American Banker
by Eric Lindeen

Nearly 20 years ago the leading banks were talking of breaking down silos, integrating operations, and acting as a single entity. Back then, the conversation revolved around centralizing credit policy to provide better credit risk management, compliance reporting, and treating customers consistently regardless of the channel they chose. These efforts largely failed due to internal politics, scope of the projects, and budget constraints.

Today, I’m hearing similar ideas, though the motivation is driven more by concern of disparate impact judgments. The number of consumer complaints that the Consumer Financial Protection Bureau is collecting is on the rise and, in the aggregate, they may seem very damaging. However, if banks can develop processes that show their credit decisions are consistent, transparent, and easily auditable they will be in a better position to respond. Even though things haven’t changed dramatically on this front over the past couple of decades, perhaps this time we’ll see more success. Particularly if the lessons learned by those who pioneered early efforts to centralize are heeded.

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