Overview
Our client, a San Diego-based financing corporation specializes in providing small business loans and other funding services to thousands of businesses nationwide. They partnered with us to increase their risk management process automation, reduce manual efforts, and improve overall efficiency. Their end goal was to establish a system that would help them identify and mitigate emerging risks speedily.
Challenge
Our client’s key USPs include providing fast and easy funding solutions to their SMB clientele. The agency’s management knew that in today’s slow-growth, high-inflation, low-profit-margin environment, fulfilling this promise without increasing credit risks was going to be difficult with their existing semi-automated monitoring system. In their previous system, in-depth risk analysis was a periodic manual task that included tedious data collection and reporting.
The time-consuming nature of these tasks resulted in risk management that was largely reactive. Moreover, it provided inadequate insight into their customer’s current business health. This meant that loan and line-of-credit decisions for repeat customers were being made using outdated data. Therefore, they needed to upgrade to a system with daily risk reporting and continuous monitoring.
TRaiCE solution
As achieving real-time visibility and early risk identification was a priority for our clients, the TRaiCE system was finetuned to monitor the agency’s SMB portfolios for early warning indicators of business distress. Using world data APIs, our proprietary LLM models combined available past financial data, regulatory metrics, stock price data, and current unstructured data to assess the present-day risk status for each business.
Our NLP algorithms also identified and generated alerts for potential leading legal, reputational, and operational business risk indicators that it found. These, if left unchecked, could transform into a major negative credit event in the future. The system was also customized to generate daily risk reports, company sentiment scores, and quarterly risk projections.
Outcome
TRaiCE is an end-to-end automated AI-led risk monitoring and Early Warning System. Our proprietary processes handle all repetitive tasks such as finding, gathering, cleaning, and segmenting relevant risk data. This helped our client substantially reduce the research time and manpower previously needed to perform these crucial tasks while improving risk monitoring. The agency was also able to uncover troubling business patterns for several borrowers easily.
These early warning signals allowed them to take proactive risk-mitigation measures. By tracking more risk variables and providing our clients with complete, continuous, and daily portfolio risk monitoring, TRaiCE provides the agency with more accurate pictures of its customer base. This has improved the agency’s ability to respond speedily and effectively to changing market conditions and make better refinancing decisions.
