It’s back to basics for the UK lending industry, argues Mikael Krohn, vice president at EDB Business Partner
The past 18 months have been a volatile time in the world of lending, however, it has also been the year when risk and liquidity management as well as the desire for a renewed sense of simplicity in the banking sector became of crucial importance for global banks and lenders. Looking forward to 2010, banks are planning to implement these considerations for future economic recovery while having to fend off competition from new banking players such as Metro Bank.
While banks have certainly become more cautious around their lending strategies, retail banks have begun to slightly increase levels of lending again. What is important, however, is that banks have systems in place that can streamline administration and help achieve operational excellence. There must be a provision to capture the process structure that has to be followed through the full loan lifecycle. This will make the firm less dependent on people, reducing the risk of human fallibility as well as increasing transparency and auditability.
Liquidity will continue to be a high priority over the next year, as banks attempt to comply with the standards of new liquidity regime announced by the FSA in October 2009, keeping it front of mind for the months to come. Banks and Building Societies are also likely to be subjected to far tougher stress-tests and risk analysis, putting pressure on them to ‘get their houses in order’. However, in the wake of the recent high profile news of Hector Sants’ departure as chief executive of the FSA and doubts around the future of the tripartite system, many financial institutions are still facing months of uncertainty around exactly what compliance issues are likely to emerge.
In the light of the recession and the low activity in the lending sector, many banks are cutting costs and slimming down their organisations. In fact, the CBI estimates that about 5,000 jobs were lost across the financial sector during the fourth quarter of 2009, as lenders, dealers and other institutions moved to cut costs.
In addition, recent research from Gartner shows that business expectations are now shifting from a focus on cost-based efficiencies, to achieving better results based on enterprise and IT productivity. These productivity gains will come from collaborative and innovative offerings that take advantage of the new “lighter-weight”” services-based technologies . In short
