The four principles of agile lending

Agile organizations are designed to be fast, resilient, and adaptable
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In times of crisis, such as the COVID-19 pandemic, they are more suited to respond to shocks. According to a recent report from McKinsey & Company, businesses that were “mature agile organizations” ranked higher on managing the impact from the COVID-19 crisis and outperformed peers who hadn’t invested in an agile operating model. The pandemic has ushered in a new sense of urgency to become more agile and lenders are taking steps to figure out the right approach.

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The era of the “Agile Lender” is here

Economic turbulence is forcing lenders to tap into every bit of their strategic agility — to detect, assess, and respond well in this uncertain environment. And now, with continued economic certainty on the horizon, gaining more operational agility - from making better and faster lending decisions in a risky environment, to increasing productivity with fewer resources, to reducing risk without sidetracking growth — is crucial for success. So, what’s the best approach? What are the right investments to make?

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Four principles of agile lending

While forming a clear picture of the long-term impact of COVID-19 remains challenging, the guiding principles to become an agile lender are clearly defined.

The agile lender needs to be able to:

• Accelerate model review cycles – COVID-19 has scrambled the reliability of traditional credit scores creating urgency for change. The first step includes reducing the credit model build and deploy cycle times to adapt more quickly to market volatility. You want to be prepared to handle continued COVID-19 economic uncertainty and prepare for the next crisis.
   
• Make smarter decisions, faster – Leverage machine learning to more precisely rank risk and render decisions instantaneously with confidence.
   
• Be more inclusive – Diversify data sources when building models to better spot borrowers that have been harder to score (i.e. thin file).
   
• Detect change faster – More robust monitoring enables you to be more proactive — ultimately limiting the impact from market volatility.

So, what’s the catalyst for change? What technology and process investments are necessary for success? This guide provides actionable advice and distills best practices from lenders in the industry who are accelerating their modeling, improving their risk assessments, and automating their lending decisions. You’ll discover insights to help evolve your company’s strategy and tactics in this demanding economy while meeting the needs of applicants.

Millions of individuals and small businesses need help and lenders have a big role to play in supporting their recovery. Lenders have a real opportunity to become far more agile so that they can help borrowers during the current crisis and beyond by building sustainable innovation and a more agile approach to lending.