Lloyds Banking Group is trialling software that extracts and standardises financial data from potential clients, in order to give it access to recent information on which it can better judge lending.
The software, CreditPal from supplier Future Route, extracts up-to-date financial data from companies who have given permission to access their monthly balance sheets and are seeking loans, according to a report.
It then standardises the data – from widely-used accounting systems such as Sage 50 and Sage 200 – and checks it for anomalies and falsification. The system is also offered free to businesses looking to improve their internal financial management, the Financial Times reported.
The idea of CIO 100 listed Lloyds trialling the software is to better inform credit decisions at the part-nationalised bank, by providing it with potential clients’ monthly management accounts, instead of relying on out-of-date audited yearly results.
The move could set off a shift in the banking industry’s credit assessment of companies, the newspaper speculated, allowing quicker loan judgement for the many small businesses seeking loans. Credit ratings agency Experian is also exploring the technology.
The system was developed by Chris Poll, a statistics businessman who sold his Micropal data service to Standard & Poors thirteen years ago. It uses pattern-detection formulae, developed by Second World War Engima decoder Alan Turing.
"We are running a couple of pilot studies to see how it works out,” Stephen Pegge, head of external affairs at Lloyds' UK commercial division, told the FT. “To adopt [these accounting systems] borrowers need to be convinced it will make them money, or save it."
In April, the group said it was on target for £2 billion savings from the merger of Lloyds TSB and HBOS, as IT, procurement and other operational changes began to deliver cost efficiencies.