OakNorth Credit Intelligence Launches Its Ultimate Guide to Commercial Lending and Scenario Analysis

OakNorth Credit Intelligence (ONci), the go-to SaaS partner for commercial banks to lend smarter, faster, and more, today announces the launch of its ‘Ultimate Guide to Commercial Lending and Scenario Analysis’.

Scenario analysis in commercial lending has undergone significant changes in recent decades due to advancements in technology, changes in the economy, tightening credit policies, and evolving regulatory requirements. This latest guide breaks down these changes, while also detailing the limitations of existing scenario analysis tools and what the core ingredients are required for a ‘best-in-class’ scenario analysis framework. The guide details ONci’s ON Scenario Analysis application, part of the broader ON Credit Intelligence Suite, which provides banks with a granular, bottom-up, forward-looking view of their commercial loan portfolios.

ON Scenario Analysis enables lenders to identify risk up to 12 months in advance, as well as run multiple macro-economic scenarios across their entire commercial loan book, then change the parameters and run them again, instantly. ONci’s forward-looking industry forecasts provide lenders with a view of performance and risk migration across their portfolios, as well as down to individual borrower levels, enabling lenders to take preventive action so they can continue confidently lending and supporting borrowers through economic cycles.

ONci’s guide to Scenario Analysis is the second in its ‘Ultimate Guide’ series, following 2022’s, ‘Ultimate Guide to Commercial Lending and Climate Impact’, which detailed the challenges climate risk presents for commercial banks and how to address this new era of risk assessment head-on, using data-driven insight to minimize risk and maximize opportunity.

Hugh Shannon, Head of Sales & Customer Success at ONci, commented: “Today’s market dynamics and volatile economic environment is making the need for actionable scenario analysis increasingly evident. This is further reinforced by current regulatory stress testing, such as the Federal Reserve’s severely adverse scenarios, not reflecting the economic reality. This was made apparent by the recent bank failures that came about due to regulatory stress tests being seen as a tick-box exercise, rather than an opportunity to use a range of forward-looking economic scenarios to gain a better understanding of the possible impacts on liquidity, and profitability. Additionally, with banks facing top-line pressures because of net interest margin compression and the continued economic downturn, there is an increased focus on efficiency. In commercial lending, actionable scenario analysis can play a vital role in guiding banks where to deploy limited resources, meaning lenders can do more with their existing assets while continuing to grow. We’re thrilled to launch this guide that details why and how banks can evolve their approach to scenario analysis to reduce uncertainty, provide actionable insights to the front line, and help identify opportunities for growth.”