Frankfurt Low interest rates are forcing banks to be more efficient in the lending business. However, according to a study by the consulting firm PwC, banks have so far used their options only to a limited extent. According to the survey, the degree of industrialization in lending is on average 40 percent, according to the study, which is available exclusively to Handelsblatt.
Given the prevailing cost pressures, institutions can no longer afford such inefficiencies. "Absolute margins have now dropped so sharply due to the interest rate environment and the competition that half a percentage point in process costs can make the difference," says study author Tomas Rederer, Partner Digital Operations in Financial Services at PwC.
The differences between individual banks are enormous, as the survey among 41 of the top 150 banks in German-speaking countries shows. In the case of retail loans, the best institute achieved an industrialization rate of 87 percent; according to the study many other institutions only achieved values between 10 and 30 percent. "For some institutions this means that they have to invest large sums of money or face a structural competitive disadvantage over the next few years," says Rederer.
To gauge the degree of industrialization, PwC has identified some 80 levers that can increase efficiency in the lending business. If an institute uses all these parameters, then the degree of industrialization according to the PwC definition is 100 percent. Since it does not make sense to use all these levers, the target corridor is only between 60 and 90 percent. The more automated a credit process runs, the cheaper it is for a bank.
There are big differences in the individual business segments. While the degree of industrialization in private customer business reaches 48 percent on average, it is only 31 percent for corporate customers. For private customers, PwC considers values between 70 and 90 percent, for corporate customers, values between 60 and 80 percent.
Rederer is not surprised that business with corporate customers has so far escaped automation and standardization. "When it comes to corporate loans, it's still very much up to the manufacturer's thinking," says Rederer. "Corporate banking is the last non-automated bastion in banking for many homes."
It's normal to a degree. Corporate loans could not be standardized and automated to the same extent as loans to private customers, Rederer admits. "But more is possible than you would like to believe in the banks," says the consultant. In one project in Switzerland, among other things, the corporate customer business was lifted onto a platform where the credit decision is made at the end of the computer.
In an international comparison, Germany is not doing well, according to Rederer. "We are well behind the Anglo-American institutes, and Spanish banks are also much further in the automation of their processes," says Rederer.
More: The lending business of the banks defies the weakening economy. But KfW warns that the growth rates will weaken again. Read more here.
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