Category Archives: workflow and process management

This series of articles will discuss the automation of credit underwriting processes. It also ams at underlining the required integration of multiple specific analytical activities, such as credit scoring, pricing… within the underwriting activity.

Credit Process application

In a previous post I mentioned and described a solution to manage and optimise the credit process for small banks, called ARGOS, a solution developed by a Dutch partner. They have published a brief descriptive document on youtube which I suggest you check out on

If there is any interest to discuss this please don’t hesitate to contact me at

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Credit Process Flow Management 3

Process and Policy definitions

The core principle of the ARGOS solution is the optimization of analytical and operational process. Any implementation starts with a process flow definition as defined by the bank. We do not impose any process flow; we use the bank’s defined process! Nevertheless we know that more often than not banks will decide to reengineer their process when confronted with a clear description of them, often highlighting process flaws.
We will of course collaborate with the bank to define the process it wants to manage. This consulting work is done before the implementation of the solution and can be limited to the description of the current process or their reengineering. The process definition will be documented through a standard process flow description applications readily available in the market, so that the bank may maintain the process description in line with their evolution in time.

To illustrate the credit process, consider the following simplified credit process:

credit UW process

Step 1: Client contacts bank and request is registered
Step 2: Account manager conducts interview registering details in Excel template
Step 3: Excel data are submitted to remote server
Step 4: Remote server reports credit risk assessment and financial analysis
Step 5: Decision account manager
Step 6: Decision credit manager
Step 7: Sending out letter to client
Step 8: Recording in database

All the documents referred to in the process flow are of course bank specific templates. Unless requested to change/ improve the current bank documents, ARGOS uses the existing templates. ARGOS makes use of the dynamic forms technology through which content filled out in any of the forms is stored automatically in the database. All of the data can be retrieved and posted in automatically generated documents such as proposal letters and reports. The interview will thus be based on the standards questions required by the bank to analyse the solvency of the prospect client.

The process can be completed by the New Business Officer, the Analyst and the Manager anywhere, anytime as long as he can be connected to the bank information system or the internet. The process implementation is simple and requires standard inputs in template electronic documents.

The procedures (and process) will be compliant to the Banks’ Credit Procedure Manual. If such a reference does not exist, our consultants can support its development.

management steps UW process

As for procedures, the Bank will have Credit Policies that define all the aspects of credit risk management. These policies include the rules applicable for the type of loan products and client characteristics, as well as the rules for the approval authority of credit risk, the credit analysis models and methodologies, the risk pricing rules and of course the reporting rules (internal management reporting as well as compliance reporting and other external communications).

If these policies need to be reviewed, adapted, enhanced for management purposes or for regulatory purposes, we can support that effort through a parallel consulting effort. The system must also be flexible so that policy changes can be easily be implemented. For example the credit approval matrix may change (amounts by function…). The changes are integrated in the credit rules of ARGOS quickly and easily. For example risk authority delegations or other rules. The policies will of course define acceptable credit analytical models and scoring/rating rules.

Business Drivers for an integrated credit underwriting process like ARGOS

The business advantages of using a platform such as Argos have been mentioned previously. They can be summarized as follows.

UW process management benefits

This risk management platform is not a credit risk capital adequacy management platform; it is a business management platform for credit risk, which is compliant to the 2nd pillar of Basel 2. The scoring/rating analytical models are optimized for markets with limited current and historical date of the quality and depth required by the Basel Accord. It is recommended that these emerging banks use the standardized approach to calculate their Capital requirements. But the reality of the matter is that both these approaches are reconcilable and complementary.


The credit underwriting process flow management is a system that allows smaller banks to streamline and integrate all the aspects of the stages of credit decisionning.

Those that are interested to know more can email me ( to request a complete description of the approach and product which includes descriptions of:
1. The scoring engines,
2. The rating approach,
3. The collateral module,
4. The reporting and document generation module,
5. The audit trail and control functions.

Also included are descriptions of the Business Architecture and the Technical Architecture.
Let me know if you wish to receive this. I will only respond to request that include the name of the institution and the full name, function and contact detail of the person requesting this document.

Thanks and talk to you soon.

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Credit Process Flow Management 2

The Benefits of a structured approach
The ARGOS Credit Process Management is a modular system that supports bank process and analytics. It focuses initially to the lending services of banks for Retail Clients and SMEs, but also for wholesale customers.
What are the business benefits of implementing a robust process flow management application?

Business benefits:

1. Enhanced competitiveness and service differentiation:

a) Improved responsiveness of the bank to credit applications through a reduction of the application response time. Linked to an appropriate credit scoring/rating system the bank response can for certain products and activities be quasi immediate. In other cases the improved process flow will reduce bottlenecks and time between two processes.

b) Optimized use of a variety of distribution channels. This is particularly important for banks having large branch networks in large countries with limited access to remote areas.

c) One-to-one loan pricing to enhanced the client satisfaction within strict compliance of credit policies (see below).

2. Enhance credit management capabilities:

a) Implementation of a one-to-one risk based pricing on all products. By linking the credit approval analytics with pricing analytics in an integrated credit underwriting process the bank can individualize the credit pricing on a risk and relationship basis.

b) Strict compliance to the Bank’s Credit Policies and Procedures. The process flow will be managed in accordance with the bank’s approved procedures and with the banks policies (approvals…). The integration of the credit scoring/rating applications will allow a systematic compliance to the credit analytical models as specified in the Banks Policies.

c) The credit risk data generated by the systems (process and analytics) is focused on credit management and may be different than the capital adequacy models used by the bank, but they are reconcilable with the Basel II, Pillar 1 models .

d) The management of credit processes is an important step to compliance to Basel 2, Pillar 2 Internal Capital Assessment Process (ICCAP)
Operational benefits:

1. Enhanced operation efficiency: All the credit underwriting process are defined in a process flow applicable to all application and only differentiated when needed by market/client type.

2. The automation of the process flow results in improved control and reduced operational risk:

a) All processes can be tracked and controlled, allowing a better management of the operating capacity (bottlenecks, exceptions, resource allocations – – human and technical resources…).

b) An audit trail is generated for all transactions handled by the system.

3. The web based client server architecture allows the system to be implemented throughout the bank’s distribution network (branches, specialized departments, internet, mobile banking, third party sales partners…), with all the required controls and audit trails.

The next post will describe the process management requirements. If this looks like a sales brochure… guess what! Sorry for that but we have to earn a living.

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Workflow management for the credit underwriting activities of retail and wholesale banks

BC&T has partnered with Stachanov BV ( to bring to the market a process flow management solution tailored to the smaller banks. I will introduce this application (ARGOS) in this blog.

Interested institutions should contact me on


The banking industry is faced with fundamental challenges that will impact their activities, business model, process and organisation. The needs for these changes resulted from the great Banking crisis that started in 2008.  The consequences of the crisis were regulatory, but also the fundamental equilibrium of the industry was impacted, of which the most fundamental was certainly the discontinuation of the “trustful” relationship between bank and client. This has resulted in increased investments in regulatory compliance and an increasing risk of the bank being disintermediate and hence in an increasingly competitive environment.

The challenges of the shareholders and senior management are to implement business strategies that respond to contradictory constraints:

  1. Comply with a growing set of regulations for all risk classes, including operational risk, solvency and business risks. Compliance is more extensive than capital adequacy as it includes minimum risk assessment procedures and processes, model risk etc. Management must seek to leverage these investments to create value!
  2. Optimise operational efficiency. In its simplest form this means generating more risk adjusted revenues with a given level of operating expenses. Without doubt this implies process improvements and enhanced operational policies.
  3. Optimise operational effectiveness. Not only does the bank need to be financially efficient, its process must also be effective. By this we mean that the operations of the bank must lead to the strengthening of the service and product delivery to enhance client satisfaction, recreate client trust and hence reduce the business risks.
  4. Optimise financial efficiency. The banks are faced with scarcity of financial resources (equity and borrowed capital). They must allocate these resources effectively to generate the required return on risk. This requires that all the previously mentioned challenges be integrated into a business model that is adapted to the bank’s market and clients and manages all the component of this model in an integrated way.

Many banks do not have the size and means to invest huge amounts of money to buy solutions developed for the larger banks in more advanced financial markets. ARGOS was developed to respond to the challenges by bringing simple but effective solutions to smaller banks to

  1. optimise their process
  2. optimise their risk underwriting and management.

We have started with the most important activity of many retail and wholesale banks which is the credit underwriting process and the credit scoring and rating models. We have extended the development vision to include collateral valuation and through the calculation of expected losses generate the management information for credit risk provisioning and risk based pricing. The proposed solution is not invasive as it will use the rules, policies and procedures of the bank. If the bank’s management wishes to review these rules, policies and procedures to adapt them to a more effective and efficient business model and implement enhanced risk models, we can help in the development of these and of course implement the new rules in ARGOS.

With ARGOS, bank will have an automated credit underwriting process from origination/ credit application to disbursement. The process flow will respect the ban’s defined credit policies with structured process. This approach is Basel II, pillar 2 ICAAP compliant and will furthermore enhance the risk adjusted profitability and financial efficiency of the Bank.

The solution is geared towards the development of an integrated risk management system for emerging banks. It can be applied in retail banks, for SME banking or for wholesale banking. The priority is to develop a pragmatic and efficient solution that can be implemented easily for a low “cost of ownership”.

In the next blog we will discuss some of the benefits of the system proposed.

Don’t hesitate to comment on the content of this new series of bank management discussion. If you want to remain informed of posts as they are published don’t forget to follow this blog or to request email advises.

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