The work is worth it, because matching data from statement spreads and accounting can make long-term Fed compliance easier, and can provide broader information to the bank to measure its performance and exposure to different business categories. “Banks have a tremendous amount of data in both systems…if they get the system linked together they can drastically improve credit risk analysis and gain an understanding of what’s going on inside their portfolio,” Saegesser says. He also said there are some banks that have already made this transition, including Capital One (COF), which presented with Moody’s Analytics at a recent risk management conference on the benefits of integrating different corporate lending data sources. Capital One would not provide an executive for an interview for this article.
Saegesser says banks can feed combined data into a dashboard that provides data on portfolio concentration. While he says portfolio concentration isn’t new, what is new is the ability to consider profit growth, sales growth and cash flow for industry groups or customers, and make comparisons with other industries to drive future decisions on what kind of businesses categories to target. “We need to do this because the regulators are making us, but afterword you can pull up better analysis.”