New Tales from the Credit World
New tales from the credit world
Today our long-time friend Cristiano Motto, who will join us at the FinTechStage Festival this year in Milan, will tell us all about Credit, NPEs, NPLs & UTPs in the Italian Market.
He believes that Credit is the most important pillar of our economy, but at the same time the least understood.
So take 2 minutes of your time to get some interesting insights.
FinTech trends in the Italian Non Performing Exposure market.
Credit is the most important pillar of our economy and society and probably the least understood.
It is the biggest and most valuable part of the socioeconomic system and represents one of the most valuable markets in the world.
In the last years, FinTech has just scratched the surface of the Credit market, but things are changing.
Having the privilege to be part of FAIRTILE’s team, as Co-founder and Senior Advisor, I had the opportunity to see very closely the raise of a new wave of players and solutions targeting the still untouched NPE (Non Performing Exposure) sector.
In 2018, Italian NPL (Non Performing Loan) transactions reached the important volume of more than €66bn, with an estimated gross value of over €266bn managed by Banks, Funds and Servicers.
After the strong reduction of the NPL stock experienced in the last three years, transactions are expected to settle around €50bn in 2019, with a decreasing trend in the next five years. 2019 will see a new impressive interest in the stream of the early stage UTP (Unlikely To Pay) market with an estimated gross value of over €83bn.
UTP portfolios will introduce unseen challenges requiring a completely new approach and operating model across Lenders and their Servicers. For their nature, UTP portfolios will require the capability to capture early warnings and manage them in real time. The fragmentation of the portfolios on high volumes of small ticket unsecured positions does not allow for inefficient processes.
The NPE market is shifting to Credit Servicing, where few 3rd party servicers will manage the largest Italian deals. As a consequence, the last few years have seen an important consolidation path of the servicing sector, many national and international leaders have acquired either independent servicers or captive banking credit servicing functions.
This new generation of Credit Servicing players needs a new set of solutions to succeed and FinTech could enter the game making the difference.
The management of NPE portfolios haven’t evolved much since the 1950s when the current frameworks were first developed. Lenders and Servicers are still relying on few data points, very poor analytics and heavily discovery and collection manual activities.
The increasing competition, the need to improve efficiency and the pressing request to grow revenues are pushing to a paradigm shift in the NPE market. Credit Servicing leaders are now investing in innovation and partnering with agile FinTech players able to leverage a wide range of structured and unstructured Data, applying sophisticated Artificial Intelligence algorithms to support better decisions and reducing inefficiencies through a massive Processes Automation.
The key to obtain the benefits enabled by these new technologies are maximised by solutions that are integrated E2E (end to end) within the servicers processes and operating structure as well as IT infrastructure. Essentially acting as a hub for connecting the data points across the players in the NPE chain.
This is still early days for FinTech in NPE, but the first results are starting to materialise in the Italian landscape.
A big thank you to Cristiano, Co-Founder & Senior Advisor, at FAIRTILE, author of this piece and longtime speaker @FTS – you will definitely see him on stage #FTSFEST19
NEWS OF THE WEEK
In case you haven’t heard already we have opened registrations of the FTSFEST19!!🚀
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May 13th, Sole24Ore: Grand Opening FTSFEST19
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