The purpose of this research paper is to identify some of the potential benefits for those banks who have loan officers that use some type of information technology to aid in the their analysis and decision making abilities. The article will give the reader some insight of why there is a need to use information technology for their loan analysis and what type of problems could occur if some type of information system tool is not utilized. The article will also outline what type of systems could be deployed ranging from a system that is fairly simplistic to one that has several functions. .
Data Requiring Manipulation.
Before any loan is ever advanced to a customer, bankers need to assess the customer's repayment ability, which requires the collection and analysis of a vast amount of data from loan customers. Generally, the data includes balance sheets, income statements, cash flows/budgets, and a detailed inventory listing. While some institutions utilize an information system to process the large amount of data into information that is relevant, complete, accurate, and current, other institutions manually organize the data in a way that allows them to draw conclusions on their own. The later choice generally takes more time and sometimes is completed inaccurately. Based upon an observation made by one of the team members in this group, those institutions who complete their analysis manually are generally small institutions (total assets under 50 million). .
Some Individuals Have Been Unwilling to Embrace New Technology.
Despite all of the advances in technology and the ease in calculating information thru the use of information systems, it is so amazing to witness individuals who are slow to move into this technology environment or who are just unwilling to change. Based upon the experience of one of the team members daily interaction with bankers, the most common criticisms heard from these types of bankers is that it is too costly to deploy a loan analysis software program or that the system will not provide any more useful information to the loan officer than what he or she already knows about the credit.