Regulators are placing significant scrutiny on every business transaction to protect consumers and organisations, requiring lenders to place extra due diligence in all areas of operation. The number of regulations imposed on financial institutions has grown significantly over the past few years to accommodate this, and now far exceeds any level in the history of lending. Adding to the sheer volume is the level of complexity behind each new regulation – requiring in-depth knowledge to implement and comply.
The creation and implementation of Basel regulations proves challenging for the majority of lenders. Despite the increasing strain complex regulations can place on organisations we have seen many of our clients uncover significant opportunities, these include:
1. Strength of portfolio
Increased strength of portfolio can be achieved through the use of stress testing scenarios and the creation of forecasting models. With immediate visibility to any areas of weakness within their portfolio, lenders can make modifications to the decision strategies and product lines.
2. Competitive positioning
With the ability to assess the entire portfolio accurately by product line, the lender has the ability to make timely adjustments to mitigate risk and costs, maximising revenue potential.
3. Sound business processes
Equipped with an automated method of incorporating macroeconomic data with master file data, lenders can benefit from seamless decision-making and risk mitigation from all areas of the business and across all business lines
4. Increased customer confidence
Knowing and understanding that a lender is doing its due diligence to ensure capital reserves are in place and that the lender can remain strong in adverse economic conditions increases customer confidence.
Basel regulations are impacting lenders of all sizes and require significant resources to manage these regulations, putting a strain on business operations. All financial institutions need a Basel solution in place that provides compliant measures of the risk associated with exposures and uses the Internal Ratings Based (IRB) system that promotes consistent lending decisions aligned to the lender’s jurisdiction, type and size.
Basel is a strategic regulation that spans the entire organisation.
Executives are constantly working on ways to understand the ever-changing regulation better and to ensure their organisation meets all of its requirements. Experian has extensive experience nationally and internationally, with lenders of all sizes to aide in the compliance of regulations. By working closely with regulators and monitoring and interpreting regulations, Experian are uniquely placed to develop strategies that minimise risk and take advantage of the opportunities that lie ahead.
To find out more or to ask us a question regarding Basel compliance. Please contact us by filling out the form here.