Managing your lending “grey area”

Luke Taylor
Author: Luke Taylor CCO & Deputy CEO
Date: 10th September 2014
Categories: Technology

A recent Reuter’s article came bearing good news as it suggested that consumer credit saw its highest leap since 2001.  While this is good news for U.S. consumers and the economy as a whole, there are dangers that come with higher levels of borrowing.

As we say with the sub-prime crisis, lending can boost growth in the short run, but if lent to the wrong people, it all go wrong  in the long run.  Unfortunately, caution in lending has negative connotations. It can be seen as time consuming and unprofitable as more borrowers are rejected and more time is taken to seek out “safe” borrowers.

This need not be the case.  There are going to be borrowers who you’re always going to lend to and there are going to be those you’ll always steer clear of.  It’s the “grey-area” cases that give lenders a tricky decision.  Loan Origination Solutions that offer automation are commonplace nowadays and most lenders will have automation somewhere in their system, but where?  Is it in the right place?

Neural Technologies’ Application Risk Management System allows lenders to choose where certainty ends and grey area begins.  Having done this certain cases are taken care of automatically and analysts are left to do what they are paid to do…analyse difficult cases.

The Reuters article suggests that some of the auto loans are a bit risky but taking risks isn’t the only way to turn an efficient profit.  By automating the correct parts of the originations process, lenders don’t have to settle for unnecessarily risky borrowers as they can spend more time choosing the best of those grey area cases. Not just taking all of them.

Tom DiMaio

Commercial Business Analyst