Join CrossCountry Consulting and OneStream for this first in a series of Webinars focused on Balance Sheet and Net Interest Margin Planning. Banks, Credit Unions and Non-Bank lenders play a large role in consumer lending. The dynamics of pricing, credit score bands, and maturity terms call for consideration of these and other attributes in the planning and forecasting process. Since the early days of Covid19, the auto financing market has seen several changes. Interest rates have changed with the Prime Rate seeing shock of (-) 150bps during first 3 months of Covid19 with a 525bps increase over 18 months commencing in Q1 2022 and then a drop of 100bps commencing in Q4 2024. During the same periods average auto loan rates went from a positive spread to the Prime rate during low rate periods to negative spreads as Prime Rate rose above ~4%. Average loan maturities have also increased with many lenders offering 6-year terms and some as long as 7-year terms.
This webinar will focus on the planning and forecasting of Auto Loans including modeling dynamics such as:
- Credit bands and effects on capital, late fees, credit losses and provisions
- Dealer reserves
- Partial and full prepayments
- Effect of dealer add-ons
- Pricing spreads between credit bands
- Variable and fixed non-interest expenses
- Vintage analysis
- Funds transfer pricing
- Product profitability
Key Industry Challenges
While Balance sheet and net interest margin cash flow planning is commonplace within the ALM models leveraged by the Treasury team at financial institutions, the FP&A and line of business teams analyses are rarely aligned with the ALM results because the processes are rooted in:
- Significant use of spreadsheets driven by limitations of technology
- Availability of reliable data which often stems from lack of investment in systems design
- Extensive resource consumption gathering data leading to reactive versus proactive processes and;
- Untimely delivery of results
- “What-if” scenario limitations
While the ALM engine produces accurate cash flow based results, it falls short of providing insight into Line of Business and product profitability, inclusive of Funds Transfer Pricing and Expense Allocations.
A proven approach is to bring the best of ALM and FP&A into a single integrated process.
How Your Organization Benefits from this Webinar:
- Speed to outcome: When the right data, technology, and skill sets converge, the level and timeliness of output is significantly enhanced. This enables organizations to proactively and rapidly react to changing business and economic conditions.
- Shift from data gathering to data analysis: By eliminating the need for data gathering, manipulation, and reconciliation, the focus shifts to usage and analysis within a connected platform while also supporting an automated reconciliation between FP&A and Treasury ALM.
- Multi-purpose value of data: Apart from planning/forecasting usage, the data enables historical analysis of client behavior and correlation to economic data while also supporting regulatory reporting data required below the ledger level.
