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What do the sixth largest U.S. bank and a small credit union in Oregon have in common?

A scalable lending risk management solution is the secret sauce for some banks, regardless of asset size.

The answer is, both are users of the CreditQuest solution offered by Harland Financial Solutions. I don't think I ever wrote anything in 38 years that compared a giant financial institution with a very small one. And for that matter, a diversified commercial bank with a local credit union. And third, one based in the Northeast where finance and money drive everyone's ambitions and the other in the Northwest where nature and logging are the orders of the day. But the beauty of technology is its adaptability, scalability and high value payoff typical of risk-determination solutions. Clichs abound in a world of anomalies "Don't measure a financial institution's success by its size." "Lending is all about analytics, science, data collection, knowing the borrower, identifying a safety net, and a bit of right timing." "Banking does not live by transaction processing alone." "Decision making is in the mind of the beholder." "Measure twice, cut once."

CreditQuest is a complete commercial credit risk management system that brings origination, portfolio management, financial statement analysis, underwriting, documentation and executive reporting together in a collaborative, streamlined solution. In other words, the mission of the loan review committee is which of two rubber stamps do we use, approved or declined. CreditQuest helps the decision-making process by delivering intelligence.

The first time I heard of CreditQuest was in 2005. That's an important fact because it was prior to the release of the solution. A second important fact is that I didn't hear about it from the vendor, but instead from a young banker who somehow got a bootlegged view of CreditQuest and was so impressed he had to tell me about it. I too was impressed because it wasn't until late 2006 when Harland Financial Solutions announced the availability of CreditQuest, much like the TV commercial featuring Orson Welles telling the world, "No wine before its time."

I have always had a special interest in lending. The main reason for this is that's the way banks earn money. But having worked for a bank, and as a consultant for banks, one discovery that stood out as a disconnect in my mind was the absence of science in a business where risk is costly (losing the entire bank) and binary decisions (approved or declined) depend on substantive investigations which typically were missing.

So especially after the trauma experienced by all banks in the past three years it would seem to me that any tool that provides just an added measure of assurance to the risk of lending would be a smart move.

How interesting that PNC Financial Services ($257 Billion in assets) and Pacific NW Federal Credit Union ($156 Million in assets) know that.

A comment about scalable software I don't believe all software is scalable. For example, in the two banks included in this blog, any idea that they could use the same core system is ludicrous. Billions of transactions per day require industrial strength software. But this blog addresses brainware, and thus software like CreditQuest merely has to serve one brain at a time, and that works well whether it's in a giant bank or a small credit union. Most of you knew that, but I had to cover myself for the others.

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