The Record - Issue 21: Summer 2021

114 www. t e c h n o l o g y r e c o r d . c om W hen the latest European Banking Authority (EBA) Guidelines on Loan Origination and Monitoring entered force in June 2021, banks across Europe will need to reconfigure their lending processes for newly originated loans. This will significantly impact how banks structure their data, tech- nology, methodology, people, governance and processes. In addition, it will affect the way they manage client relationships and business lending activities over time. Banks have been contending with a growing number of regulations for several decades and often consider them as constraints. However, VeriPark believes they should view EBA’s new guidelines as a catalyst to accelerate revenue, income and new account growth for the lending market through digital transformation. By imple- menting a digital loan origination solution, banks can achieve EBA regulatory compliance while responding intelligently to customer needs, driv- ing customer loyalty and increasing productivity. Regulatory expectations in the credit sector necessitate high data and IT requirements, as well as the adoption of innovative models for automated credit risk analysis and credit risk decision-making. Therefore, financial institu- tions are encouraged to implement a data infra- structure that enables them to automatically compile data regarding credit risk with little reliance on manual processes. This allows them to analyse the financial position of borrowers using artificial intelligence (AI) which, accord- ing to a recent McKinsey report, leads to much faster credit decisions, with customers getting cash up to 80 per cent sooner. Using AI also cuts decision-making times by 30 to 50 per cent and ensures banks make better-quality risk deci- sions, lowering process costs and improving the cost income ratio of the process. The introduction of the new EBA regulations also gives financial institutions the opportu- nity to experiment with quicker and more agile lending models that will help them to improve Why lenders must embrace regulatory challenges Digital loan origination solutions are empowering banks to accelerate revenue, expedite decision-making and improve customer service as they reimagine their lending processes in accordance with new regulations BOHUM I L HYANE K : V E R I PAR K G E RMANY V I EWPO I NT