Risk Management Solutions Slash Underwriting Time from Days to Minutes
Today’s banking customers are no longer willing to wait days or weeks for decisions to be made with regard to their financing options. They demand fast action from banks, or they simply will go elsewhere. For one super-community, full-service bank, the use of Dun & Bradstreet data and credit products played a key role in data helping drive quick financing decisions to better cater to customer demands.
Dun & Bradstreet recently sat down with the bank’s Vice President of Commercial Payments, Credit, and Risk to learn more about its credit and risk management strategies, and how Dun & Bradstreet helped support those initiatives via advanced analytics solutions such as retro-scores and alerts.
Dun & Bradstreet: Tell us about your nationwide bank, its fast growth, and the challenges that presents?
VP, Financial Services Firm: We’ve been on a fast-growth trajectory across a number of different economic cycles. We started with a small credit department of two people and now have 13, and are managing risk across our portfolio in all 50 states. From a relatively small portfolio, we’ve grown 50-fold in the 18 years since I first joined the bank. Over that period of time, we’ve kept growth rates well above industry averages, but our loss rates have traditionally been less than half of the industry average. We’re a little bit of a unique animal. When I started the department, we were very much a traditional, commercial underwriting organization and needed to maintain tight control of losses. But scalability became a big challenge as we grew our small-business portfolio. We needed a different toolbox than we were using for the large, half-million-dollar deals. That’s when we engaged Dun & Bradstreet to take our relationship to a higher level.
Dun & Bradstreet: How has your Dun & Bradstreet relationship evolved?
VP, Financial Services Firm: I’ve been working with Dun & Bradstreet since 1999. Like a lot of banks, we initially used Dun & Bradstreet as a way to validate our credit decisions. Three years ago, we began looking at ways to improve our workflows with small-business customers and go with automatic/electronic processing. Up until then, we were still paper-based. We had tough decisions when making the leap from paper-based underwriting to electronic, and Dun & Bradstreet really helped by doing a retro-score analysis and validating the power of the scores.
Dun & Bradstreet: Which Dun & Bradstreet products are you using for your underwriting, and what are the benefits?
VP, Financial Services Firm: We’re using the DNBi® Risk Management platform, and have integrated that into our CRM system with Dun & Bradstreet modules. For instance, D&B® Decision Maker for DNBi is tied in with our new account underwriting process to enable faster, automated decisioning. When an account comes in, we build the workflow to automatically populate key decision variables based upon identifying the right Dun & Bradstreet D-U-N-S® Number to help drive that process forward. We’re now able to go with an all-digital process as opposed to a paper-based method where credit analysis meant sorting through papers, printing reports, and physically assembling packets. That whole process took days instead of minutes or seconds. That’s been one of the biggest changes our customers have seen in our account underwriting system — the speed of decisioning is much faster. As a result, DNBi has been critical to helping us maintain our top-tier presence in the commercial card area.
Dun & Bradstreet: Can you describe your predictive scoring process?
VP, Financial Services Firm: We truly rely on predictive data, and Dun & Bradstreet has been instrumental in putting together a retro-score for us. Our losses were so abnormally low that a lot of predictive score vendors said they couldn't do much for us. So instead of looking only at ways to improve losses, Dun & Bradstreet looked at the business we were leaving on the table. They put together a great retro-score analysis that was very powerful for us. We use the predictive scores to generate reports daily that show any accounts that have deviations and to help us prioritize the workflow for the analyst. The old needle-in-a-haystack approach of the past was very reactive. By incorporating predictive scores in our credit methodology, we’re ahead of the curve instead of constantly chasing it.
Dun & Bradstreet: Have the advanced analytics provided new insight that allows you to approve accounts with more confidence?
VP, Financial Services Firm: Yes, the retro-score that we did recently showed that we had narrowed the gap of predictability on write-offs and delinquencies. We used to have pretty wide gaps between scores. Today, we believe we have set the proper thresholds for our particular portfolio. That has produced huge ROI for us. We’re no longer buying plane tickets and flying people to visit customers who ultimately would be declined for credit. In the past, sales and credit didn’t talk until after something was submitted in the credit pipeline — and they had already incurred sales costs. This has been one of those unexpected benefits. And the feedback from our business partners has been extremely positive.
Based on the predictive scores and incorporating non-financial data that we get on non-public companies, we’re also able to segment and target the right customers for new marketing efforts.
Dun & Bradstreet: What kind of ROI are you calculating and sharing with your leadership to validate the use of DNBi?
VP, Financial Services Firm: When we first signed on with the DNBi platform, getting buy-in from senior management on the potential return was critical, and we actually benchmarked ourselves quarterly to make sure we stayed on target. The ROI is probably one of the easiest things to show. We’re continuing to maintain credit losses well below the industry median. We remain true to our conservative culture, but are still finding ways to show very strong growth.
Dun & Bradstreet: Are there any key features of DNBi that you want to highlight?
VP, Financial Services Firm: When we went nationwide 11 years ago on the commercial card products I support, we faced challenges. The alerts were a big selling point to us since we’re a super-regional bank. Going to places like California and New York, we worried about not having boots on the ground in those regions — the traditional 101 of commercial banking. While that still has presence in today’s world, there are new ways to monitor risk without actually being in San Francisco or New York City. Given that our bank has no loan officers and no brick-and-mortar presence, the alerts allow us to get out front and evaluate risk. The alerts have saved us more than six figures every week we’ve been a customer of DNBi. We experimented a lot with the alerts, and have become more strategic in our settings.
Dun & Bradstreet: Are you looking at other Dun & Bradstreet credit products?
VP, Financial Services Firm: Your Small Business Risk Insight ™ (SBRI) scores play a key role in our credit decisioning process, allowing us to blend financial data and non-financial data from Dun & Bradstreet. And we’re really looking forward to incorporating Small Business Financial Exchange (SBFE Data™) into our risk analysis as well.
Dun & Bradstreet: What’s your relationship been like with Dun & Bradstreet?
VP, Financial Services Firm: We want to maintain a very strong relationship with Dun & Bradstreet, and we don’t want the process to get stale. We’re continuing to look at our portfolio and trends we are seeing — and trends Dun & Bradstreet is seeing — and trying to leverage the benefits of the two organizations. Dun & Bradstreet’s new product roadmap is very exciting to us. Today we are the poster child of why DNBi is worth the investment.