Ask Your Credit Analysts These Questions to Optimize Deal Flow

Mary Ellen Biery
November 25, 2019
Read Time: min

The human component of optimizing deal flow

Financial institutions, regardless of size, must grow their assets and lower unit costs in the years ahead in order to remain competitive. That’s the advice of economist and industry consultant Thomas J. Parliment. “You can’t stop earning because you’re afraid about the credit environment,” Parliment told hundreds of bankers at Abrigo’s 2019 ThinkBIG Conference earlier this year. “You have to earn. You have do it faster.”

Technology certainly plays a role in lowering unit costs and managing risk for many lenders. Moving from disparate spreadsheets and repetitive data entry to a web-based platform that streamlines analysis and improves consistency will shorten turnaround time.

However, chief credit officers cannot overlook the human component of optimizing deal flow, either. There is a lot more to an effective team than the number crunching and simply moving applications along a pipeline, according to loan review and credit risk Consultant Ancin Cooley.

Cooley, who recently led two Abrigo webinars, “Best Practices for Credit Analysts at Banks” and “Credit Union Best Practices for Credit Analysts,” recommends asking your credit analysts a series of questions that can help get to the bottom of issues that might be stalling some loans or reducing efficiency. “Maybe there’s a weakness that needs to be addressed,” he says. The questions Cooley suggests asking are:

  1. What loan types or industries give you the most trouble?
  2. Which loan officer do you like to work with the least?
  3. Do you concentrate better in the morning or the afternoon?
  4. Are there any additional areas in the credit department you would like to learn more about?
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Learning about obstacles to loan deal flow

Cooley explains that responses to the questions will potentially shed light on:

  • Strengths and weaknesses of the individual credit analyst
  • Other players in the lending process who might be contributing to bottlenecks
  • Opportunities to develop credit analysts more fully to their potential

 

Some loan types or industries can be tricky

Some credit analysts will work with a loan and turn it around very quickly, but if given another type of loan, Cooley says, “They seem to babysit it.” He suggests asking credit analysts, “What type of loan or industries give you the most trouble?” Knowing the answers to that question will help managers identify the resources to help improve analysts’ performance or comfort level with those loan types or industries.

Some co-workers can contribute to bottlenecks

Asking credit analysts privately, “Which loan officer do you like to work with the least?” can be enlightening as it relates to deal flow, according to Cooley. The object of asking this question is not to create strife, he says. But if one name keeps coming up when you ask multiple analysts and they can give valid reasons why the person is difficult to work with, rude, or generally not a good teammate, it might be something you want to address with the loan officer.

Cooley says asking a question like this is “about creating an environment that facilitates respect and efficiency, which is good for business.”

Uncovering other ways to encourage efficiency

Credit analysis requires focus

Cooley says that deal flow can improve when credit analysts are able to concentrate, so he suggests asking analysts, “Do you concentrate better in the morning or the afternoon?” After reading the book, Deep Work by Cal Newport, Cooley used this approach with some institutions in his consulting work: He suggests credit analysts be given a period of time to focus on the credit in front of them without being disturbed. Allow them to shut their doors or put something outside their cubicles and mark the time in their calendar as being off limits for disturbances.

“I’ve seen efficiencies improve when you implement deep work periods either in the morning or the afternoon so that your analysts can really focus,” he says.

 

Encourage analysts to learn

Credit analysts, like all bank or credit union employees, want to feel respected, rewarded, and appreciated, Cooley says. “Just making credit analysts do file after file after file after file – you’re going to burn them out,” he says. With banking skill shortages seen as a threat to growth prospects, it’s a good idea to look for ways to avoid credit analyst burnout.

One of the ways managers can show credit analysts appreciation and respect is to ask, “Are there any additional areas in the credit department you would like to learn more about?” Helping analysts learn more about areas outside of their immediate purview benefits both the employee and the financial institution, he notes. “Maybe let them work on the allowance. Maybe one quarter let them learn about the exception-tracking process. Let them work on appraisals; let them develop a variety of skills, and in that variety of skills, they’ll develop a better perspective, and I promise you, it helps with retention tremendously.”

“This is about retention and engagement and managing your talent risk,” Cooley says.

 

Understand how personalities can affect performance

Another way to improve efficiency in the credit department is simply to be understanding of your employees, according to Cooley.

Everyone approaches their work in a different way, and being cognizant of various personalities and work styles can help you uncover “superpowers” in certain analysts. For example, some analysts reveal they are “fiercely loyal when they feel understood,” Cooley says, adding they might pass up another job opportunity if they feel their current work situation suits them well.

Cooley recommends creating office boundaries for all workers, such as requiring that people who wish to discuss a loan file set up a meeting in advance with the analyst. While some analysts may be prepared and have their “i’s dotted and t’s crossed and they’re ready to go” if you’ve made an appointment, it can throw that same analyst off if you pop in unannounced, Cooley says. “It makes certain people extremely anxious when you just drop by. It creates inefficiencies. They get unfocused. They get flustered. It takes them an hour to get focused again, and your deal won’t get done as fast.”

While Cooley didn’t suggest this, one option for increasing your team’s effectiveness and encouraging collaboration is to implement personality testing across the team to gauge individual work styles. Assessments such as the Myers-Briggs assessment and the DiSC assessment can help both management and teammates understand one another’s personalities and behavior, which can shed light on opportunities to improve the quality and efficiency of work.

To hear more of Cooley’s advice for optimizing deal flow and helping credit analysts perform at their best, listen to the replay of the webinars, “Best Practices for Credit Analysts at Banks” and “Credit Union Best Practices for Credit Analysts.”

About the Author

Mary Ellen Biery

Mary Ellen Biery is a Senior Writer and Content Specialist at Abrigo.

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Abrigo is a leading technology provider of compliance, credit risk, and lending solutions that community financial institutions use to manage risk and drive growth. Our software automates key processes — from anti-money laundering to fraud detection to lending solutions — empowering our customers by addressing their Enterprise Risk Management needs.

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