IND Offers Help to Commercial Lending Institutions to Reduce the Risk of Loan Defaults

Parsippany, NJ (June 6, 2003) -- At the IND E-Business Revolution seminar for CEOs held earlier this year, the question was raised, “What are commercial lending institutions doing to audit the e-business enablement status of commercial loan applicants to determine the degree to which they may present a default risk?”

While this question may seem insignificant on the surface , when considered within the context of the inevitable dominance of technology over business processes, the question was extremely insightful. Indeed, if a commercial loan applicant is not aware of the importance of technology and is not taking active steps to keep up to date in its use to support business operations, experts, such as the Gartner Group, have predicted they will face increasing difficulty in competing with e-business enabled companies, and that many will fail.

Dr. John T. Whiting, Director of E-Business Enablement Services at Parsippany based IND, observed “It is clearly that technology can help a company perform more efficiently and cost-effectively, and that the likelihood of failure can be significantly reduced through the proper integration of technology to support business processes. He also noted, “In contrast, a company that is relying on traditional business processes and neglects taking the steps required to remain competitive through the use of technology is likely to face an increased probability of failure.”

Dr. Whiting has engaged in a number of discussions with major banks and lending institutions. His discussions have been based on his understanding that “To be ultimately profitable, lending institutions must strive to achieve a zero loan default rate. To hit this target they must engages in a loan application process to audit the applicant’s performance history and status to isolate information that can be used to predict how the company will perform in the future. The goal is to separate those loan applicants that present a risk of failure from those that will succeed. The loan application process is the institution’s tool to identify and separate the losers from the winners.”

Whiting notes “With it clear that e-business enablement is evolving as one of the most important predictors of a company’s future success, it is prudent, and indeed essential, that commercial lending institutions find a way to identify the degree to which loan applicants are using technology to ensure their future success.”

Whiting predicts that all commercial lending institutions will need to upgrade their loan application processes to include a tool to identify the e-business enablement status of their loan applicants as a part of the routine loan application process.

Whiting notes, “IND has been a pioneer in the area of e-business status assessment. The IND E-Business Enablement Methodology™ includes an analytical tool designed to assist clients in determining their e-business enablement status. The IND methodology is based on the analysis of specific organizational, system and component characteristics that provide a criterion reference for objectively determining the degree to which a company is leveraging technology to enhance performance.”

Whiting states, “This tool could readily be applied to the commercial lending institution’s application process as a measure of the degree to which the applicant company might present a future default risk. This can be accomplished by documenting the lack of or a deficient an e-business enablement program. It would also identify those applicants that are less of a default risk because the applicant company has a definable program in place to ensure the effective use of technology to drive business goals going forward.”

It is predictable that technology will be increasingly important to the future performance of companies, and that commercial lending institution that do not include the identification of the e-business enablement status in their loan application audit will face an increase in the number of loan defaults.

IND has created the IND E-Business Enablement Institute to share knowledge about e-business enablement with CEOs, lending institutions and other organizations that will need this information to remain competitive. IND is also partnering with financial service companies, accounting firms and other financial institutions to help share the information necessary to leverage e-business technology to drive business.

For more information about IND, visit http://www.indcorp.com, e-mail sales@indcorp.com or call 973-227-5020.

Press Contact:
Eric Speidel
Tel: 973-227-5020 ext. 130
E-Mail: customercare@indcorp.com

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