively. This period is also characterized by a significant interest in private credit markets as a response to the regulatory capital challenges faced by traditional banks. Furthermore, integrating artificial intelligence (AI) and advanced analytics is becoming increasingly central to banks' strategies, helping them gain insights, enhance efficiency and better serve customers amid economic fluctuations.
Present strategies
The future of FIS Commercial Lending is poised for transformative growth with the adoption of new technologies, especially AI and cloud computing, gearing towards creating a more flexible, scalable and cost-effective operational model. The drive towards digitization, with a particular focus on enhancing user experiences through digital portals and leveraging AI for credit analysis and customer service, is expected to redefine the lending landscape. Additionally, the integration of legal technology to manage complex agreements and the continuous shift towards cloud-based solutions herald a new era where efficiency, client satisfaction and innovation lead the way in commercial lending.
For FIS, collaboration with fintech’s and a shift towards a platform ecosystem approach will help FIS offer a more comprehensive and integrated suite of solutions, helping us remain at the forefront of addressing the needs of the modern lending market.
Future directions
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Adoption of automated reconciliation solutions has been driven by margin pressures, the regulatory landscape and the emerging remote work environment.
THOMAS
WHAT LEADING FIRMS ARE DOING:
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C
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RUN – streamline business operations and ensure efficiency.
CONNECT – build deeper, lastingrelationships with customers.
GROW – identify and leverage opportunities to generate revenue.
Match rates: Straight-through processing is contributing to match rates of 90% and above, replacing moderate rates of 50-60%
Technology: A single third-party software solution is replacing a patchwork of vendor offerings and in-house built applications
Operational approach: Centers of excellence are replacing fragmented processes
Exception handling: Escalation and execution management are fully automated, with processes clearly defined, replacing ad-hoc management
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Self-service by the business unit and configurable reports are key characteristics of today’s reconciliation solutions.
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Manually matching transaction details, verifying balances and identifying any discrepancies was a labor-intensive process that required significant effort, making it prone to errors.
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The Future
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Track the evolution of reconciliation to understand where we’ve been and where we’re going.
The Past
The Present
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©2024 FIS FIS and the FIS logo are trademarks or registered trademarks of FIS or its subsidiaries in the U.S. and/or other countries. Other parties’ marks are the property of their respective owners. 2912186
Unexpected Transactions Posted to GL and Suspicious Outgoing Wires
Monitoring: Automated daily reports with detailed status tracking are replacing limited reporting and indicators
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