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The "New Normal:" Are You Ready For It?
By Josh DeForest
December 11, 2009 07:49 AM
The bottom line is that we have come a long way, and the question on everyone’s mind is “where do we go from here?” While the exact answer to that question may be elusive, PIMCO CIO Bill Gross in an October 2009 article wrote of a New Normal. This, he says, is a break in economic climate manifested in lower GDP growth, re-regulation of the financial sector, financial deleveraging and consequently lower ROA.
None of this should come as a surprise given what we have just experienced, the financial hangover will eventually subside, but we will experience significant change in our industry. The question at hand is do you have the tools to thrive in this “new normal.” There are many questions in front of us, including: How will financial sector regulation change the way we currently do business? How will you be competitive in this new normal? With slower GDP growth and lower ROA, who will be and how will they become the next industry leaders?
We are going to experience a much harsher environment in the coming years. Unemployment is still high and cracks in the economy continue to persist. This coupled with pending regulation makes for a lot of uncertainty for managers trying to create and maintain a profitable loan portfolio.
The next question becomes can you adequately reserve for delinquency and set pricing as we adjust to this new paradigm to be profitable?
It was for this reason that our team created Decisive Analytics, a robust portfolio analysis tool utilizing state of the art modeling procedures. This tool allows you to “stress test” your pricing and reserve allocation before implementing your auto finance programs. Then you can continually model your existing portfolio for expected (or possible unexpected) events or market conditions. This powerful tool gives you the ability to create a retail or lease origination program that is profitable and helps you set pricing so that it stays that way. With Decisive you will have the tools to make quicker and clearer decisions that will keep you ahead of the competition.
Call 888.966.6306 for more information and a free demonstration.
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