Improving credit risk monitoring with AI

Different types of contracts in retail, corporate, and capital markets typically carry numerous covenants divided among affirmative and negative categories. Loan officers, analysts, lawyers, lenders, and borrowers spend significant time in formation, interpretation, and compliance of these covenants during pre- and-post credit disbursal. The complexities of covenant management have multiple aspects in the form of human resources, education/training, data, judicial system, and legislature, making this a cumbersome and inefficient process.

This results in

  • Credit and risk assessment
  • Manual enforcement of regulatory/audit compliance
  • Loan servicing errors

The Covenant Management solution from Virtusa xLabs leverages advanced machine learning (ML) and natural language processing (NLP) techniques to interpret the financial and non-financial covenants in the contract. This structured information extracted from the lending contracts can be further used to build self-enforcing smart contracts that will retain all the stakeholder information so that any changes to terms and execution of the contract can be communicated to them.

AI covenant management


Benefits

  • Improve covenant monitoring and compliance reporting through process efficiency
  • Reduce regulatory compliance costs and data error rates
  • Improve your organization’s credit decision-making process and commercial portfolio performance
Improving the credit decision-making process with AI

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