Higher-for-longer interest rates have put pressure on banks' net interest margins while putting deposits in the spotlight. Bank margins should trough in 2024, but the pace of improvement remains in question as customers continue to shift funds into higher-cost deposits.[1] While credit quality has largely held up thus far, institutions recognize that significantly higher rates will challenge borrowers that need to refinance loans coming due soon, particularly those looking to refinance commercial real estate (CRE) credits. Credit losses will increase, but most industry observers don’t expect a severe meltdown.
This environment has made it very important for banks to make data a strategic imperative as they look to operate more efficiently, onboard the right customers, capture full customer relationships and grow profitability.
The chief data officer and his research team at this regional bank were using a loan prospecting solution from S&P Global Market Intelligence ("Market Intelligence") via S&P Capital IQ, a powerful desktop platform. This extensive intelligence on CRE and commercial and industrial (C&I) loans enabled members of the team to identify attractive lending opportunities in their target regions. The team was also using Snowflake, a cloud computing offering, and thought they could further increase efficiencies if they received the loan prospecting data via Snowflake to easily integrate it with other bank data on their Internal system.
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It has become imperative to enhance efficiencies and get quick access to data to drive internal applications as volatile economic conditions impact bank profits and increase competition. |
Pain Points
Every quarter, the research team manually downloaded business listing data from Market Intelligence's Commercial Prospecting offering to analyze the information along with other important bank data. This was taking many hours and the team wanted to find an automated way to ingest the data into internal applications.
The Solution
Specialists from Market Intelligence discussed access to the Commercial Prospecting data suite via Snowflake, which was extremely appealing since the team was already using this cloud-based capability. This solution would provide the ability to easily:
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Uncover prospects |
The business listings data provides relevant details for 40M+ businesses across the U.S. and 5M+ for Canada to target prospects by area (e.g., city, county or zip code), industry type, estimated revenues, employees and more. |
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Access detailed CRE information |
The loan origination and property data incudes 25M+ CRE mortgage deeds and parcels that are sourced from each county courthouse across the U.S., plus loan origination data for 75% of U.S. counties. The data is linked to the business listings information. |
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Identify C&I liens |
The UCC filings data contains 80M+ UCC filings for 45 U.S. states to identify C&I liens and link them to the business listings information. |
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Understand the full customer relationship |
The related properties and UCC liens component provides a complete picture of a customer’s portfolio and banking relationships by linking to other CRE properties and UCC lines tied to the same borrower’s transaction, sale deed or mortgage transaction. |
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Anticipate changes in creditworthiness |
Probability of Default (PD) details are available for the respective North American Industry Classification System (NAICS) industries on a state and county level |
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Automate data access |
Through Snowflake, users can directly access and query S&P Global and select third-party data eliminating the data ingestion process and significantly improving their productivity and efficiency. Snowflake's unique cloud-based architecture enables near-infinite scalability for faster queries at lower costs. |
Key Benefits
The Chief data officer and his team were excited about the opportunity to eliminate the manual downloads of information and transfer hours of time to analysis to support the bank's lending activities. They have now implemented Commercial Prospecting data access through Snowflake and have been able to:
- Make significant gains in efficiency.
- Identify important lending opportunities faster than in the past.
- Save costs on salaries by eliminating the need for additional support each quarter to help download data.
[1] "Q2 Outlook for U.S. Commercial Banks' Performance: Has Profitability Hit a Trough", S&P Global market Intelligence, May 7, 2024, https://www.spglobal.com/marketintelligence/en/events/webinars/q2-outlook-for-us-commercial-banks-performance-has-profitability-hit-a-trough.