Banks, Financial Institutions can Leverage Business Intelligence to Make Lending Decisions

February 15, 2013

When the recession hit, small businesses experienced one of the heaviest impacts, particularly because banks dramatically raised their restrictions on lending.

But the economy has started to bounce back since then, and banks are lending more to small businesses as a result. According to a recent Biz2Credit report, large banking institutions approved more than 15 percent of loan requests in January – compared to fewer than 12 percent the previous year – and small bank approval reasons grew to nearly 50 percent. 

Rhoit Arora, CEO of Biz2Credit, believes that recent innovations, at least in part, spurred these lending increases.

“Technology is changing the landscape of small business lending. Big banks are investing a lot of money in their online platforms and streamlining the loan application process. Small banks need to do the same,” Arora explained. “The small banks must upgrade their systems and allow online applications for small business loans.”

One technology that could help banks make better lending decisions in the future is business intelligence (BI). A recent Ventana Research study found that business and big data analytics are among the top IT priorities for organizations in 2013. Currently, only about half of companies are satisfied with their business analytics capabilities, while just 14 percent of respondents said they are happy with their big-data strategies.

In a recent blog post for SmartData Collective, Mark Smith, CEO of Ventana Research, described business analytics as “a set of processes” that simplifies data in a way that it can be used to make better decisions and to conduct predictive analytics. 

As banks continue to lend more to businesses, BI tools can be extremely useful – both for analyzing which companies are acceptable to lend to, and which ones may have trouble making repayments in the future.