The role of the Information Systems and Asset Quality Assessment in the “non-performing loans” system. An Italian case study

This work aims to analyze the contribution of an Information System (IS) to implement credit monitoring as a new integrated process to prevent Non-Performing Loans (NPLs) in a smaller bank whose activitiy is focused especially on credit intermediation (Mehta V., Singh Manhas P., 2006). “Information Technology (IT) is a critical component in creating value in banking industries. It provides decision makers with anefficient means to report information about risk, profitability and precedent conditions for loan” (Huaiq W., John M., Stephen L., 2002). The study focuses on the process of active monitoring of the entire credit portfolio, aimed at guiding the best migration between risk classes (Malinconico A., 2013; Bouteille S., Coogan Pushner D., 2012)). This is no longer understood as a sequence of stages, but as a set of integrated activities, in which the quality of information becomes a major determinant of the outcome (Bennardo A., Pagano M., Piccolo S., 2011). Such tools are basic to support Risk Management (RM) in the decision-making process and aiding performance evaluation. The purpose of this work is, through a case study, to highlight the possibility of IS to support this new integrated process of credit monitoring, providing increasingly reliable data, availability on demand and real-time information, and facilitating the creation of a development of global knowledge and new reporting tools, as well as the collaboration and integration between the areas of risk and business operating processes (Al-Laith A.A.G., 2012). The study shows that the characteristics of the specific business make it necessary to take into account several aspects such as: variety of education and culture of the staff; functional relationships; and further appropriate technology resources. All these features affect the conceiving, developing and deploying of IS solutions, to be adopted in order to reach the business objectives especially in order to improve the asset quality, as mentioned above.