Twin Themes for Bank Strategies in 2012

In a new article in Global Banking and Finance Review titled “European Credit: More Trouble Ahead,” FICO’s managing director for EMEA, Mike Gordon, discusses our most recent European Credit Risk Outlook. This report by FICO and Efma has been discussed in this blog by my colleague Daniel Melo, but Mike’s article gives it a new twist.

As Mike notes, “Despite more stringent spending reviews, banks will invest in making sure their risk management teams, systems and processes for each product category are sound enough to enable responsible lending growth. They will also look for ways to make sure lending decisions are in synch with their capital management strategy, so that they neither increase the capital burden to an unsustainable level nor choke off profitable lending that could provide a strong return on capital.”

These twin themes – capital management and risk management – are at the core of banks’ strategies this year, not just in Europe but worldwide. Bringing them together to make smarter lending decisions is going to put some banks way ahead in the economic recovery.