Structuring the Unstructured: Financial Data 101

Data has quickly become an integral part of any well-run business. By acquiring, storing and analysing data, firms across all industries can gain a fast competitive edge. Nowhere is this more relevant than in finance, which has long been powered by data in everything from market-making to lending decisions. Here we’ll explore the opportunities that remain untapped.

Let’s take lending decisions for medium-sized businesses. At least every quarter, private information received from clients is manually entered into Excel sheets and stored separately, usually in a client file. This will cover covenant compliance, but also detailed financial data tracking company performance. In a survey conducted in 2020, over two-thirds of Bankers relied on manual document tracking. Manually tracking this data can (and does) work, but depends on good quality monitoring teams and robust processes.

Many lenders are limited by their ability to process and manage this private client data. Speed and efficiency are key levers in business while reducing the amount of risk, all anchored around experienced decision-makers. Market leaders will structure this data at scale, throughout the cycle, providing a better client experience.

Today, scaling these client numbers and monitoring loans is time consuming and costly. Furthermore, because client data is mostly not viewed at an aggregate level, lenders are less proactive in loan monitoring and potentially slower to react to emerging risks. 1 in 5 loans for medium-sized businesses are abandoned because the credit process takes too long, and not due to poor creditworthiness. Streamlining this flow with technology can quickly unlock this additional business.

With new technology, lenders can automate legacy processes, allowing them to scale up their business and reduce the overall risk they take on. By structuring this private data centrally, lenders will be able to spot risks in their portfolio, such as the impact of energy prices or rising input costs, well before they impact covenant tests. Acting faster will allow clients to receive the support they need and enable lenders to appropriately deploy their capital in times of stress.

Scribe is a data platform for company information, powered by research-based AI. With Scribe, organisations can convert any financial data (PDF or otherwise) into a structured financial model, all via API.

Header image by myrfa