Building An Enhanced Commercial Lending Credit Risk Platform for EQ Bank
Equitable Bank (EQB) approached Blanc Labs to envision, build, and implement a highly complex commercial lending credit risk platform. Blanc Labs has been an integral part of EQB’s digital transformation journey. In this case study, we provide a brief overview of EQB’s digital transformation journey, share highlights from its recent work with Blanc Labs on a new commercial lending platform, and identify the key factors that have made the collaboration between Equitable Bank and Blanc Labs so successful.
Equitable Bank is Canada’s challenger bank, ranked No 1 for two years running (2021-23) in the Forbes list of the World’s Best Banks. Since 2014, it has strategically focused on being a leader in digital banking, embracing an ambitious digital transformation agenda centered around its lending and deposit businesses. The bank knew that to survive and thrive in an increasingly digital world, it needed to get better control over its data and use innovative technologies more effectively to create value both inside the bank and for its brokers and end customers.
To digitally transform their operations, EQ Bank approached Blanc Labs to create a customized commercial lending credit risk platform for improving its data governance, underwriting and decisioning processes, and its client and employee experience.
Blanc Labs took an Agile approach to developing the bank’s commercial lending platform.
Concept to First Release
EQ Bank was determined to launch its commercial lending platform as quickly as possible. The bank and project team set a target to release Version 1 of the platform within 12 months, with the understanding that additional releases would follow to address gaps, improve functionality, and enhance the user experience.
To meet the tight timelines, the team designed and built the platform in parallel with additional discovery related to the requirements of the bank’s three commercial lending business units. The strategy was to ensure that the business line with highest volume and most standardized deals would be the primary focus on the first release, followed by the business line with small to medium sized deals on the second and finally the business line with deals representing low volume, high dollar value and more complex credit structures to be addressed in the third release. To expedite the entire process and drive more value, the team introduced feedback sessions with senior management to share design work visually and get immediate feedback. This process not only made feedback more efficient, but also helped align all stakeholders on prioritization.
The team completed the design and build work for Release 1 in mid-2019, conducted appropriate testing, and deployed the first release of the platform on schedule.
What we have built with Blanc Labs as our partner, is a data-centric model which is unique in the Canadian marketplace. As we continue to optimize the build, we will realize many benefits over the years.
Building a Release Train
As confidence in the project rose, stakeholders became increasingly more involved and collaborative. At this point, employing a very efficient and disciplined release cycle was paramount. To make the release process more effective and efficient, the project team introduced the concept of a release train. This meant that the timing of each release was predefined, but the scope of each release was flexible and agile. When fully implemented, the release train resulted in high utilization of all team members and a more predictable cycle of activities and releases.
By November 2021, the bank had fully migrated all loans to the new platform and all lines of businesses were using the platform. This was a critical milestone for EQB as it meant the bank was now well positioned to begin reaping the rewards of the new platform with better data governance, enhanced risk management and a better employee and customer experience.
Establishing a foundation for future growth
With the platform now fully in use, new releases are expected to target niche lending scenarios and improvements to the user experience. Future releases will focus on shortening the end to end customer journey. The platform is expected to be fully mature by 2023.
The solution we created with Blanc Labs was an early adopter of our cloud-only, digital platform architecture. The platform approach provided capabilities for the team to incrementally build the solution using agile techniques while also providing consistent security and operational resilience.
Blanc Labs was able to work closely with Equitable Bank to build a customized, data centric commercial lending platform that produces a consistent and accurate risk assessment leading to better decision making. Over time, the improved collection and accessibility of data will allow Equitable Bank to refine their risk rating models and further improve their risk management.