In a recent article, www.CNNMoney.com reported that Federal Reserve Chairman, Ben Bernanke, said that the pace of recovery in 2010 would be moderate and added that the unemployment rate would come down quite slowly, due to headwinds on ongoing credit problems and the effort by families to reduce household debt.’
While some media outlets promote an optimistic economic viewpoint, clearly there are signs that significant challenges lie ahead for lenders. As Bernanke forecasts, many issues that have plagued credit markets will sustain themselves in the coming years. Therefore lenders need to be equipped to monitor these continued credit problems if they wish to survive this protracted time of distress.
While banks and financial institutions are implementing increasingly sophisticated and thorough processes to monitor fluctuations in credit trends, they have little intelligence to compare their credit performance to that of their peers. Lenders frequently cite that they are concerned about their lack of awareness or intelligence regarding the credit performance and status of their peers. Marketing intelligence solutions are important for management of risk, loan portfolio monitoring and related decisioning strategies.
Currently, many vendors offer data on industry-wide trends, but few vendors provide the information needed to allow a lender to understand its position relative to a well-defined group of firms that it considers its peers. As a result, too many lenders are performing benchmarking using data sources that are biased, incomplete, inaccurate, or that lack the detail necessary to derive meaningful conclusions.
If you were going to measure yourself personally against a group to understand your comparative performance, why would you perform that comparison against people who had little or nothing in common with you? Does an elite runner measure himself against a weekend warrior to gauge his performance? No; he segments the runners by gender, age, and performance class to understand exactly how he stacks up.
Today’s lending environment is not forgiving enough for lenders to make broad industry comparisons if they want to ensure long-term success. Lenders cannot presume they are leading the pack, when, in fact, the race is closer than ever.
