Straight-Through Processing (STP) Key to Helping Commercial Lending Regain Profitability

But for others grounded in the cold reality of return on investment, STP has been little more than a buzzword which, like Rodney Dangerfield, gets no respect. Although debunked by many as overhyped and unproven, TowerGroup believes STP can help wholesale banks restore profitability to their commercial lending business while simultaneously enhancing risk management and other strategic objectives. Highlights of the research include: - Long-accustomed to a market in which sheer revenue volume masked cost structure inefficiencies, commercial lenders are increasingly hobbled by the disjointed, best-of-breed system platforms and redundant manual processing that still prevail at many banks. In the context of a severe drop in commercial loan demand and a hyper-intense competitive market that continues to squeeze interest margins - to say nothing of rigorous new requirements for operational risk management and more transparent reporting - it is not surprising that many commercial lending executives are looking for more robust and economical loan systems. - STP in commercial lending is a compelling value proposition that can bring to bear multiple flexible features, such as full process automation, product consolidation and workflow management. It can also be implemented in stages to help banks control costs or ease the impact on ongoing operations. - The best opportunities for taking advantage of STP in commercial lending come more from managing risk in the origination phase of the loan process than from incremental productivity gains in the servicing phase.