Some of the biggest banks in the country - including Chemical, Wells Fargo, and Natwest - are entrusting their Community Reinvestment Act compliance to a new software product.
Less than a year old, the product, called CRA Wiz, this month got its biggest public showing to date at the American Bankers Association's annual compliance conference in Boston.
It was a hometown crowd for PCI Services, the Boston-based consulting firm that developed CRA Wiz. The versatile software lets users analyze their own lending patterns as well their competitors'. Banks can use the information to check CRA and fair-lending compliance, analyze market penetration, and make marketing choices.
"This has revolutionized our work," said Gary Spariosu, a vice president with Chemical Banking Corp. who specializes in CRA compliance research. "You can do just about anything you want in terms of analyzing the data."
PCI introduced CRA Wiz nine months ago, after making a name for itself providing geoanalysis for banks. The company saw that some banks, mostly large ones, wanted a flexible tool to do that work in-house, said Raffi A. Festekjian, a principal at PCI.
Along with bankers and other vendors, PCI tracked regulators as they revamped the rules implementing CRA. The new requirements, released in April, already have been incorporated into the product. For example, a bank can now use the software to compile and analyze information on small- business and farm loans.
"The release of our small-business and consumer module within two months of the passage of the new regulations has demonstrated PCI's ability to quickly deliver fair lending and CRA compliance tools in the Windows environment," Mr. Festekjian said.
The company's 22 clients are almost exclusively big banks. Money-center and large regional banks are more technologically advanced and therefore more likely to use the product to its potential, he said.
"The big banks have deeper pockets," Mr. Festekjian added.
The average customer pays $12,000 for the CRA Wiz software, which includes data for the whole country. As interstate branching approaches, CRA Wiz can help banks analyze market opportunities and check out potential competition.
While most customers buy the nationwide package, banks also can pay $5,895 for software covering one state.
Although the CRA compliance market is crowded, Mr. Festekjian said CRA Wiz is faster and easier to use than its competitors.
Chemical's Mr. Spariosu said he'd been using another product that took much more time to do the same tasks.
"The speed is phenomenal," Mr. Spariosu said. For example, he said CRA Wiz can analyze all of Chemical's loans in Nassau and Suffolk counties on New York's Long Island in three minutes.
The system is designed so someone with no computer experience can learn to use it in a day. "The program can be used by a novice or a power user," Mr. Festekjian said.
After installing the software, the bank downloads its loan files into the system, which runs on Windows. The banker can then choose from a number of options including defining delineated communities, editing Home Mortgage Disclosure Act data, or producing tables and charts showing lending patterns.
Banks can crunch the information to find, for example, loan approvals and denials by race, applications in certain census tracts, or outstanding loans by county.
Besides spot-checking, CRA Wiz also can monitor a bank's performance over time. Chemical is using the product to track its affordable mortgages.
Other customers use the software to speed up mergers by showing examiners and consumer groups the bank's CRA record. To produce a map that would show a community group what a bank's lending pattern is in the Bronx, for example, would take two minutes, Mr. Festekjian.
There is one downside to the product, joked Mr. Spariosu. Because the software is so easy and fast to use, his bosses want more work done faster.
"My management demands a quicker turnaround," he said.