Jason Schwabline, Chief Strategy Officer, Alogent 

Exception management—the process of monitoring, tracking, and resolving exceptions—might not be the biggest cost driver for financial institutions. However, inefficient exception management can lead to considerable costs over the course of months or years.

Identifying and reducing exception-related overhead requires a strategic approach. Here are four hidden costs to look for. 

Download Alogent’s calculator spreadsheet to estimate your financial institution's exception-related costs.

Cost #1: Reviewing Checklists, Loan Files, & Documentation

Simply knowing what to track takes time and effort. For example, a commercial real estate loan will require different documentation and follow-up tasks than an agricultural loan. Credit and loan exception checklists are useful but require ongoing review by staff. Failure to do so could cause a surge in document-related exceptions, such as missing trailing documents or customer tax returns. Using outdated or errant checklists makes things even more challenging. 

Received documentation must then be reviewed for quality, accuracy, and thoroughness. For example, documents sometimes arrive with missing pages or outdated information. Signature boxes get overlooked. Scanned-in documents can be illegible or in an incorrect order. Such issues lead to additional exception-related overhead.

Cost #2: Entering Exception Data into Spreadsheets & Ticklers

Let’s imagine that your bank needs an updated financial statement from a customer. The lender reaches out and receives the document, which is promptly placed into the loan file. Now someone from your bank must remember to “clear” the exception by updating your tickler or exception spreadsheet. Failing to take action as soon as possible results in outdated exception data, but resolving one exception at a time is disruptive and annoying to the user.

Loans containing policy exceptions create additional complexity for staff—more data entry, more spreadsheets, and more time away from value-added work.

Cost #3: Reporting on Exceptions

Reporting is a key component of any exception management workflow. However, exception reports are only as valuable as the data contained within them. Manual data entry reduces the reliability of exception reports and erodes confidence in the information.

If data is tracked in multiple spreadsheets, someone will need to merge everything into one location prior to generating the exception reports. Loan administrators or other team members must then distribute the reports—usually via email—to all relevant stakeholders, such as lenders, loan assistants, managers, and loan operations staff.

Cost #4: Sending Notice Letters

Financial institutions commonly rely on notice letters to request missing or expiring information. Running mail merges, printing letters, stuffing envelopes, and applying postage can be time-consuming and tedious. There’s also the hard cost of paper, ink, envelopes, and postage to consider.

Generating notice letters can be especially tricky if your exception data is a mess. Asking customers to provide the same document twice isn’t a great experience, but it’s a situation that’s nearly impossible to avoid with unreliable exception data.

Streamline Exception Management

Need a more cost-efficient approach to exception management? Explore Alogent’s exception tracking capabilities in AccuAccount.