Commercial banking operations

Lending represents the cornerstone of commercial banking operations, accounting for 70 percent of revenue in the commercial banking sector (excluding capital markets and investment banking). The loan origination process enables banks to provide vital financial support to businesses through:

• Cash flow management.
• Asset investment and business growth.
• Supply chain and trade financing.

Pega's approach to lending focuses on achieving the optimal balance between digital sales completion and personalized interaction. This balance is particularly crucial as banks face increasing pressure to:

• Eliminate manual processes.
• Maximize digital self-service options.
• Enhance efficiency, especially for small and medium-sized enterprises. 

In an era where regulatory compliance is paramount, effective risk management becomes critical to the success of a bank. Regulatory breaches can have severe consequences, as evidenced by recent cases where fines have reached hundreds of millions of dollars, which significantly impacts key metrics such as return on equity.

Pega risk management solutions encompass the following areas:

• Know Your Customer (KYC) and Client Lifecycle Management.
• Sanctions alert triage and investigations.
• Financial Crime Investigations.

Through partnerships with industry leaders and collaborations with major institutions, including Bank of America, HSBC, and ING, Pega solutions bring extensive subject matter expertise to this crucial domain.

The operational backbone of commercial banking, which consists of client servicing and operations, typically represents:

• 60-70 percent of bank headcount.
• At least half of the cost base.

While initial onboarding and product setup is important, customer retention primarily depends on:

• Competitive pricing.
• Service quality.
• Value-added services.

Pega solutions help banks to enhance operational efficiency through:

• Multi-channel service delivery.
• Optimized self-service features.
• Timely access to relevant information.
• Reduction in complex case resolution times from days to minutes.
• Achievement of 80-90 percent straight-through processing rates.
• 80 percent reduction in contact center calls through enhanced self-service features.

Commercial banking success hinges on two fundamental pillars: effective risk management and careful margin management. Pega solutions help banks excel in both areas by providing comprehensive tools for lending, risk management, client servicing, and operations to truly crush complexity in commercial banking.