CLO/CCO, toughest jobs in the bank

michael's picture

Not unlike Jaws characters Sheriff Brody, Hooper and Captain Ben each claiming rights to the greatest scar, every banker likes to think of their job as the toughest one in the bank. Certainly, arguments can be made for CEO, CFO, CIO, and CRO; each with their own nuance of challenges. But in my estimation, the hands-down winner goes to the those charting the primary revenue driver of the bank ship Orca.

Whether it’s loan production and profitability from the Chief Lending Officer’s view, or credit quality and portfolio composition from the Chief Credit Officer’s view, these two roles face constant, daily obstacles, not the least of which is helping deals navigate the internal compliance gatekeepers known as Loan Operations. Many community banks have an us versus them situation between lenders and loan operations. Underneath this conflict there often exists animosity, mistrust, and a general lack of teamwork to deliver loans quickly and efficiently to customers.

As leaders of the bank, CLOs/CCOs can no longer leave resolving these issues to IT in the form of some new whiz bang origination system that the vendor claims will also solve world hunger. Nor can they rely on Operations to improve the situation via updated and lengthier procedures and one more checklist. The time has come for a much more drastic and impactful solution.

A question we ask during our process assessments is “Who owns the process?”. The answer usually reflects the departmental silos that the process crosses. When many people own sections of a process, the process design will include rekeying, verifications, checklists, tracking logs, and all sorts of other non-value added activities. To bust the silos and overcome the us versus them mentality, one person must own the process from start to finish. In the case of loan delivery, that includes everything from application to lien perfection. One person will be accountable to the process performance metrics. How fast? How much rework? How many rekeys? How many prints? How many scans? How many handoffs? When one person is accountable to the process performance metrics, they will also need to own the technology that is used in the process and the education, training, rewards, and feedback that the process performers receive.

This one person will be the process owner. No one can interject a work-around, a new form, a new checklist, or any other activity into the process. The process owner and their process improvement team will accept all suggestions for requirements from other stakeholders, but they will implement these requirements in the most efficient and effective way. This may mean the work is done in a different location than where it is today. Or the work may be automated and therefore eliminated from where it is done today. As long as the desired results of the process are delivered, the process owner and their team will have complete authority over the process design to go along with their complete accountability to the process performance metrics.

And that’s why the CLO/CCO has the toughest job in the bank. In very few cases have we seen where the start-to-finish loan delivery process design is theirs to own, yet it is the foundation of their work. Balancing credit risk with meeting loan growth goals, the management and development of lenders and credit analysts, ensuring portfolio profitability, and helping their teams navigate the internal compliance gatekeepers to keep the deals flowing leaves little time to design and implement a streamlined, digital process that will work within the bank’s culture. The CLOs & CCOs I work with tell me that leaving this important task to IT or Operations either takes too long or fails to yield the desired results, and that ignoring a move to digital processes puts the bank at a long-term competitive disadvantage.

Agile Banking help’s CLOs and CCOs develop strategies and a vision for high-performing and scalable processes to deliver loans to your clients. Our goal is to speed your digital transformation by leveraging what you have when it makes sense and by providing what you need when the process requires it.

While I don't know if we are a good fit for your bank, why don't we schedule a short call to help me learn more about your unique challenges? From there we can decide if it makes sense to setup a deeper conversation.