How advanced platforms are reshaping risk management in servicing and reporting
March 24, 2025
As complex financial instruments like securitized assets rise in popularity, financial firms face three interrelated challenges: ensuring transparency, delivering deals efficiently and managing risk effectively. Of the three, risk management is increasingly important to funders, requiring a level of reporting, transparency and integration with client systems that can be difficult to achieve without significant investment. As banks seek to optimize their money at work and deliver more complex structured solutions, understanding these challenges and how to address them is essential.
Unlocking visibility into item-level performance
Risk departments want as much oversight of performance as possible so action can be taken to mitigate risk where possible. But it requires significant work to get item-level performance insights from portfolio reports.
Risk departments want as much oversight of performance as possible so action can be taken to mitigate risk where possible.
Typically, it’s difficult for funders to get an accurate and up-to-date view of the portfolio because they must wait for a monthly field audit that’s dependent on manual data extraction and formatting. However, new technology solutions can help, with modern cloud platforms offering a near-live perspective.
Corporates can upload daily open-item files, while funders gain access to granular, detailed reports, including item-level performance. This allows funders to analyze specific customers, debtors and time periods for individual transactions or across the portfolio. Access to current data eases minds among risk professional and can also boost advance rates.
This higher level of transparency also benefits the corporates in another way, with treasurers reporting that they are seeing an up-to-date picture of their receivables book for the first time.
Powerful custom reports
Accurate reporting is crucial when handling complex securitizations, but different stakeholders require different views and data formats. It’s time consuming to restructure reports for different purposes, and the time spent doing so can render reports out of date by the time stakeholders receive them.
This is where modern systems can also improve processes. Using the latest technology, once a reporting need is established, automated reports can be used to monitor key metrics, run calculations and raise red flags when a set trigger point is near or reached. Funders can draw upon standard reports or create custom reports in their preferred format.
Using the latest technology, once a reporting need is established, automated reports can be used to monitor key metrics, run calculations and raise red flags when a set trigger point is near or reached.
This allows a financial institution to automate reporting processes to satisfy internal requirements without having to retrain their team or disrupt daily processes. Reports can be produced in any format, on any data point in the platform, at any cadence determined by the funder (or corporate).
Backup servicing and other third-party integrations
Many risk departments make use of third-party backup servicing (BUS) providers to protect and service the assets in case of insolvency or any other event that could mean the original provider can no longer do so. This can be viewed as a type of insurance, and providers are often insurance companies that assess the risk and take on a portfolio based on that assessment. BUS providers require a level of oversight and reporting on a portfolio so they can be familiar with the assets covered should the need for servicing or active collection arise.
Modern platforms use encrypted connections to link with third-party services and can integrate directly with BUS providers. BUS providers can monitor data using the platform via a “cold,” “warm” or “hot” arrangement, which determines the extent to which live data is available to the BUS provider. This connectivity is crucial if a program enters a situation where the BUS is actively collecting.
A new industry standard
Funders in the securitization industry are increasingly recognizing the value of advanced, innovation platforms that bridge financial and risk management. In fact, a growing number are insisting their customers use them for reporting as a precondition for securing funds, a development that is reshaping industry practices and expectations.
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