E-Business Tools for Active Credit Risk Management - A Market Analysis

Abstract: This paper analyses the impact of ICT on the value creation system of loans and its respective business models and focuses on credit risk management of commercial banks. Whereas ICT impact on loan origination has been studied already in earlier papers there are no in-depth studies available mainly focused at credit risk management, which reaches beyond mere origination. After presenting a general analysis about ICT impact on value creation in the financial industry, this paper provides a state-of-the-art analysis of e-business tools for credit risk management emphasizing their value proposition with respect to credit risk management. The analysis is based on the hypothesis that only by innovative e-business solutions traditional loan business can convert into active credit risk management. As a result the research comes up with three categories of tools which are valuation platforms, rating tools, and trading platforms. It can be shown that ICT leads to the deconstruction of the traditional loan business model.