An expanding loan market fueled by Business Intelligence


The Hungarian loan market experienced a dynamic growth in the past five years which resulted in record-high disbursed and outstanding amounts both in the Corporate and in the Household sector. The Hungarian Financial Institutions couldn't operate prudently on a rapidly expanding loan market without putting a strong emphasis on debt management, collateral management and valuation - this is a necessity the Financial Institutions had to learn on their own during the Great Recession of '08, especially with a collapsing housing bubble and the solvency issues of household loans denominated in Swiss Franc.

Right now, foreign currency loans in the household sector are non-existent, but there are certain risks remained involved with the credit market that needs to be managed - almost exclusively with the help of some kind of a software product. Many systems are readily available, but most banks have their own custom processes that cannot be fully standardized, and because of that many Financial Institutions are operating with in-house developed solutions or heavily customized vendor products. The list of the available products may vary, but there's no Financial Institution in Hungary that lacks one of the following:

  • loan origination and disbursement system
  • outstanding debt management system
  • soft and hard collection support system
  • collateral management system

Apart from the loan origination and disbursement systems, the rest relies heavily on underlying data which is used to support and manage the following basic operations and processes:

  • An outstanding debt management system has to know exactly the current state of all the disbursed loans, the loan repayment schedules, whether the repayments are lagging behind or a partial repayment was made.
  • A collateral management system is responsible for tracking and reporting the Loan-To-Value ratio of a collateralized loan. It is extremely important in the case of housing loans, since the Hungarian National Bank obliged our clients not to exceed the 80% treshold, therefor regular re-valuation and monitoring is a must for every creditor institution in Hungary. A collateral management system can efficiently support these processes.
  • A soft and hard collection system helps the Financial Institutions assess the quality and redeemability of a failing loan contract, helps decide the Bank whether just sell the asset to an external company or keep working with the debtor.

The above mentioned systems rely heavily on the underlying data and are very sensitive to the data quality. Because of this, Business Intelligence experts and consultants are involved in the introduction projects and in the further development/maintenance phases as well. Advocate Business Consulting is one of the top provider for Business Intelligence IT Consulting Services working with our clients helping them using their datawarehouse and data sources to provide cutting-edge processes for navigating in an rapidly expanding loan market with the following services:

  • Requirements analysis, assessing currently available data sources, creating GAP analysis for needed, but not present data;
  • Data markt/Datawarehouse process and data design;
  • Datawarehouse-related architecture planning;
  • Business Intelligence and report development in Oracle/MS SQL environment.

All of our projects ended successfully, with full satisfaction from our clients' end with the end results that helped to manage risks from the lowest grade to the extreme measures, while making sure the Hungarian National Bank prudential requirements and obligations are met - enabling the Hungarian Loan Market to be as safe and solid as it is today.