Implementation Guide

First and foremost, welcome aboard! We are thrilled to have you as a partner and thank you for your trust. Our job is to ensure that you are successful in using the system to meet your goals. We want you to win better deals, build stronger, more profitable relationships with your customers, and build a better brand for your institution.

That process starts with the proper implementation. This guide will get you started, but there are more detailed articles in the support center, and our team will be there to walk you through every step.

Building the Winning Implementation Team

When rolling out any new system, the implementation team determines the success of the project. Because pricing is perhaps the most cross-functional process in a bank, it may have conflicting perspectives, and you must select a balanced team with proper leaders as stakeholders. We have completed hundreds of implementations. We know what works, and we're excited to share the recipe for a successful implementation.

The size of your team will vary depending on how you choose to fill the roles. For some FIs, the team is small, and individuals fill multiple roles. For others, the teams are larger, and often the project manager pulls in individuals from across the organization to add their expertise for a few decisions.

Executive Sponsor (The Project's Champion)

This person, often from the C-Suite, pushed PrecisionLender through the sales process and will continue to champion its success during implementation and beyond. Their role is to prioritize the application and ensure the project receives the resources needed to achieve the desired milestones on time. This person will provide strategic guidance and help to ensure the continuity of the project.

Project Lead (aka Project Manager)

The Project Lead manages the overall project and coordinates the rest of the team members during implementation. For larger teams, they generally act as the primary point of contact, and they then pull in resources and experts from the bank as needed at each step. In short, they are responsible for making sure that tasks are completed in time to keep the project on schedule.

System Administrator (aka "Chief Pricing Officer")

Your System Administrator is the MOST IMPORTANT ROLE IN THE PROJECT. Our most successful clients understand that you need the right person to own and manage the application for a digital transformation to succeed. Since they will own the pricing function as we advance, the Admin participates as soon as the project begins. They will need to be well-versed in the system's business requirements and have a solid understanding of the FI's finance and credit functions. This combination of skills ensures they translate the FI's high-level strategy to the correct pricing tactics, and they can configure the tool to align with those tactics.

While the Admin will be responsible for most of the day-to-day management and configuration of the system, they must have more than technical skills. They must also have sufficient authority and clout within the organization to make final pricing decisions. They should carry enough respect to serve as the go-to resource for pricing the most complex relationships.

Given the importance of this role, we suggest you check out some of our additional content on the subject.

Lender/Relationship Manager Champion

The rollout to your bankers goes more smoothly when they have a seat at the table during implementation. Ensure the project team designates a representative from the lending function to provide the perspective of bankers. This person speaks up and helps keep the team from making decisions that negatively affect the RM's ability to negotiate a fair deal with a borrower.

Credit Expert

The Credit Expert is responsible for helping determine how credit risk (specifically: probability of default and loss given default data) translates to pricing new opportunities. They may gather the data needed for the credit analysis and work with PrecisionLender's Solutions Experts to finalize the credit-specific assumptions on risk grades, collateral, guarantees, and default rates.

Finance Expert

The Finance Expert helps determine bank-level assumptions such as tax rates, funding curves, cap/floor optionality, and capital assumptions. They are also typically involved in the setting of Target Returns, as they should be able to provide context on the rest of the bank's balance sheet.

Data Expert

The data expert will assist with creating the data files for the Relationship Awareness (RA) module. Many larger banks use data warehouses, and in that case, include anyone familiar with querying that system to provide the necessary extracts. In other banks, the data comes directly from the core system, so include someone with specific knowledge on writing reports/queries of the core. The PrecisionLender RA team will handle the bulk of the mapping issues, so minimal specialized data skills are required, and we will need minimal involvement from your IT department.

Implementation Details and Resources

Prep Work Requirements

In order to provision your instance of PrecisionLender with the best recommendations for your institution, we ask for your assistance. Below are prep work activities the client must complete before the workshop. As a reminder, please do not share sensitive data such as, but not limited to, account, portfolio or social security numbers, CIF, or any other confidential information.

Safelisting PrecisionLender
- Client Resource: IT Admin
- Description: Safelist the PrecisionLender application, email domain, and supporting domains according to this support article. This ensures access to the application and support site. It also ensures any email sent from a PrecisionLender employee will be delivered.
Complete Data Request
- Client Resource: Data Expert
- Description: PrecisionLender will provide documentation regarding the files and fields necessary to implement Relationship Awareness. After an in-depth data request discussion, your data expert will be responsible for creating the first pass of your extracts. This allows us to help you mitigate any data integrity issues and fill in the relevant details with your team.
Complete Client Questionnaire Workbook
- Client Resource: System Admin
- Description: Be prepared to gather the items below and a set of recently closed loans. We enter these into PrecisionLender to test settings and build the data to set the initial ROE targets.
  - Credit Risk Ratings OR 1YR PD - Credit Migration
  - Funds Transfer Pricing
  - Commercial Loan Product Set
  - Deposit Information
  - Interest Rate Input & Recent Deals
  - User List
Additional Materials
- Client Resource: System Admin
- Description: Gather and send the readily available materials described below. These will help us make recommendations during the workshop.
  - Logo file: should be .jpg or .png and will be resized to fit 250 * 50 pixels
  - Pipeline Stages: sample of the pipeline, CRM process, or origination lifecycle to get a sense of opportunity stages
  - Product list: how does the organization bucket its loans? Go broad, not granular
Relationship Awareness Considerations
- Client Resource: System Admin
- Relationship Awareness
  - Users: PrecisionLender maps relationships from the core to users set up in PrecisionLender. Users who do not have an Officer Code will not own relationships in PrecisionLender.
  - Products: The products set up in PrecisionLender are used for pricing and mapping products from the core for Relationship Awareness. Consider any product types important in the full view of the relationship and plan to set up a product type to capture these.
  - Collateral Types: Collateral types must be consistent across all commercial loan products.
  - Risk Ratings: Risk ratings must be consistent across all commercial loan products.

Set Goals

PrecisionLender firmly believes "what gets measured gets managed." It is essential to set two levels of goals at the early stages of the project.

Determine a realistic "go-live" date.
- The PrecisionLender team can guide how long each step usually takes and create a detailed project plan with assigned tasks and due dates to meet the targeted date.

Ensure the pricing decisions guided by PrecisionLender are consistent with your strategy.
- Align pricing tactics along a strategy spectrum that includes risk mitigation, growth, and profitability.
- Management must communicate the desired outcome to the project team and PrecisionLender to configure the solution to optimize results.

Configure The System

Reporting Regions

One of the powerful features of PrecisionLender is the ability to track and report pricing opportunities by a client, region, state, branch, or lender. In addition, using your institution's reporting structure, you can allow different reporting entities to use other products, funding curves, return targets, etc.

Security Profiles

Each user will have a Security Profile. The Security Profile functionality determines the level of access that the user has within PrecisionLender. In addition to the Security Profiles and their associated access levels, you will need to set up overall access restrictions and password protocols.

More on Security Profiles and Access Settings:

Opportunity Stages

As lenders are working on opportunities, they will update the "stage" as it progresses. Configure these stages to match your institution's workflow, and they will work in tandem with PrecisionLender's pipeline reporting functionality.

Product Setup

PrecisionLender will provide you with a template for collecting the credit data needed for analysis. This process involves pulling totals for the number of loans in each risk grade at two points in time. PrecisionLender then takes that data and completes an analysis that will form the basis of all of the credit and capital assumptions for the products.

Commercial and Consumer Loan Products

For each product, your team will sign off on:

The credit and capital assumptions for each risk grade
The overhead costs for the origination and servicing channels
The collateral & guarantee types with default LTV and recovery factors
(if desired) Any prepayment options

Assumptions Validation (AV)

The scope of the AV process will largely depend on the size and complexity of the user base. For smaller institutions, AV happens during the implementation workshop. In larger organizations, you may choose to run a PrecisionLender pilot group to test the specific settings. The AV process has three primary objectives:

Information Regarding AV and Gathering Recent Closed Deals for Testing:

Assumptions Validation (AV) is when the financial institution tests its configuration of PrecisionLender before rolling out the system to the rest of the organization. You gather recently closed loans, deposits, and fee accounts to test the settings and build the data necessary for setting the initial targets. The AV process has three main objectives:

Verify that the product list is complete and that the default settings for each product are appropriate for the institution. Are there any products missing? Any apparent errors in the products' default settings?
Test a range of loan structures to validate the credit, overhead, funding, and capital assumptions are reasonable. Are they directionally consistent, and are the profitability results adequately affected by the different collateral types, risk grades and guarantees?
Build a large enough sample set of recent accounts to determine Target Returns for each product type.

The general rule for AV is the more opportunities that can be gathered and used for testing, the more comprehensive testing will be, and the more appropriate preliminary targets will be. At a minimum, we recommend the organization gather five opportunities per product type.

Below are the types of accounts we recommend your institution gather for testing purposes:

Opportunities booked within the last quarter are usually sufficient. It may also be helpful to gather recent loans lost to competition as these can be good indicators of the current competitive pricing dynamic.
Opportunities should reflect a representative mix of quality and structure. We recommend the bank focus on deals that are commonly representative of the standard types of deals the bank does every day. Avoid unusual or outlier loans (huge deals, atypical loan structures, absolute best and absolute worst credit, etc.).

Setting Target Returns

After configuring products, we set target returns. These targets allow the FI to communicate how to price specific products to lenders (and thereby the market at large). The targets steer the production volume to match the bank's high-level strategy and targeted balance sheet mix.

The process starts by entering recent loans and deposits (samples from each product type) into PrecisionLender and calculating the returns of those structures using the configured products. The bank (executive sponsor and system admin) then determines how to price products relative to that market level based on the bank's objectives.

These targets are preliminary, as they are not a "set it and forget it" part of the system. These targets will be adjusted regularly as both the market and your strategies evolve.

Relationship Awareness Setup

A PrecisionLender Relationship Awareness team member will work with your Data expert to pull the necessary data from the bank's core system(s) during the data implementation. This information includes specific fields for loans, deposits, other fee-based products, and relationships. Once you gather the necessary data, PrecisionLender will map it to the proper users and products and test the automated process in our environment. After testing, PrecisionLender will assist with installing PLI.exe, the upload tool that completes the data upload into PrecisionLender's production environment.

Engage the Users

After the system setup is complete, PrecisionLender will guide you through creating the best process. Management must communicate to the lenders how they will use the system. Specifically, the following will need to be determined:

Which loans require pricing through PrecisionLender?
How are loans updated through their stages?
What is the process for approval of pricing exceptions?
Where do users go with support and strategy questions?

When you answer those questions, PrecisionLender works with you to create a training plan. Your training plan and how you roll out PrecisionLender are tailored to your organization.

Please include the system administrator and the executive sponsor for the training sessions so someone can answer institution-specific questions around process or policy.

Measure & Improve

After training is complete, PrecisionLender will engage the admins and executives regularly. During these discussions, the PrecisionLender team will ensure you maximize the full capabilities of PrecisionLender/Q2's offerings.