The need to evolve and remain relevant within any industry, for large and small organisations alike, is crucial to ensuring ongoing viability and sustainability, thus allowing us to deliver returns to shareholders. Given that we accept the need for continuing evolution, I thought it an ideal opportunity to take a closer look at how, in my opinion, this challenge impacts Credit Risk Management (CRM). We continue to face a low growth environment, continue to see tighter margins and increased expenses which ultimately drive the need to challenge the way in which
we do business.

Many businesses have undertaken exercises in LEAN or continuous improvement; often driven by reviews to improve current processes and gain efficiencies by delivering improved customer and partner experience. This of course includes compliance, reduced operating costs – and the
list goes on. As we continue in an environment with the expectation to 'do more, with less' we need to be open to the concept of really questioning our core functions and objectives and how we might go about achieving this.
Within CRM, across different organisations and industries, we are all driven by the risk appetite and profile of our organisation. However, the message seems to be consistent; minimise operating cost, minimise credit loss, maximise profit without materially impacting our profile and individual proposition. There are many ways in which we can strive to achieve this but I am forced to question the best way to do this when we look at the current environment as ‘the new norm’. 

Necessity is the mother of invention 1 – “when the need for something becomes imperative, you are forced to find ways of getting or achieving it”2

We are presented with an opportunity to embrace challenges and leverage off not only the wealth of experience and knowledge that we have in our businesses, but to new and innovative thinkers who may not be as constrained by the conventional obstacles we have traditionally accepted as insurmountable. If we can embrace the need to change and be willing to ‘up-end’ things whilst taking some risk (always within our appetite), we can arrive at somewhere new that is better than could have ever been achieved through the natural evolution of change. In some ways you could consider the process to be jumping a few steps in the evolutionary cycle. I know, it sounds simple in theory and something that we would all be willing to jump into head first, however we need to take a considered and strategic approach if we are to avoid failure to execute and/or delivering on an improved model. In planning our approach, several key questions come to the forefront of my mind before we even get into change management principles;

- What technology exists already within our organisation that we can leverage off?
- What are our industry peers doing/what can we learn or apply from other industries?
- How can talent in our organisations assist in shaping the solution and execution?
- Are there emerging trends we need to consider (i.e. market movement)?
- Are we reducing or increasing risk?
- What are our budgetary constraints?
- And most importantly, how do we measure our success?

As you read this very brief list of questions, you already called out a never ending list of obstacles and issues that would have you throwing your hands in the air – but this is where we need to be prepared to innovate and take a chance. When you start to enter solution design, I have always found it beneficial to take a similar approach to that of an exercise of root cause analysis. Get to the bottom of it (ask the 5 why’s), consider every possibility (even those that are at the extremes of viable) and have the people in the room that know the business the best. Even when you think that you have arrived at the perfect solution, have someone in the room (whether a business analyst or even someone from your own teams) who can play devil’s advocate and really make you work to prove that you have the right decision at the top of the list.

One of the important considerations often left off the list is people and culture, and these add an additional layer of complexity. It is important to understand the prevailing culture before embarking on any journey to re-invent the wheel. This allows us to understand our current state and any challenges that we may face along the way (including resistance to change). As any experienced leader will attest, if we do not proactively address this before heading too far down the rabbit hole, our level of success may be greatly hindered when we emerge on the other side.

This certainly can be a challenge that we face when implementing any change, however it is certainly something to be acutely aware of, especially when we are talking about significant change. As a natural extension, it is also an opportunity to consider what kind of culture we hope to have at the end of the exercise and how we can go about achieving this throughout the change process. As you work on delivering any new vision the people need to understand, share and feel connected to the project for the end result to be truly successful.

Many of you reading this carry far more years of experience, a lifetime of academia and wisdom, however I would encourage you to share that wisdom to achieve a new vision. Find that innovator who can challenge the status quo, understand the business and offer a new and insightful perspective. 

We need to be willing to step outside our comfort zones, whether it be the new starter at the bottom of the corporate ladder who has an idea and is pitching that to an Executive, or the Executive on the receiving end hearing that proposal – and looking past the nerves and questionable business case, to see the opportunity to be ultimately gained (for those that may have seen the TV show – Shark Tank). 

At the end of this process embracing the opportunity to take a step back, understand what it is that you are trying to achieve and how you will go about achieving it will lead to a new and improved model that delivers on; 

- Improved customer/stakeholder experience
- Improved staff satisfaction and engagement
- Improved compliance
- Reduction of waste in process
- Improved operational efficiency
- Reduced operating costs

Who wouldn’t want to achieve these things and have fun along the way?

Best of luck on the journey.

Joshua Rutland is Manager Collections and Business Enablement, Bendigo & Adelaide Bank.

Joshua was a 2015 and 2016 Victorian finalist in the Dun & Bradstreet Young Credit Professional Awards.

1 Proverb of unknown origin
2 Oxford Dictionaries –

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