Financial industry executives are facing significant challenges developing and implementing credit risk policies, finds a new survey from Zoot, a provider of credit decisioning and loan origination solutions.
According to the poll, 93% of participants said it takes at least nine months to develop, test and deploy a credit risk policy concept. The majority – 64% – reported that this process takes their institution 12 to 18 months.
‘Zoot's poll showed that about half of the respondents share risk management resources across origination, servicing and collections, which is encouraging," says Bobbie Britting, research director of consumer lending at TowerGroup. "Simply restricting credit is not a sustainable practice, and to emerge from this crisis, preventing loss on the back end begins with knowing what to look for in originations."
Eric Lindeen, director of marketing at Zoot, says the lengthy policy development and implementation process prevents financial institutions from adapting to changing market conditions, causing them to "lose money due to outdated credit risk models."
"When the market is constantly changing and new regulatory requirements are looming, financial institutions need to be able to respond quickly and implement new strategies that will be effective," Lindeen adds.Â Â Â Â Â Â Â Â Â