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Bank Value
The software enables the banker to efficiently evaluate the financial condition of the SME in an interactive format. In less than 30 minutes, a banker trained in the methodology can enter a company’s financial data to arrive at an income statement and balance sheet and begin to evaluate the financial risk of an SME. Depending on the level of the SME’s understanding of the bank’s requirements, financial information is captured in different ways: 1) through an interview process asking the SME key questions about his business such as revenue, costs of raw materials, operating costs, etc; 2) by importing financial data into the application from spreadsheets; or, 3) by entering data by line item directly into the application.
Once the data is captured, the standardized format of the software will generate financial statements and a set of financial ratios to enable the banker to analyze the financial risk, arrive at a credit score, and understand the financial management of the SME’s business. Approximately 30 numbers are required to perform the total loan evaluation process. This process dramatically reduces time, and thus transaction costs, permitting a greatly increased volume of SME lending. Consider this comparison: a U.S. bank loan evaluation takes an average of 12 hours and costs between $500-$1000; the FMI methodology takes 30 minutes and costs between $50 - $100.
The software allows the bank executive to manage the SME Portfolio and conduct data analysis. The program turns data into information, allowing the bank to successfully market, and profitably lend to creditworthy SMEs. The software allows executives to view the summary of the bank’s SME portfolio (e.g., view new loan accounts added or net increase in loan outstanding), examine trends by various factors (e.g., industry, geography, business size, loan size, etc.), and summarize the portfolio by various categories/industries (e.g., revenues, earning, working capital, interest cover, etc.). This capability also permits benchmarking and “peeling the onion,” or the ability to disaggregate performance data at various levels of detail.
FMI software for Banks
The software provides the bank with four key value propositions enabling the bank to:
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