NH Mutual Bancorp Q2 Lending User Guide
NH Mutual Bancorp
Q2 Lending User Guide
Table of Contents Digitizing our credit policy — Product configuration, creating segments ........................................................................ 2 How does decisioning/routing/pricing work? ................................................................................................................. 17 How does your product ensure clean customer/prospect data—both from bank and external data sources ............. 30 What is the process for initial policy creation? ............................................................................................................... 30 What does the exception process look like?................................................................................................................... 36 How does rolling-out, reviewing, and early tuning of the policy work? ......................................................................... 41 How do we monitor, track, and implement changes related to all aspects (forms, processes, etc.) of the SBA guaranty programs? ........................................................................................................................................................ 43 How does our product work with the bank to monitor and manage the credit policy? ................................................ 44 How are the loans funded? ............................................................................................................................................. 47 What is not automated in your solution? ....................................................................................................................... 46 Describe the transition from application to business deposit account opening? .......................................................... 47 Is your product integrated with JHA Silverlake? Is the account creation fully automated to the core? ....................... 51 What are the processes/tools for monitoring and supporting the customer interaction?............................................ 50 What account funding options do you offer? ................................................................................................................. 50 How do you comply with NACHA’s upcoming web account validation rule for funding purposes? .............................. 50 What marketing capabilities (internal customer base and prospects) are provided by our product to the bank? ....... 51 How do we take the friction out of the customer experience? ...................................................................................... 56 What are marketing and digital user experience best practices? .................................................................................. 56 What is the timing start to finish for the customer to successfully complete a SBL application? Time to open a business deposit account? .............................................................................................................................................. 57 What reporting is given for usage/abandonment rates at each step of the application process? How do we prompt for half-started applications? .......................................................................................................................................... 61 Describe the digital user experience for transitioning across channels (branch, online, mobile, etc.) ......................... 63 How are the channels integrated: for the customer/for the banker? ............................................................................ 66 Describe the ongoing digital experience for the banker/back office. ............................................................................ 72 What training is required in bank channels? How is ongoing support provided? .......................................................... 87 What are the processes/tools for monitoring the portfolio and individual loans? ........................................................ 88
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Digitizing our credit policy — Product configuration, creating segments Start by looking at our Origination Configuration administrative user interface, then our CL Product configuration screen, and finally how you can configure and manage all your loan products and unique product workflows in Q2 Origination:
Launch one of the CL Product configurations (suggested: “Small Business Non-RE Term”) and proceed through the various parameters Q2 uses to configure loan products in Q2 Origination (such as product details, compliance configuration, pricing configuration and more).
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Here’s how we manage stage progression of a loan for each product (from Application through to Booking), along with how we manage Rate Cards, and how we can configure Approval Processes to enforce dual control for any changes made to product configurations.
Now that we have introduced you to product configuration in Q2 Origination, we can pivot to discussing how we manage and enforce credit policy, due diligence policies, compliance policies, and more in our system. To start the discussion, acknowledge that we use two forms of logic to enforce credit policy in Q2 Origination: •
Scorecards – which use weighted logic to calculate credit ratings (which are used to determine credit worthiness)
•
Policy Conditions – policy-based criteria that is used to enforce credit policy, due diligence policies, compliance policies, etc., and drive exception tracking and governance of mandatory policy conditions.
Let’s start by providing an overview of our Scorecard feature and a sample Small Business Scorecard. Navigate back to Origination Configuration and click the Scorecards configuration option. We can configure multiple Scorecard Sets to support the different scoring scenarios that you require. Usually, we associate a Scorecard Set with a single Asset Class – or sometimes with a specific loan product (if the scoring requirements are unique enough).
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Each Scorecard Set includes one or more Scorecards (the categorization is to enable you to more easily separate criteria for different contexts, such as legal entity classifications).
Each Scorecard consists of weighted matching criteria, enabling you to weigh quantitative values such as consumer credit report data (like credit score, inquiries, delinquencies, bankruptcies, open accounts, adverse actions, etc.), business credit information (such as third-party risk scores, bankruptcies, judgements, liens, public filings, etc.) and credit analysis indicators such as debt service coverage,
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global debt service, total exposure and more. In fact, any field from any object in the Q2 Origination database (whether included in our managed package or added as a customization by you or our implementation teams)
It’s easy to add new Scorecard Criteria by clicking the New Scorecard Criteria button and adding a new piece of weighted scoring criteria:
And if necessary, navigate to the Risk Analysis screen of the digital credit file to see how Scorecards are used to determine an aggregate Total (Risk) Score and, ultimately, a Credit Rating (which we use to determine the
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recommended credit approval for the loan). We can auto-decision loans using Scorecards and Policy Conditions, but we can also provide “assisted decision making”, where you have the final say.
Now, let’s pivot to Policy Conditions. Scorecards and Policy Conditions work together to manage and enforce credit policy. While Scorecards determine a weighted credit rating for a specific loan, Policy Conditions enforce mandatory credit policy conditions (as well as due diligence, collateral, and compliance policy conditions). Policy Conditions is the feature we use to track and satisfy policy exceptions during the loan origination process.
Policy Conditions, like Scorecards, evaluate configurable rules; however, unlike Scorecards, Policy Conditions are supported by additional functionality that enables: 10355 Pecan Park Boulevard | Austin, TX 78729 | Q2.com
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•
An exception to be triggered (if Exception Criteria is evaluated to be true)
•
The exception to be satisfied (by meeting configurable Satisfaction Criteria)
•
The exception to be overridden (only authorized your users AND only if allowed by you)
Start by looking at a simple Credit Policy Condition which enforces that all credit entities associated with the loan have credit scores greater than 600 (i.e. any borrower or guarantor with a credit score lower than 600 will result in a policy exception).
First, let’s look at the Exception Criteria (i.e. Generation Criteria) by clicking the Individual Credit Score Below 600 rule. This criteria determines if a policy exception exists or not. In this scenario, the Policy Condition evaluates the entity’s involvement in the loan (is the entity a borrower? a guarantor?), the entity’s legal classification (is the entity an individual?) and the credit score criteria (i.e. less than 600). If all of these criteria are evaluated to be true for any entity involved with the application, a policy exception will be triggered. And in Q2 Origination, all mandatory exceptions must be satisfied or overridden by an authorized user before an application can be closed and funded.
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Let’s say that NHM wants to apply this Policy Condition to a single loan product (or a group of loan products), all we need to do is add the appropriate criteria to the Generation Criteria – Party Application CL Product Name Operator equals “Small Business Non-RE Term” — now this Policy Condition applies only to Small Business NonRE Term loan products.
Look how these exceptions are presented to the loan team.
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We have shown you how to configure and trigger a policy exception…but how do you satisfy these exceptions? This is done using Satisfaction Criteria. Policy Conditions can be satisfied in three ways: •
Data – Specific Satisfaction Criteria is evaluated to be true (for example, an exception is triggered because certain mandatory information is missing from an application; however, now it has been added and the exception can be satisfied).
•
Documents – Some exceptions can be satisfied using documentation. For example, we typically use third-party data to automate KYC and KYB; however, if the data is inconclusive (for example, if we are unable to verify the business borrower’s Tax ID number – which is a common automation exception), the Policy Condition enforces secondary verification using documentation (i.e. the Policy Condition’s Satisfaction Criteria specifies documentation which can be captured to satisfy the exception).
•
Override – Again, certain exceptions can be overridden by an authorized user (this is controlled by the FI and implemented at the FI’s discretion).
To demonstrate an example of Policy Condition Satisfaction Criteria, launch the “Customer Identification Program (CIP) – Primary Identification” Due Diligence Policy Condition. This Policy Condition – which enforces KYC due diligence (this is not a credit policy example, but it helps articulate how our exception tracking feature works) – is satisfied by capturing and approving any 1 of the Documents listed in the Satisfaction Criteria configuration (in this case, the entity’s Driver’s License, Passport, Military ID, Social Security Card, Foreign-Issued Driver’s License, Foreign-Issued Passport, or Foreign Green Card).
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This criteria may not specifically match NHM’s CIP compliance rules, so know that configuring Satisfaction Criteria in Q2 Origination is simple (just as it was to configure Exception Criteria and Scoring Criteria). Click “New Resolution Criteria” and see easy it is to add additional criteria.
Again, see how this impacts the user experience and the workflow for the loan team. On the Exceptions screen (for an in-flight loan application), we see a list of exceptions which must be satisfied before the loan can be finalized (i.e. closed and funded). Since this example (as a reminder, we are satisfying a KYC exception) is satisfied using documentation provided by the borrower (this is indicated to the loan team by the Condition Type = “Document”
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referenced on the exception…”Data” exceptions are only satisfied once the data criteria configured for the Policy Condition has been met or overridden by an authorized users), we can click the Actions menu next to the KYC exception and click the Documents option.
The resulting screen shows the user which documents can be captured to satisfy the exception.
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Users can notify the borrower of required documents by checking the box next to each document and clicking the “Notify” button.
While we see the exception tracking and satisfaction process, check out how borrowers can upload documents online AND how existing NHM customers can upload documents via digital banking. Launch UUX and log on.
Navigate to Account Management and click the “Small Business Loan” tile (these cosmetic items, such as labelling, are 100% configurable).
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The borrower is presented with a list of loans (if he/she has multiple active loans in origination – otherwise the borrower will only see their current application). Click “Continue” next to APP-000000041.
The borrower is presented with a list of documents that he/she can upload to satisfy the KYC exception, along with instructions (i.e. “any one of the following documents will help us verify your identity”…), and the current status of the loan (these values are configurable by the FI).
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Click “Upload File” next to Personal Tax Return. Locate IRS1040.pdf document on your computer and upload it.
Borrower sees the progress of the file upload…
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The document has been uploaded successfully and the borrower can now view his/her file.
When the loan team accesses the loan’s credit file, they will see the status of the Policy Condition has changed (it is now in “In-File” status); however, one additional action is required to fully satisfy the exception.
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You wouldn’t want to just accept a document from a borrower without first reviewing the document (to ensure it is correct, readable, etc.), so a user must update the status of the uploaded document to ”Approved” to satisfy the exception (or they can “Reject” the document to send it back to the borrower for re-submission).
When the status of the document is updated to “Approved” the status of the Policy Condition is automatically updated to “Satisfied” (and one exception has been handled successfully).
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How does decisioning/routing/pricing work? Credit decisioning is managed in Q2 Origination using graphical workflows (along with the Scorecard configurations we demonstrated a moment ago, as well as some additional configurations we have not covered yet). Since you asked us to provide a “graphical representation”, see that the graphical representation of workflows in Q2 Origination are available to you any time your inside the system (which we will demonstrate now). To demonstrate our credit decisioning workflow (and how we manage workflow routing in general in Q2 Origination), we must navigate to the Salesforce Admin UI and launch Flows. Click Setup Flows. A list of workflow configurations will appear which represent different workflow orchestrations managed in Q2 Origination, such as KYC, KYB, fraud, adverse action and credit decisioning (which will be the focus of our demonstration).
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Click “Run Credit Micro-Workflow” and “Analyze Credit Micro-Workflow” from the list of flows (each will launch in a new browser tab). We break the credit decisioning workflow into two flows because they happen at two different levels (first, at the Party level to capture credit data for each entity; and second, at the Application level to aggregate the credit data, determine the credit rating, make a credit decision and generate pricing).
Let’s walk through the credit decisioning workflow (beginning with the “Run Credit Micro-Workflow” workflow). The credit decisioning workflow is triggered upon application submission and automatically runs for all applicable parties (i.e. credit entities involved in the loan). Start by clicking on the “Credit Check Done?” workflow node.
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This node determines if credit has been run for the current party on the application. If credit has been run for this particular entity, the workflow will stop…otherwise it will continue.
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The next step in the workflow is determining whether the entity is an individual or a business so we can run the right credit inquiry (and to the right provider)… click on the “Business or Individual?” node of the credit workflow
The workflow determines – based on the party’s Legal Entity Type – whether they are an individual or a business.
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If the party is an Individual, the workflow branches to the top portion of the workflow, where the appropriate thirdparty adapter is identified and initiated (click “Decision Is Active”).
As you can see, if the party is an individual, the consumer credit adapter (to Experian, Equifax and TransUnion) is automatically selected.
However, if the party is a business, the workflow branches to the lower path of the credit workflow (click “Decision Is Active” on the lower branch).
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If the party is a business, the business credit adapter (i.e. FICO SBSS/Liquid Credit) is automatically selected.
Now it’s time to transition to the Application-level credit analysis/decisioning workflow (i.e. “Analyze Credit MicroWorkflow”). This portion of the workflow begins once the “Run Credit Micro-Workflow” has completed for all parties… in fact, this is the first step in the “Analyze Credit Micro-Workflow” flow – verifying that credit has been run for all applicable parties associated with the application.
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If credit has been run for all applicable parties, the workflow moves on to the Scorecard evaluation step.
As mentioned previously, while automatically triggered by the workflow, Scorecards (and Scorecard Criteria) are configurable by you:
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Next (and once the Scorecards have been run successfully – and again, the process is orchestrated automatically by the workflow), we need to determine the application’s credit rating.
The Run Credit Rating Matrix Rules step in the workflow triggers another configuration in Q2 Origination. Similar to Scorecards, and you can configure any number of credit/risk ratings in Q2 Origination:
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Applicable Credit Rating values are applied to Applications based on configurable mapping logic.
For example (in this scenario), in order to receive an “A” Credit Rating, the Scorecard evaluation performed in the previous step of the workflow must result in a Total Score of 400 or greater.
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Again, the Credit Rating assignment is orchestrated automatically by the workflow. Once complete, the workflow determines the Application’s credit decision status.
Based on the Credit Rating, the Application can fall into 1 of 3 credit decision status: •
Auto Approve
•
Manual Review
•
Auto Decline
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You have complete control over the logic:
If the application’s credit decision status is “Auto-Approve” or “Manual Review”, the workflow automatically proceeds to the Pricing Generation step.
Pricing – like Scorecards and Policy Conditions – are configurable by you. When pricing is triggered during the workflow, the Rate Cards associated with the loan product (which we covered earlier) are accessed automatically to determine which are applicable to the loan.
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Typically, a Rate Card is configured for each loan product (however, multiple loan products can leverage a single Rate Card).
Each Rate Card contains multiple pricing details which are associated with an application Credit Rating. So, if an application receives an “A” Credit Rating as a result of the Scorecard evaluation step of the workflow, the application is eligible for any of the pricing details with a “A” Credit Rating reference.
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There can be more than one pricing detail configuration per Credit Rating…this gives you the ability to present multiple pricing offers to their borrowers.
Each pricing detail configuration includes a minimum financed amount, a maximum financed amount, term, rate and more, plus additional determining factors – additional criteria that can be added to each pricing detail configuration – can be configured to refine the financed amount.
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See this slide, which depicts the borrower experience and how we present multiple pricing offers to a borrower during the application flow.
How does your product ensure clean customer/prospect data—both from bank and external data sources? Q2 Lending’s Integration Framework includes an array of third-party abstractions that normalize data we receive from third-party sources (or from your internal applications/platforms) so that third-party data can be used consistently by our application (regardless of the third-party being used). Our adapters connect to the third-party, translate data from the third-party endpoint into our third-party abstractions and make the data available inside Q2 Origination.
What is the process for initial policy creation? Though we have already covered Policy Conditions (in overview fashion), check out a quick review of how we create different Policy Conditions from scratch using an eligibility example. See what it looks like to configure an eligibility Policy Condition, which enforces that a business borrower has at least two years in business to be eligible for business credit as a part of their broader credit policy. To configure this rule, we start on the Origination Configuration screen – click Policy Condition Definitions.
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Click New.
Enter applicable Policy Condition data. In this case, we enter “NHM Eligibility Condition – Years in Business” as the Policy Condition Name and Description. We have the ability to translate these values in our Portal so that we present borrower-readable content via the self-service channel (for example, in our borrower document upload scenario previously in this demonstration, we presented custom text regarding documents required to satisfy an identity verification/KYC exception…these Portal Title/Portal Description fields determine this content). Select “Party” from the Object Type list (this indicates that the Policy Condition is specific to parties or entities associated
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with the loan…other options include Application and Collateral). Select “Data” from the Condition Type field – this indicates that the Condition is satisfied based on data matching rules (versus the “Document” Condition Type, which indicates that the Condition is satisfied by uploading and approving specific documents, as was demonstrated previously in the earlier KYC example). Select “Credit Policy” from the Type field – this indicates that the Condition is a part of the Credit Policy (i.e. different Policy Conditions are grouped together to form different policies – such as credit policies, due diligence policies, collateral policies, compliance policies, etc.). Once all of the information has been entered, click Save to create the Policy Condition.
Now that we have created our “NHM Eligibility Condition – Years in Business” Policy Condition, we need to determine our Exception Criteria (Generation Criteria). To do this, click “Add New Rule” under the Rule Generation section of the Policy Condition screen.
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Enter the Rule Name (“Stated Years in Business Rule”) and select “Party” from the Object Type. Now you can start adding your Exception Criteria by clicking the “+” icon. First, let’s add our Years in Business criteria…select Party Years in Business Operator: less than or equal to 2 (this means that if a business states that they have been in business for less than 2 years in the loan application, this policy exception will be triggered).
And of course, we will want to add additional criteria to ensure that this Policy Condition is triggered for the right types of entities (for example, we would only want to trigger this Policy Condition for business entities), so we add criteria for each Legal Entity Type to which the Policy Condition applies.
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Now that the “NHM Eligibility Condition – Years in Business” Policy Condition has been created and the Exception Criteria has been configured (which will ensure that a mandatory exception will be triggered for any business credit applicate under 2 years’ in business), we need to determine if we want to provide additional Satisfaction Criteria.
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In this case, as an eligibility requirement, the only way to satisfy the exception would be to override it. As mentioned previously, this is completely at your discretion and, if applicable, override capability is enabled at the Policy Condition level by checking the “Enable Override” checkbox (this allows authorized users to override the Policy Condition’s status). “Enable Override With Approval” can also be checked…this allows authorized users to override the Policy Condition’s status, but it requires an Approval Process to finalize the change (this is how we enable dual controls in exception override scenarios).
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Check out what the resulting exception looks like to loan teams in the Q2 Origination UI:
What does the exception process look like? Since we have already gone through a document-based policy exception workflow previously in this demonstration (when we walked through the KYC/identity verification exception tracking and satisfaction process), I suggest we approach this question with the following demonstration: •
Quick review of exception tracking and satisfaction using documentation – in this case, we will use a document to satisfy a business verification/KYB exception.
•
Review of exception overrides – using the previous “NHM Eligibility Condition – Years in Business” Policy Condition example as the basis of this demonstration.
Let’s start with bullet #1 – Quick review of exception tracking and satisfaction using documentation. Going back to the application we used in the previous identity verification/KYC example, you can see that we have other exceptions we need to satisfy before we can finalize the loan. Specifically, we will focus on the “Tax Identification Number Verification (KYB)” for purposes of this portion of the demonstration.
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Click “Actions” and select the “Documents” option from the resulting menu.
Again, we see a list of documents that we can capture to satisfy the exception (in this case, SoS Registration, Business Tax Returns, etc. – remember that Policy Condition Satisfaction Criteria is configurable by you). For purposes of this brief refresher demonstration of exception tracking and satisfaction using documentation, let’s assume the document has already been captured from the borrower.
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Since the document has already been captured, all we need to do is approve the document to satisfy the exception. Select “Approved” from the Status picklist.
Once we have approved the document and closed the modal/window, the status “Tax Identification Number Verification (KYB)” condition is automatically updated to “Satisfied”. In addition, notice that the “Proof of Ownership (KYC)” exception was also satisfied automatically because the document we used to satisfy the “Tax Identification Number Verification (KYB)” condition also satisfied the “Proof of Ownership (KYC)” exception (this is
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evidence of our ability to satisfy multiple exceptions at the same time if they share similar Satisfaction Criteria – an example of efficiencies created by Q2 Origination).
Now, let’s move to the second bullet #2 – Review of exception overrides. In scenarios where an exception cannot be satisfied by documentation or data, but the FI is willing to take on the risk associated with the exception, the FI may override the exception. For this demonstration, let’s use the “NHM Eligibility Condition – Years in Business” condition we created earlier and let’s say you’re willing to override this exception for a particular loan (where the business borrower has only been in business for one year) based on other credit factors associated with the loan. In these cases, the Policy Condition must have “Enable Override” set to TRUE (as demonstrated previously); and if overrides are enabled for the Policy Condition, authorized users will see a new option on the Actions menu for the exception – “Override Status”.
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When an authorized user clicks “Override Status”, he/she is presented with a modal/window which enables them to: •
Override the Policy Condition’s exception status
•
Provide comments describing applicable reasons for the override and any applicable mitigating factors
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Comments are required to submit an override. And as a reminder, we can also require additional approval for override scenarios (this requires “Override with Approval” to be enabled at the Policy Condition level and an associated Approval Process to be configured).
How does rolling-out, reviewing, and early tuning of the policy work? Implementation of your credit policy, due diligence policies, collateral policies, and compliance policies in Q2 Origination begins with our out-of-the-box (turnkey) “starter” package configurations. We provide the following OOTB to accelerate the roll out of your initial policies: •
•
Scorecards – We provide a starter set of SMB Scorecards which include Scorecard Criteria for the following: o
Business Entities – includes SBSS Score (from FICO SBSS/Liquid Credit), Total Revenue, Debt Service Coverage, Years in Business, Bankruptcies, Judgements, Liens, etc.
o
Individual Business Borrowers – includes Credit Score, Debt-to-Income Ratio, Bankruptcies, Delinquencies, Inquiries, etc.
o
Individual Guarantors – includes Credit Score, Debt-to-Income Ratio, Bankruptcies, Delinquencies, Inquiries, etc.
Credit Policy Conditions o
Unsatisfactory Credit Rating
o
Individual Credit Score Below 600
o
Business Borrower Less Than 2 Years in Business
o
LTV Below 80%
o
Bankruptcy
o
Loan to Income/Revenue
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•
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Customer Due Diligence Policy Conditions o
Customer Information Program (CIP) – Primary Identification
o
Customer Information Program (CIP) – Secondary Identification
o
Principal Name/Address Verification (KYC)
o
Guarantor Name/Address Verification (KYC)
o
Signer Name/Address Verification (KYC)
o
Beneficial Owner Name/Address Verification (KYC)
o
Borrower Documentation (Business)
o
Borrower Documentation (Individual)
o
Principal Documentation (Individual)
o
Guarantor Documentation (Individual)
o
Beneficial Owner Documentation (Individual)
o
Affiliate Documentation (Business)
o
Signer Documentation (Individual)
o
OFAC/Watchlist Verification (KYC)
o
Tax Identification Number Verification (KYB)
o
Proof of Ownership (KYB)
o
Proof of Good Standing (KYB)
Collateral Due Diligence Policy Conditions o
Property Appraisal (Real Estate Property)
o
Flood Determination (Real Estate Property)
o
Flood Insurance Verification (Real Estate Property)
o
Property Survey (Real Estate Property)
o
Collateral Documentation (Real Estate Property)
o
Valuation (Vehicle)
o
Insurance Verification (Vehicle)
o
Collateral Documentation (Vehicle)
o
Valuation (Equipment)
o
Collateral Documentation (Equipment)
o
Valuation (Possessory)
o
Collateral Documentation (Possessory)
Our implementations start with these OOTB Scorecards and Policy Conditions and then we analyze your credit policy to identify changes we need to make. By beginning with OOTB Scorecards and Conditions, we can implement more quickly (and it helps you better understand the different frameworks we use to enforce credit policy, due diligence policies, collateral policies, compliance policies and more.
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And since you probably are digitizing your business lending operation for the first time (and since you’re probably also leveraging technology to assist with credit analysis and decision-making for the first time), we also offer functionality to help tune your scoring models and policies to ensure the best outcome. Click Origination Configuration
Scorecards. Launch the Commercial Scorecards and click Edit.
Our Scorecard feature, for example, includes the ability to designate Scorecards as “Champion” Scorecards and “Challenger” Scorecards. This Champion/Challenger designation enables you to run production scorecards (i.e. “Champion”) to process real-world loans while simultaneously running “Challenger” scorecards in parallel; this allows you to make changes to your production scorecards and run them/evaluate them in parallel so that you can compare the results of the Challenger scorecards to your current production scoring logic. This functionality allows you to make incremental changes to your scoring logic and associated credit policies – and test them using live data – without impacting your active/production scoring models/credit policy (for live loans in origination) until you are ready to convert the Challenger scorecards to Champion scorecards (i.e. put them in production).
How does our product work with the Bank to monitor and manage the credit policy?
Q2 Origination provides reports and dashboards to enable you to monitor your credit policy. Interactive dashboards enable your users to view insights and indicators regarding active loans and exceptions to policy.
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NH Mutual Bancorp
Q2 Lending User Guide
Your users can also drill into any report to view the report details, as well as click Application links within the report to access specific loans.
Your users can also subscribe to exception reports to receive proactive daily, weekly or monthly credit policy updates.
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NH Mutual Bancorp
Q2 Lending User Guide
Authorized users can also customize and create their own reports and dashboards.
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NH Mutual Bancorp
Q2 Lending User Guide
How are the loans funded? Loans are typically funded through the core banking system. Through integration to your core banking system, we will book the loan to your core in real-time where the loan can be funded. If funding from your core banking system is a problem (for whatever reason), we also offer the ability to process funding transactions/disbursements from our loan servicing module by generating an ACH file (which can then be processed by you. If this is a feature you need, we will figure out a way to license it).
Describe the transition from application to business deposit account opening? The transition to deposit account opening (or as we prefer to call it “inclusion”) occurs after loan approval, when we present credit offers to the borrower. Cross-selling deposit and treasury products and services after loan approval increases the odds of conversion by 2-3 times, enabling you to expand customer relationships more effectively via self-service channels.
After accepting a credit offer, the applicant is presented with funding options, including the ability to 1) select an existing deposit account into which he/she wants to fund the loan; 2) provide wiring instructions to wire the funds to an external account; or 3) open a new account with the financial institution. If the applicant elects to open a new deposit account with you, he/she is presented with a list of deposit products to choose from.
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NH Mutual Bancorp
Q2 Lending User Guide
The applicant can view deposit product features and fees and select the deposit product that best suits the applicant.
Once the applicant has selected the applicable deposit product, he/she can click “Next” to proceed to the next step.
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NH Mutual Bancorp
Q2 Lending User Guide
If the applicant has chosen to open a new account, he/she will be presented with a list of beneficial owners and guarantors that he/she created while filling out the small business loan application, each automatically selected as a signer on the deposit account (this is done as a courtesy to the applicant…if the applicant does not want to include one/any of these parties as signers on the deposit account, they can simply uncheck the “Signer” box).
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NH Mutual Bancorp
Q2 Lending User Guide
Applicants can also add additional signers to the deposit account.
And click “Finalize” to complete the deposit portion of the application.
Finally, the applicant is sent applicable loan and deposit agreements for electronic signature.
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NH Mutual Bancorp
Q2 Lending User Guide
Is your product integrated with JHA Silverlake? Is the account creation fully automated to core?
We do not have a real-time integration to Jack Henry Silverlake at this time, but we are in the process of building out a real-time Silverlake integration for a customer (so by the time NH Mutual goes live, we will have this integration). Our integrations typically include batch data to ensure access to data in scenarios where the core is offline for any reason (this is for batch “stand-in”), as well as real-time CIF/Loan/Account inquiry and realtime loan booking and account opening. What marketing capabilities (internal customer base and prospects) are provided by our product to the Bank? Q2 offers Q2 SMART to enable FIs to market to their customers directly inside Q2 digital banking. Q2 SMART allows FIs to create multiple campaigns which target different audiences with different product offers and promotions. The product offers/promotions configured in the campaign appear as SMART Ads to digital banking users (i.e. clickable text or images displayed to online banking users based on their inclusion in an audience associated with a specific campaign).
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NH Mutual Bancorp
Q2 Lending User Guide
Audiences are groups of customers with specific traits in common – behavior characteristics, transactional characteristics or product elections – defined by you for specific marketing campaigns.
Here are some examples of traits you can choose from:
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NH Mutual Bancorp
Q2 Lending User Guide
Q2 SMART provides details for each campaign, such as total impressions, clicks/click-through rate and total conversions, as well as lead lists and other actionable intelligence.
In addition to provide campaign statistics, insights and lead lists, Q2 SMART also integrates seamlessly with Q2 Origination to enable customers to click a Q2 SMART Ad (advertisement), launch a loan or deposit application inside digital banking and process the application straight-through without the customer ever having to leave digital banking.
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NH Mutual Bancorp
Q2 Lending User Guide
Integration loan application launched from a Q2 SMART Ad:
In addition to Q2 SMART, Q2 Origination is natively built on the Salesforce platform enabling Q2 Origination customers to leverage the world’s premier CRM to market to their customers. Through Salesforce, you can purchase Marketing Cloud and manage demand generation campaigns, sales pipeline and more.
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NH Mutual Bancorp
Q2 Lending User Guide
Marketing Cloud facilitates email campaigns on your behalf and allows you to send marketing emails directly from the system…
…as well as view/manage campaign results.
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NH Mutual Bancorp
Q2 Lending User Guide
How do you take the friction out of the customer experience? Q2 Origination takes friction out of the customer experience by: •
•
•
Integrating with digital banking and eliminating re-keying of data for existing customers o
UUX SSO enables us to identify the existing customer and access additional customer details from the core banking system.
o
Q2 Origination pre-populates loan applications with data from the core banking system, reducing the amount of data entry required by the customer.
Proactively (and intelligently) cross-selling relevant products to existing customers via digital banking o
Q2 Origination integrates with Q2 SMART to target audiences with product offers and process and fulfill them straight-through.
o
We plan to – as a part of the Q2 Origination roadmap – contribute more origination and onboarding data to the SMART data store so that additional traits can be manufactured to create greater/more effective crosssell intelligence.
Proactively cross-selling relevant products during the application flow o
Q2 Origination positions relevant deposit and treasury product offers to applicants during the loan application process at appropriate times to increase the likelihood of conversion.
o
Q2 Origination re-uses data already entered to reduce redundant/repeated actions.
o
We plan to – as a part of the Q2 Origination roadmap – also enable loan cross-sell during business account opening.
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NH Mutual Bancorp •
•
•
•
Q2 Lending User Guide
Leveraging third-party data to reduce data entry and improve accuracy o
Q2 Origination connects to a variety of third parties to capture demographic information, firmographic information, financial information and more for each borrower.
o
Q2 Origination leverages services like Google Address to reduce data entry.
Get the borrower to “yes” and to “cash” as fast as possible. o
Q2 Origination uses third-party data and automation to quickly qualify a business borrower (usually in less than 3 minutes). This is getting a client to “yes”. Any time you can get a borrower to a conditional approval, the borrower 1) typically stops shopping around; and 2) reduces the borrower’s anxiety level considerably. Getting the borrower to “yes” quickly also buys you time to perform additional due diligence, analysis, etc. to finalize the loan request.
o
Q2 Origination also digitizes due diligence, approval, closing and booking, getting the borrower to “cash” quickly…providing rapid access to funds drives the ultimate borrower experience.
Digitizing back-office workflow to accelerate onboarding and origination workflows o
Faster and more efficient back-office loan process and fulfillment leads to a faster, more convenient, and superior customer experience.
o
Having a digital “single source of truth” for origination and onboarding reduces errors and mistakes (which often slow the origination process down or require the borrower to resubmit documentation and information).
Providing greater relationship clarity and situational awareness for bankers o
Eliminates the need for existing customers to have to explain their business or banking relationship overand-over again to different bank representatives (which, based on feedback from our FI clients, is a big complaint from their business customers).
o
Provides better visibility across workflows and lines of business, enabling faster and more efficient origination and onboarding.
What is the timing start to finish for the customer to successfully complete a SBL application? Time to open a business deposit account? Our small business loan applications are designed to take between 90 seconds and 3 minutes to complete and submit. You can monitor the average time spent during application (for different segments – i.e. self-service versus branch) via interactive dashboards. You can also monitor application abandonment and other key indicators to track the success of your digital lending and self-service account opening strategy.
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NH Mutual Bancorp
Q2 Lending User Guide
Your users can also drill down to view individual reports and time spent completing specific applications.
In addition to higher-level process indicators (such as average application submission time), Q2 Origination also provides the ability to drill down and view the average time spent at each step of the self-service application flow (i.e. average time to submit each page of the portal application flow).
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NH Mutual Bancorp
Q2 Lending User Guide
Your users can also filter and customize these reports to gain additional insights.
End-to-end processing time depends on a lot of different factors – for example, could you process the application straight through (in which case the entire process, from application to closing and e-signature, takes less than 5 minutes); however, many applications require additional review and due diligence before it can be approved, closed, and funded. Let’s be honest, automated straight-through processing only applies in certain conditions, and there will inevitably be scenarios where underwriters, credit analysts, etc. will need to manually review and process
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NH Mutual Bancorp
Q2 Lending User Guide
the loan. For any of these scenarios, we provide reporting and analytics to help you understand how the application workflow is performing at each stage of the origination process. For example (see screenshot), we capture the amount of time (to the second) that a loan sits in a particular state…this enables you to identify process bottlenecks, benchmark workflow efficiency and more.
Again – and as mentioned previously in this demonstration – authorized users can subscribe to any/all of these reports and receive them automatically. In addition, your users can export the report data as a CSV or XLS to further slice and dice the data, import it into other business intelligence platforms, etc.
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NH Mutual Bancorp
Q2 Lending User Guide
What reporting is given for usage/abandonment rates at each step of the application process? How do we prompt for half started applications? As mentioned previously, application abandonment and usage is tracked by you using interactive reports and dashboards in Q2 Origination (see previous section for details…screenshots also included below).
For those who are looking for more insights regarding user cohorts, click-through rates, deeper adoption and abandonment statistics, etc. we can also integrate with Pendo. By feeding our usage data to Pendo, you can view how applicants are interacting with specific features (like help or tooltips)…
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NH Mutual Bancorp
Q2 Lending User Guide
…as well as what browsers applicants are using to apply online, the ratio of online versus mobile applicant submission and more. Q2 Lending does not resell Pendo (FIs must purchase Pendo separately) and implementation of Pendo requires an additional implementation and setup fee, so if you’re interested in using Pendo, we will need to submit an RFQ.
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NH Mutual Bancorp
Q2 Lending User Guide
Describe the digital user experience for transitioning across channels (Branch, online, mobile, etc) The transition (for a prospect/customer) is seamless from product-to-product (such as from Business Account Opening to Small Business Loan Origination) because new customers (who are not yet enrolled in digital banking) use a common set of Portal credentials to access deposit and loan applications in progress. Existing customers seamlessly access new applications and in-flight applications using their digital banking credentials.
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NH Mutual Bancorp
Q2 Lending User Guide
In terms of transitioning from a desktop experience to a mobile experience, our Business Account Opening and Small Business Loan Origination portals are mobile responsive, enabling an applicant to apply from their desktop computer…
…as well as apply via a mobile device.
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NH Mutual Bancorp
Q2 Lending User Guide
In terms of transitioning from online to branch, your users can submit new applications on behalf of the customer or locate an inflight application and continue it on behalf of a customer via Q2 Origination’s Agent Application View.
When an in-flight application is selected by one of your users, the application contains all of the information entered by the applicant up to that point, enabling your user to complete and submit the application on behalf of the customer.
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NH Mutual Bancorp
Q2 Lending User Guide
Your users can also access in-flight applications from the digital credit file (and get a more comprehensive experience):
How are the channels integrated: for the customer/for the banker? Q2 integrates multiple channels for the customer and banker, as well as between the customer and banker: •
•
Customer Support – Q2 enables bankers to support their digital banking clients from inside of Q2 Origination by giving bankers the ability to: o
Unlock Online Banking Passwords – Your users can unlock their customers’ online banking passwords from inside Q2 Origination.
o
Reset Online Banking Passwords – Your users can reset their customer’s online banking passwords and select a Secure Access Code target to send the verification code.
o
Launch CSR Assist – Authorized users can launch CSR assist from Q2 Origination and co-browse with the customers to troubleshoot digital banking issues.
Omni-Channel Origination and Onboarding – Q2 Origination enables prospects and customers to apply for loans and deposits across any channel, as well as switch between channels without any loss of fidelity: o
Desktop – Q2 Origination provides a rich self-service experience via desktop media.
o
Mobile – Q2 Origination’s self-service experience is also mobile responsive, enabling borrowers to apply for loans or deposit accounts via mobile devices.
o
Branch – Q2 Origination enables your users to submit loan and deposit applications on behalf of their customers, as well as allows your users to continue in-flight applications started by a customer via the online or mobile channels.
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NH Mutual Bancorp
Q2 Lending User Guide
Let’s begin by walking through Q2 Origination’s digital banking support capabilities. If enabled (licensed), authorized users will see additional support functions on the Q2 Origination Account (i.e. customer screen)
If the customer is an existing online banking customer (meaning they have an existing Customer/ User /Login record in UUX), authorized users will be able to perform specific support functions inside Q2 Origination.
For example, your users can unlock passwords for their customers by clicking “Unlock” from the Actions menu.
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NH Mutual Bancorp
Q2 Lending User Guide
Once your user confirms the Unlock Password action, the customer’s online banking password will be unlocked and the customer will be able to log onto online banking.
Authorized users can also reset their customer’s online banking passwords by clicking the “Reset Password” icon.
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NH Mutual Bancorp
Q2 Lending User Guide
Next, your user will need to select a Secure Access Code target from a list of available targets (password changes must be authorized and authenticated out-of-band by the borrower before a new password can be set).
Finally, authorized users can “co-browse” with their customers to help them troubleshoot online banking issues, teach them how to use certain features, etc. The co-browse session is initiated by launching the CSR Assist (by clicking the CSR Assit button).
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NH Mutual Bancorp
Q2 Lending User Guide
CSR Assist requires specific entitlements and credentials which must be entered before launching the co-browse session.
Once successfully authenticated, your user can view the customer’s online banking session and co-browse alongside them.
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NH Mutual Bancorp
Q2 Lending User Guide
Next, let’s look at how Q2 Origination integrates the online and mobile channels for your prospects and customers.
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NH Mutual Bancorp
Q2 Lending User Guide
Describe the ongoing digital experience for the banker/back office. The back-office experience generally works like this… When a back-office user launches an application in Q2 Origination, the user is presented with the digital credit file and a summary of the loan details (i.e. amount, product/purpose, interest and payment details, key dates, etc).
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NH Mutual Bancorp
Q2 Lending User Guide
Back-office users have the ability to log notes and comments throughout the origination process…
…as well as send messages to other loan team members.
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NH Mutual Bancorp
Q2 Lending User Guide
Q2 Origination notifies back-office users of required actions using tasks which are accessible by all members of the loan team.
Back-office users are given greater visibility and situational awareness by enabling them to view the borrower’s current treasury relationship (if they have one), as well as the progress of any active treasury onboarding workflow (and the personnel involved in the onboarding workflow).
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NH Mutual Bancorp
Q2 Lending User Guide
Likewise, back-office users have the ability to view the borrower’s existing deposit relationship (if applicable) along with any new deposit accounts in the process of being opened, and the FI personnel processing the in-flight deposit application.
Back-office users can view/add/manage parties (borrowers, guarantors, signers, related entities, participants, etc) associated with the loan.
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NH Mutual Bancorp
Q2 Lending User Guide
For each party, back-office users can access contact information, personal, and demographic information (for individuals), business and firmographic information (for businesses) and more.
Back-office users can enter/modify party details, manage the parties’ addresses, etc.
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NH Mutual Bancorp
Q2 Lending User Guide
For each party, back-office users are also presented with credit and due diligence details, such as consumer credit and KYC (for individuals), business credit and KYB (for businesses), fraud and other information.
Back-office users have the ability to drill deeper into any party details, such as business credit, to view additional information, indicators, etc. which are not summarized/displayed on the main Parties screen.
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NH Mutual Bancorp
Q2 Lending User Guide
Back-office users can view loans and deposits associated with the party from the core banking system.
Back-office users can also view the broader household or global business relationship through our Relationship Graph.
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NH Mutual Bancorp
Q2 Lending User Guide
Similarly, back-office users can view/add/manage property being pledged as collateral to the loan.
Back-office users can view high-level collateral information…
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NH Mutual Bancorp
Q2 Lending User Guide
…as well as detailed collateral information (specific to each unique collateral type).
Back-office users can view/manage collateral locations, collateral owners, and appraisal/valuation details (as well as trigger new appraisals/valuations)…
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NH Mutual Bancorp
Q2 Lending User Guide
…along with applicable UCC, flood determination, insurance and other relevant information.
Back-office users can also drill deeper into any collateral details, such as flood determination, to view additional information, indicators, etc. which are not summarized/displayed on the main Collateral screen.
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NH Mutual Bancorp
Q2 Lending User Guide
Back-office users can access a variety of additional capabilities – such as credit and risk analysis, pricing, credit memo, etc. – by clicking More.
Back-office users can view the current loan team (FI personnel working to process/originate the loan) and add additional users to the team.
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NH Mutual Bancorp
Q2 Lending User Guide
Back-office users can view dynamic document checklists (i.e. dynamic document requirements based on the type of loan product or purpose, legal entity classification of each party, collateral types, etc.).
Back-office users can upload documents received from the borrower, as well as view documents uploaded to the credit file (or uploaded by a borrower from the Portal, as demonstrated previously).
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NH Mutual Bancorp
Q2 Lending User Guide
Back-office users can manage mandatory exceptions to credit policy, due diligence policy, and compliance policy from the Exceptions screen.
Back-office users and credit analysts can also spread financials.
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NH Mutual Bancorp
Q2 Lending User Guide
Back-office users can enter balance sheet and income statement information and automate the calculation cash flow and financial ratios.
Back-office users can toggle trend analysis as well as stress test borrower financials by running sensitivity analysis.
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NH Mutual Bancorp
Q2 Lending User Guide
Back-office users can automatically calculate global cash flow, global debt service and global debt service coverage.
Back-office users can then use the resulting ratios and indicators, along with data captured from the borrower (and from third-parties) to automatically evaluate the loan (using scorecards which we previously covered in this demonstration) to determine the application/deal’s credit rating.
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NH Mutual Bancorp
Q2 Lending User Guide
If the deal rating results in the need for manual review and approval, authorized approvers can review the loan and submit their decision (along with any approval conditions/requirements).
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NH Mutual Bancorp
Q2 Lending User Guide
What are the processes/tools for monitoring the portfolio and individual loans? Let’s start with individual loans. We provide the following features for monitoring individual loans: •
Covenants
•
Periodic/Annual Review
Covenants Covenants can be added to a loan application or entity/relationship from the digital credit file user interface (Q2 Origination can be customized to add covenants automatically as well). Launch APP-00000000041 and navigate to the Covenants screen to demonstrate the “Add Covenants” user experience.
Covenants in Q2 Origination come in two forms – document (reporting) covenants and financial covenants. For document covenants, you can define the type (i.e. Document), description, evaluation frequency, notification period (i.e. the number of days prior to the covenant becoming an exception should the relationship manager and borrower be notified of the covenant requirement) and associations (i.e. loan product association, legal entity type association, etc. – how we associate specific covenants with specific deals).
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NH Mutual Bancorp
Q2 Lending User Guide
In addition to document/reporting covenants, we also support financial covenants to enable FIs to periodically evaluate key financial indicators to continuously manage credit risk. Financial covenants are enforced by defining the specific financial indicator/ratio and the evaluation criteria (i.e. operator and matching value), along with the frequency.
When a covenant evaluation is triggered (based on the Notification Date configuration at the Covenant Definition level), the covenant becomes visible on the Relationship UI.
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NH Mutual Bancorp
Q2 Lending User Guide
Authorized users can manage covenant exceptions and view covenant history.
That’s how we manage covenant tracking and monitoring; however, we also enable periodic credit risk reviews in Q2 Origination.
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NH Mutual Bancorp
Q2 Lending User Guide
Periodic Reviews Periodic reviews are managed in Q2 Origination with a special type of loan product configuration. By using our existing product infrastructure, we have the ability to manage credit analysis, decisioning and exception tracking workflows during periodic/annual reviews the same way we do during loan origination. For example, if you want to manage ongoing/annual reviews for specific small business or commercial loans, you simply need to 1) configure the periodic review product workflow; and 2) link the periodic review product to the specific small business or commercial loan product you want to review.
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