In the ever changing retail banking environment mastering the art and science of credit management is paramount to assure growth of Assets, Revenue and eventually profitability.
As the banking environment undergoes steep changes, fintech advances, new entrants in banking business and young population, banking institutions must adapt to remain relevant and assure longevity.
Majority of SACCOs have found themselves in a predicament with declining fortunes from traditional members, aging membership and thus the need to attract new members who bring forth diverse credit needs that the SACCO may not have developed either the right products or lending mechanisms. The result, rising PAR.
Credit risk management is a multi-faceted discipline and requires a clear strategy, robust structure, diverse competencies and a culture with zero tolerance on non- adherence to the practice.
PKL’s work on credit transformation rotates around building capacity of the credit Unions to handle credit risk effectively. Being the core business of the CU, we relook at the overall SACCO Strategy to refine credit function’s contribution with regards to growth of assets, revenues and profitability.
We align these aspirations to the required optimal SACCO structure and agree of the role of the branch in credit risk management. We ascertain human capital capabilities required from HQ to branches and resource/fill-in positions appropriately.
We agree on capacity development gaps and develop capacity development programs by way of training, mentoring and coaching.
Credit risk management requires a robust credit management systems which are supported by the SACCO’s Core Banking System and Credit Procedures.
We interrogate/evaluate the capabilities Core Banking Systems, policies and procedures and map out a capability strengthening plan.
As part of credit strategy we align credit lending mechanisms with the needs of members at present and into foreseeable future in line with the current strategy. We favor developing lending mechanism visa viz rigid products.
Here we mean, mechanisms of lending to say salaried persons, small businesses, agri-based, micro loans et cetera and not rigid products – salary loans, normal, development et cetera.
In so doing, we support the CU to make a transition from product to member-centric and hopeful increase the volume of business per member.