Credit portfolio management is becoming increasingly complex. Economic uncertainty, rising interest rates and regulatory pressures have placed unprecedented demands on financial institutions (FIs).
The question FIs must now ask themselves is: how can they meet these challenges head-on? The answer lies in the strategic use of technology, specifically platform solutions and the integration of artificial intelligence (AI) to automate routine tasks and augment the banker experience.
Economic Uncertainty Raises the Stakes
Economic volatility has become the norm, so much so that it directly impacts credit portfolios and risk management practices. In fact, the International Association of Credit Portfolio Managers reported 42% of portfolio managers expect corporate client defaults to rise globally through October of 2025.
Commercial real estate (CRE) portfolios, particularly office space and multifamily sectors, have been significantly impacted post-pandemic with rising delinquency rates. Additionally, according to the Mortgage Bankers Association, $2.2 trillion in U.S. CRE loans are set to mature by 2028 during a higher interest rate period, potentially impacting businesses’ ability to refinance their CRE loans.
Regulatory Pressures Mount
Regulators are steering institutions toward better risk management, portfolio diversification and increased capital requirements. However, meeting these expectations isn’t easy.
Legacy systems that depend on historical data cannot match the pace and complexity of today’s regulatory environment. This leaves many institutions struggling to adapt to heightened scrutiny while patching inefficiencies manually.
Outdated Processes Impact Efficiency
Managing a credit portfolio requires insight into diverse variables like borrower profiles, interest rates, economic forecasts and more. In many organizations, this work is still highly manual.
According to an Accenture survey, 72% of senior banking risk professionals say their organization’s risk management capabilities and processes have failed to keep pace with the rapidly changing risk landscape. Even more telling, only 35% say they are fully able to assess the risks associated with interest rate increases.
Outdated processes impact timely responses to market shifts and increase the risk of errors in data analysis and reporting. This results in a reactive approach that often misses warning signs until it’s too late.
Why Intelligent Technologies Are a Game-Changer
Platform solutions with embedded AI reshape the way institutions approach credit portfolio management. These technologies do more than just streamline workflows. They centralize data, bring proactive insights and deliver actionable intelligence that wasn’t previously available.
Automate the Repetitive
Streamlined workflows and automation provided by platform solutions significantly reduce the burden of repetitive tasks. The majority of a banker’s time is spent on servicing and monitoring booked loans, including but not limited to preparing annual reviews, conducting risk assessments and reconciling compliance data for regulatory reporting.
Automating tasks frees bankers to focus on building relationships and efficiently manage risks. Not to mention, automation drives additional operational efficiencies such as cost savings and enhanced productivity.
Centralize Data for Seamless Operations
Data is essential for effective credit portfolio management. Yet Forrester reports that up to 73% of financial institution data remains unused. Why? Information is often scattered across multiple legacy systems or departments, making it inaccessible and unstructured.
Platform solutions and AI-enabled tools solve this by integrating data from various sources into one cohesive view. This centralized approach eliminates fragmentation, offering decision-makers increased transparency and a complete view of their credit portfolios.
Enable Proactive Risk Monitoring
One of the most significant impacts of data and AI lies in its ability to transform risk management from reactive to proactive. Through centralized data and AI, FIs can harness real-time insights and gain a holistic view of their credit portfolio to effectively monitor and manage risk.
For instance, data and AI-driven credit monitoring tools can continuously analyze key performance metrics, broader market fluctuations and changes to a client’s credit data to uncover potential risks in real time.
This capability allows financial institutions to stay ahead of major risks and even identify growth opportunities to balance risk and reward within the credit portfolio.
Collaboration Between AI and Experts
AI augments decision making by providing richer, faster and more refined insights, enabling bankers to focus on what they do best.
Cornerstone Advisors notes that 41% of banks are using or plan to use generative AI to help increase productivity in back-office operations and 27% for risk management. Pairing human-in-the-loop with AI results in more effective and efficient risk management strategies, whether adapting to market volatility or monitoring at-risk loans.
A Future-Forward Approach
FIs must rethink their approach to credit portfolio management. By integrating data and AI, institutions gain the tools to tackle economic uncertainties head-on while delivering operational excellence and building deeper client relationships.
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