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Banks being viewed as a panacea for all ills?

While prompt Regulatory actions have tried to address liquidity and other issues of borrowers, there is heavy reliance on Banks to deliver. However, the borrowers and banks together are awaiting reforms. In the COVID Diaries Part 3, Sumit Kakkar evaluates if banks can do heavy lifting

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Opportunities presented by Debt Market Distortions

With entire mankind confined to their homes, what has the kept banks and debt markets ticking in April & May, 2020?
In COVID Diaries chapter 2, Sumit Kakkar evaluates how Regulatory announcements and opportunities presented by the bond market distortions have kept the counters of banks, hedge funds and fixed income players busy.

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Banks: Evolving asset strategies

Banks need to look at ingenuous ways of growing AUMs – draw up enabling credit lines for cash flow mismatches for existing low leveraged customers. Banks would be less adventurous with new connections, where visibility of corona impact would be limited. Asset strategies would evolve with time. Sumit Kakkar evaluates the evolving asset strategies for banks

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Can Credit Scoring replace Judgemental Lending? (SME Lending Models 6)

‘Let us Parametrise’, just like the temptation to automate everything, is another articulation we see clients getting excited about. Get data, feed in the system, create a multi variable algorithm and loan is approved! While this may work in stable, digitally savvy (data-rich) environments, it is not a solution for everyone or for every situation. Historically, results for some categori ...

Digitise vs Digitalise

‘Digitise’ mindset vs ‘Digitalise’ thinking

This was a conversation with the senior management of a client, a couple of years back Bank  “We plan to be a digital bank. We have recently launched new version of the mobile App.” Me ” That’s good. Is mobile an extension of your branch or a branch in itself?” Bank, puzzled look & pause “We will have 3 Apps now for our different customer segments.” Me “Customers? ...

Distribution- Do we need a Relationship Manager? (SME Lending Models 5)

Some crossroads our clients encounter while setting up distribution/origination models: Do we set up a new SME vertical or leverage Branch resources? Is third party agents a good idea? To what depth in the market should we penetrate? Should we segregate the Sales and Relationship functions? The answers lie hidden deep within the organisation’s current state and long-term view ...

Is Loan a Product? (SME Lending Models 4)

Lending business can be summed up in two sentences: I (customer) need money. You (Bank) give money and charge interest. But lending isn’t so simplistic! Consider the permutations- ‘I need money now, but you will give after 4 weeks.’ ‘You are reluctant but may give loan with 110% security. I don’t have it.’ ‘You give money but not as much as I want. I sulk but still take ...

Is Technology the panacea? (SME Lending Models 3)

Technology has benefits. It can improve TAT, data access, accountability, reduce operational risk & build competitive advantage. Full workflow digitisation suite- Tabs +CRM+LOS+CBS integration+ LMS+DMS, seems impressive. “Let’s get it automated” is an oft repeated indulgence we hear during our engagements. But the devil is in details! Considering investment in any scalable tech ...

Financial Analysis is not Credit Risk Assessment (SME Lending Models 2)

Financial analysis is the most exciting part for many bankers. Evaluation of ratio trendlines, NWC availability or future cash flows is logical & fun way to credit decisioning. Possibly the next best thing to being an oracle! Who can counter argue when nos. show the future? Here is what spoils the fun: In most geographies, compliances for SMEs are often simplified. Add to thi ...